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Welcome to Mortgage Talk with Mark Hairston, 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. Hey,

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welcome everybody on Mortgage Talk. It's
my weekly little show on mortgage financing.

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Then I'm excited to be back with
everybody. I was out of town last

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week up in Detroit, actually Pontiac, Michigan. I've never been to Michigan

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before. It's kind of fun.
I thought they're on business. So I

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want to give a shout out to
my marketing director, Leanna Borsellino and my

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good friend Kate Balderis who held down
the fort last week. And I hope,

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I hope it was worth everybody's while
to watch that show or listen to

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that show because her quarterly bonus is
gonna be dependent on that. Just kid.

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So today I'm going to do sort
of a Q and A. I've

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I've reached a lot of prospects and
some realtors and say, hey, what

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are you hearing? From your from
your potential buyers in this market, what

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kind of questions are you getting from
them? And I wrote down a whole

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bunch of them. I kind of
wanted to talk about these questions a little

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more in detail to hopefully, you
know, get people to better position mentally

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or psychologically or even financially to buy
a property. So the first one is

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obviously very important. It says,
how do rising interest rates affect my ability

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to get a mortgage? And obviously
that's a very important question. It's a

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very good question. It's probably on
the top of everybody's mind who's on the

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sideline, whether you're a renter and
you're thinking about buying your first home,

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or you're relocating to Austin area,
or you're thinking about moving up or moving

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down and you have a property to
sell. You know, what are interest

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rates? How do they affected my
ability to get a loan? And obviously

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it doesn't help. That's a challenge
in this market for sure, because we've

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gone from around two and a half
percent about a year and a half ago

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to upwards to seven percent now.
So the math the four formula will is

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along the lines. This is an
average, but on average, every percent

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higher of interest rate decreases one's ability
to buy buy about ten percent of the

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market. So in other words,
let's say that you qualify for five hundred

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thousand dollars on a mortgage at six
percent. If it goes to seven percent

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one percent higher, your buying power
goes down to around four fifty, about

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ten percent less to keep the payment
the same That's a rule of thumb and

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vice versa. If you buy a
property today or thinking about property today at

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seven percent and it rates where to
fall a six percent, your buying power

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would go up ten percent to keep
the same payment. So that's a very

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good rule of thumb you may want
to use. And of course that's an

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aside from many taxes or insurance it
will be charged on a mortgage. I'm

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just talking about the mortgage itself,
about ten percent per per insurance, per

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rate of gain by the loan rates. The next question is should I be

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concerned about the impact of inflation if
I'm thinking about buying a house. You

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know, obviously inflation has ticked up
a lot. The problem was and this

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is confusing, but inflation is a
product or a result of the Federal Reserve

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pumping lots of money into the economy, which happened during COVID. There was

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some number like around five trillion dollars
at the Federal Reserve put into the banking

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system, so money was easy to
get to and rates had fallen quite a

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bit. That's changed the last year
and a half. The Fed has raised

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race considerably though since the last oh
year and a half maybe two years now

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they're a little late to the game. So we saw a very sudden increase

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in inflation in the Federal Reserve raising
race trying to catch up with that.

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So inflation as a as a hedge. A lot of times real estate is

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considered a hedge against inflation because because
the cost of materials go up, so

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billion of house will go up based
on the cost of lumber and labor and

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all sorts of factors. So a
lot of times buying a property or owning

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property is a hedge against inflation,
just like maybe gold or silver made hard

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assets or usually considered a good hedge
against inflation. So I don't think it's

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a problem buying this market personally around
that question. Now, the time will

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tell what's going to happen there.
But inflation starts to lower and come down,

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which is starting to show signs of
that, then interest rate should also

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fallow too, which is also going
to increase the value your property because more

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people can be in that market to
buy it. So again, I think

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we've bottomed out right now in this
at least in the local Austin, Texas,

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Central Texas market, and I think
it's still a good time to be

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buying. So what steps here's the
third question, what steps can I take

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to secure a competitive interest rate?
Or how do I in other words,

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how do I get the best deal? You know, that's the bottom line.

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When rates were I've been doing this
since eighty five when rates were at

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thirteen and a half percent, So
I've seen rates fluctuway from thirt teen and

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a half percent down to two and
a half percent over the last thirty seven

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years, up and down. And
when rates were at the bottom a couple

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of years ago, probably twenty twenty
one and two years ago, you know,

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people weren't complaining between a two and
a half percent rate and a three

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percent rate. There wasn't a whole
lot of negotiation, if you will,

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between the banks and the brokers and
the clients, because they would they thought

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it's all good now have rates have
moved higher, people are much more interested

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in getting the best deal, which
I want to share with you another idea

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for you. If you're really interested
in learning how to shop for a mortgage,

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reach out to me. My phone
number is five one two seven eight

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nine six nine sixty seven, either
but via text or call or email marketmark

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hairston dot com and I'll be happy
to share with you a consumer guide I

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wrote years ago, not in the
last year or two, but I mean

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five or six years ago, on
how to shop for the best deal.

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It's called The Truth and Lending.
It's a fifteen page white paper consumer guy.

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How I kind of pulled back the
curtains against in the mortgage industry and

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tell you how it works so you
can make educated conversation, whether we have

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a broker like me, or your
bank or credit union or mortgage lender,

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online lenders, whoever you speak with. It'll give you some detailed information on

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how to make sure that you put
yourself in the best position if you will,

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to win, because there's a big
difference between six and a half percent

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and seven percent on an interest rate
in this market with these prices. Okay,

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so is it a good time to
buy a home in the uncertain the

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economy. That's a question you're going
to have to answer you for yourself,

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because I can't tell you what to
do. I don't want to tell you

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what to do. I can barely
tell myself what to do. That's done.

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But I bought my first home in
nineteen ninety in Austin, Texas,

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and we are in a bad recession. This is a fourth I hate to

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call a recession per se, but
it's certainly the fourth correction we've had in

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the real estate market since I've been
in the business. We had one in

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the late eighties, mid to late
eighties, for sure, around two thousand,

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two thousand and one. The big
one was ten to ten, two

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ten, And this fourth one is
in the last year or so. And

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I find this one to be more
interesting than the others. But anyway,

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my first home I bought nineteen ninety. I bought a property down in Oak

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Hill area off a William Cannon in
escarpment if you know, the area of

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village of Western Oaks, Western Oaks
area. And it is a bad economy.

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We were coming out, or we
were coming out of, a really

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bad economy. The point around that
is is always and I've said this before

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on this show, and I've said
that in private conversation. Do you make

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your money on the buy and not
when you sell. In other words,

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if you can buy at the right
time, that's where you're going to make

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your profit. And I think today, because of price is coming down the

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last year fourteen fifteen months, that
this is an excellent time to buy him

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because I think that interest rates will
be coming down next year. I don't

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know how much, but I don't
see him going much higher than this,

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and as reinist rates fall, I
think you'll make a good investment if you

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could afford the property at these rates. And that's that's the kicker right now.

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We're gonna talk about that a little
bit more as we go. So

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buying in a recession or maybe coming
out of recession is a great time.

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My last time we're out the last
time I bought, but I bought another

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property in two thousand and ten,
my wife and I did, and we

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bought a property in the Lost Creek
area. And if you remember, two

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ten was some of the worst economy
we've ever seen. I mean, the

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banking system, the whole economy almost
fell. But we weren't worried about that.

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We thought it was a great time
to buy then, and it was.

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It turned out to be a great
investment. We still own that property,

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we re lease it out for a
profit. And so typically speaking,

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you want to buy it the low, whether it be stocks or any any

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any investment, you want to make
sure you buy it the low. And

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I think we're very close to the
low, if not at the bottom.

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So how does it unstart e commy
impact the housing market. Well, we've

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seen that in the last We've seen
that in the last fifteen months that prices

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have come down. So that's how
an uncertain market is going to affect the

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economy. There's a lot more to
it than just that. You know,

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it's about jobs. You know,
in Texas is a very fortunate state in

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the sense that a lot of jobs
are still moving here. I think I

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saw her government, Governor Abbot say
that about twenty five large corporations have relocated

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in the Dallas Fort Worth Theream,
not to mention you know, central Texas

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in general. So Texas is still
a very favorable business market. And that's

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the key. Employment's always the key
to a healthy roal estate market because without

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that you know, I was,
Like I mentioned, I was in Detroit

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this past week. Detroit between Detroit
and Pontiac, Michigan now Detroit proper.

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Detroit downtown is a beautiful city.
I went to see the Tigers and Red's

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play, had a great time the
game. Took an uber down there from

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Detroit's I mean, the Michigan's a
beautiful state. But just driving in the

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uber for about forty minutes or so, you could see along the road lots

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of vacant properties just basically just boarded
up all along the freeways. And that's

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not going into the more of the
inner city. So Detroit's lost a lot

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of jobs over the years, population
over the years, and those some of

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that real estate's just sitting there.
Maybe a good time to buy in Detroit,

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I don't know. But Texas,
on the other hand, has been

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a migration center for businesses. Tesla's
obviously came here in Oracle and Samsung's building

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that huge plant. And it's not
just those big names. You hear about

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the big names, but it's all
the selfimental businesses and industries that come to

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support those big companies. So again, I feel I've been in Austin for

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forty six years now, and I'm
not really going anywhere. I still think

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it's a great place to live.
I'm pro real estate. I'm bullish on

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Austin and real estate, so I
would not be personally too concerned about buying

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property in this market. We're looking
for some other property right now. Are

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there any government programs? Are incentives
available? You know, one of the

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things is different. And I was
talking to a mortgage friend of mine yesterday

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and we were saying, this is
in some ways worse in my industry.

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I'm not saying in general, but
in my industry than it was in two

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thousand and eight, two thousand and
nine, two ten, because the government

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stepped in with a lot of incentives
for people to buy, and they were

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talking about down payment programs and tax
incentives and things like that for first time

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buyers. First time buyers drive the
market generally speaking, because you know,

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if you buy first time buyers buy
a property, then that seller can do

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something different. They can move up
or move out or whatever. So a

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lot of times first time buyers are
a key, which we're starting to see

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a lot of that come back in
this market now. About half our business

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I would say at least half,
maybe more as first time buyers, people

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who are living in apartments or coming
out of college or have a roommate and

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they want to say, Hey,
I'm done with this. I don't want

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to live in this rental property.
I want to go buy my own place.

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Because there's an old saying you're gonna
pay a mortgage, you might as

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well pay your own because you're paying
somebody's, that's for sure. But in

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this economy, the government really hasn't
done much. And I'm not saying they

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should. I'm just saying they haven't
done much as far as incentives to be

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able to buy. Now, we're
going to talk a minute in a minute

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about a program called MCC, which
I think is very very important that a

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lot of lenders don't either know or
they don't talk about. Let's talk about

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now. MCC stands for Mortgage Credit
Certificate. It's nothing new. MCC is

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a government program national. It's not
for Texas, it's not for my company.

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It's for anybody that qualifies, and
you qualify as a first time buyer.

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First time buyer is somebody who's either
never owned a property or hasn't owned

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a homestead in three years. That
would be considered a first time buyer,

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and the government says, look,
if you're a first time buyer, this

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is a great incentive. We'll offer
you up to two thousand dollars tax credit

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if you buy a home, and
every year you live in this home,

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we'll give you a two thousand dollars
tax credit. A tax credit is different

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than a tax deduction. You can
deduct your interests and taxes against your taxable

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income, but a tax credit is
such that it's a dollar for dollar deduction

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from what you owe. So at
the end of the year, let's say

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in April you file your taxes and
you owe two thousand dollars. If you

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have this program, it can only
be done in the loan process. It

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can't be done after you close.
So make sure your lender is talking to

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you about this program if in fact
you qualify. But let's say in April

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you owe two thousand dollars, Well, if you have this, you don't

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owe any money. Or let's say
you're going to get back a thousand dollars

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and if you have the MCC program
in place every year, not just the

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first year, but every year.
In this case, you'll get three thousand

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back if you get a thousand back
from the government. So that's that's not

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a new program. That's been around
since really the mid to early nineties,

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as I recall, So it's not
new, but that's the way incentive I

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can really think about off the top
of my head that would would encourage people

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to look at buying as a first
time buyer. What current what are the

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current rates and how do they compare
historically? Well, as I meant the

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answer the question really historic, the
current rates are on a fixed rate or

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around seven percent fixed thirty year.
Now I'm I've just locked alone in yesterday

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for a client who's refinancing into a
fifteen year. He bought a property in

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May of this year and he barred
around seven twenty five. He had a

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home that he was going to sell, but he qualified with this current mortgage,

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so he didn't need to sell the
property first to buy. But he

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knew he was going to be selling
that property and he did. He's club

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a matter of fact, he's closing
today and he's going to receive about four

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hundred thousand dollars and that what he's
going to put that down on a new

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on the property we financed and the
loan. So he's gonna be barring around

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three hundred and twenty five thousand on
a fifteen year note and I locked him

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at six and a quarter percent,
and so he's very happy with that because

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it's gonna his payment's gonna be a
little bit less than he's paying now.

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And if to go to a fifteen
year no, So the answer, but

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fixed rates, Normally people go to
a thirty year loan because it keeps your

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payment relatively as low as you can. Now. When I got in the

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business in eighty five, like I
mentioned, rates, we're thirteen and a

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half percent, and they've fallen over
the years anywhere from thirteen and a half

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to two and a half. But
on average rates to historically forty year average

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has been around six percent. So
we're a little higher than the than the

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national average historically. But I do
believe we'll see that those rates come down

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in that market, hopefully in the
fives in the next year or so,

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depending on you know, a lot
of factors. So that would be a

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comparison of where we are today versus
you know history. Another question is how

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can I improve my credit score and
how does that help me? Well,

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a few months ago, what about
a month ago, I guess we had

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a three week series on credit scoring, how to increase your scores. It

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helps quite a bit. The higher
your score, the better deal you're going

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to get. Now that's in the
conventional market. If you're a veteran,

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or if you're in the fa shade
market, it's not as significance, not

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as big a deal as your credit
score is from let's say six fifty to

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seven fifty. But on a conventional
known it is, and most of our

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business right now is conventional financing.
But I would suggest that the key,

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one of the keys, or there
are several keys, but one of them

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is to make your payments on time. Number one. Obviously, make always

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make your payments on time, even
it's just the minimum. So if it's

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twenty five dollars minimum payment and you
owe a thousand dollars, just make the

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twenty five bucks, you know,
at least do that. But the other

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key is to keep your keep your
balances as low as possible. Now,

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the problem that we're seeing today when
I talk to clients is their credit card

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balances are much higher. Matter of
fact, we have reached a record in

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this country of credit card debt it's
over a trillion dollars. Now we've never

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seen that before, but what we
call unsecured debt, credit card unsecured debt

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over a trillion dollars two years ago
because of all the because all the free

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money that people got, you know, not only were savings rates higher,

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but credit card balances were around six
hundred billion dollars. And this goes two

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or three years ago. So it's
not quite doubled, but it's gone up

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significantly in the last you know,
certainly in the last year, because I

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wouldn't say people are living on credit
cards, but they're certainly using them more

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so than ever. And I'm guilty
of it too. I've got some credit

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card debt I need to get handled
between you and me. So so number

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one, Number one is to pay
make your payments on time. Number two

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is to reduce your credit card balances
or your total debt as much as you

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possibly can, you know, and
I'm working on that myself. So what

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is the maximum? And again,
the higher your credit scores in the conventional

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market, the better your deal.
So if you save an eighth or a

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quarter on an interest rate, and
you're bar and a half million dollars or

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six hundred thousand dollars. That over
time, that adds up quite a bit,

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so it's going to save you ultimately
thousands of dollars. What is the

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maximum mortgage amount? Now this is
a question I get practically every day because

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people say, hey, I want
to know how much I can borrow.

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Okay, and until we get into
the weeds with people about income and credit

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and down payment whatnot, a good
rule of thumb is we're going to take

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fifty percent. This is a rule
of thumb. It's not an exact science,

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but keep it in mind if you
want to do some quick calculations.

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We take fifty percent of your gross
income. So let's say a married couple

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makes ten thousand dollars a month gross
income before taxes, before four O one

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K, before healthcare expenses, anything
like that. Whatever you make as a

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gross income, we take fifty percent
of that. So let's say that's that's

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that number will be five thousand dollars, and then we back out any debt

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you may have, Let's say student
loans, car loans, revolving credit loans,

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personal loans, things like that.
And let's assume for a minute that's

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fifteen hundred dollars. We take that
out of the five thousand, we leave

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you thirty five hundred dollars. The
thirty five hundred dollars is how much we

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would allow you for a mortgage payment. So and that would include taxes,

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insurance and homewards insurance and all those
sort of mortgage insurance whatever. The thirty

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five hundred dollars would have to cover
all of that. Whatever is left over

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after you deduct the expenses in a
thirty five hundred dollars payment in today's marketing

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with these rates and taxes, is
probably around a four and a quarter to

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four hundred and fifty thousand dollars loan. Of course, that's after you're down

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payments. So let's say you bought
a property for five hundred thousand or let

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well, let's say five hundred thousand, put down ten percent and your bar

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and four fifty. Your payments should
be in the thirty five hundred dollars range,

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depaying on other factors. So that's
just a real thumb. But be

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sure you consult with a mortgage consultant. Make sure you consult with somebody who

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can give these details. That reminds
me of a couple who were coming out

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of California, and they got pre
approved, but all I could approven for

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was two hundred and seventy five thousand
dollars. But they wanted to buy a

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house for three hundred seventy five thousand
dollars. So I said, well,

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I may not be the right source
for you, you know. And I

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did all I could for him,
but I couldn't get them that much money.

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So I taught at the agent this
past week. I said, hey,

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did they ever close? They said, yeah, they did, and

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he said they actually got denied,
but but she went out. The wife

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was not working. The husband was
being transferred here with home Depot, but

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the wife was not working at the
time. And he said, you know,

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they made her go get a job
so they could borrow, you know,

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the other one hundred thousand dollars.
And I guess maybe I should have

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thought about that, but she told
me she didn't want to work. So

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anyway, makes because the pre approved
by this lender, well, they didn't

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get pre approved, they got denied
until you went to got a job.

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So always sort many ways of skin
of cat. Okay, what are closing

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cost? Great question? Great question
because there's lots of closing costs. Now,

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closing costs are third party fees and
people so people think if they put

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down a lot of people think if
they put down ten percent, maybe they

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don't have a other costs per se. But there's there's gonna be several thousand

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dollars worth of closing costs. And
there're third party fees, like the lender

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fees. My fee as a mortgage
broker, you don't the lender. The

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borrower doesn't pay me. I get
paid by the lender whoever I sell that

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loan too. But the lenders have
charges. There's appraisal fees, there's there's

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attorney fees, there's title costs,
there's surveys, there's recording fees. There's

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all sorts of third party fees and
on average, on average, they run

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about forty five hundred dollars to five
thousand dollars. That it's just the closing

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fees. Now, the question was
can they be negotiated? And we're seeing

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most of the time and I would
say three out of four loans these days,

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the seller is participating in paying some
of those fees. They're negotiable.

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So on a conventional loan with five
percent down, the seller can pay up

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to three percent of the sales price
for closing costs. So on a half

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billion dollars property, that'll be three
percent would be fifteen thousand dollars. Now,

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closing costs don't run fifteen thousand dollars, so that's that's if you want

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to buy points to buy down the
rate possibly on FHA it's going to be

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around six it's six percent, So
again there's a lot of latitude on FHA

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for the seller to pay a lot
of the fees. As far as by

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down costs, there's there's ways of
reducing your costs or your rates temporarily.

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It's called two one or three one
BYEM three two one BYM and that's probably

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for another day we could talk about
that, but that's also a tool of

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negotiation that we're starting to see a
lot with buyers because they can't afford a

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seven percent rate, but two one
buy down affords in the opportunity to get

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a five percent rate in the first
year, six percent in the second year,

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and seven percent in the third on. So those that costs, there's

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fees to lower that rate temporarily that's
going to be paid by the seller too.

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So again most of the time because
of the market in general. We're

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not really in a bad market.
We're in what I call a balanced market.

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On average, properties are selling between
three and four months on the market.

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You know, two years ago there
was three or four days. Literally,

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are certainly three or four weeks before
a property would sell. Those days

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are kind of over. We're sort
of back to a normal market where there's

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more negotiation between a buyer and seller, and there we're seeing a lot of

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people coming to the market that maybe
couldn't buy two years ago. So it's

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I think it's a healthy thing.
It's a healthy thing all around. You

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know, this this COVID thing was
a weird, weird time, but those

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days are at least over for now. They keep talking about mass coming back.

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We'll talk about that some all the
time. So how long does a

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mortgage approval take? Well, that's
a great question. On average, we

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can usually close alone within three weeks. We say a month, but we

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really don't need a month anymore.
The technology around mortgage financing is such that,

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you know, we could process these
loans and close them using between two

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and three weeks. You know,
when I got in the business in the

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eighties, there was no internet.
There was no technology. There's no Facebook,

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if you will, and they would
take sometimes six to seven weeks,

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but that was when everything was piled
in a package like this a paper.

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We don't really do paper anymore.
Everything's done pretty much electronically and so on

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average week can close pretty quickly,
and that's an incentive for people because if

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you get pre approved, let's say
with me or anybody for that matter,

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and you get pre approved, you
get all your ducks in a row,

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as I say, and you can
contract. We can usually close in two

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weeks, and that may make the
difference between getting that property or not getting

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it if you come in prepared.
And that's one of the questions they keep

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asking, what's the benefit of game
pre approved? Well, the benefit is

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your negotiations. Your negotiation goes way
up in your favor because the seller saying,

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hey, this guy has been through
the process. And as a lender,

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I'll usually call the listening agents say, yeah, this couple or this

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client is well qualified. We've got
them all prepared as far as their payments.

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They're very comfortable with their payment,
in their in their interest rates and

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all that sort of thing. We
write a letter to that effect, and

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that's that's something you really want to
work with. Because I had a client

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called me last week and he wasn't
pre approved, but he wanted to buy

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a property and he lost on that
deal because he didn't have time. He

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didn't have his ducks in a row, so so he lost on that property.

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Now he's in a position because we've
done everything up front the next property,

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I'm sure he's going to get okay, So what about tax and centives?

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And this is a good question too. We know the government's always and

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I mean always had some of the
synos for people to buy proper real estate

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in general, whether it be a
commercial property or our residential property. And

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and so there aren't Texas centers available
to you. And let me know,

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I've got to wrap this thing up, but call me and we'll talk about

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your specific situation because I want to
make sure you're clear about everything we're talking

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about today, and a lot of
other questions I didn't have time to cover.

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So again, Mark Harrison's Mortgage Talk. I appreciate you guys being with

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us. See you next week.
Obay. This has been mortgage Talk with

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00:26:30.880 --> 00:26:37.160
Mark Hairston. Mark is a mortgage
advocate with Texas Mortgage source LLC offering personalized

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00:26:37.200 --> 00:26:42.200
mortgage solutions, vast customized quotes,
great rates and service with integrity. Contact

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00:26:42.240 --> 00:26:48.559
Mark at Mark Hairston dot com Mark
Hairston dot com. You can call our

393
00:26:48.640 --> 00:26:52.559
text Mark at five one two seven
eight nine sixty nine sixty seven. That's

394
00:26:52.640 --> 00:26:57.359
five one two seven eight nine sixty
nine sixty seven and come back next week.

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00:26:57.559 --> 00:27:00.079
We're more mortgage talk like