"So your mortgage drastically increases. So we see this a lot, unfortunately, with new construction homes. But yes, there's a lot of lenders that will do, unfortunately, stuff like that because they just wanna get paid, and they don't care, and they don't look at it as an actual family or a first-time home buyer or a single mom or a widowed husband, right? It's just, hey, it's just a paycheck to them. So that's where you see a lot, unfortunately, of these massive increases in housing, and then you really can't afford it anymore."
"That's very unethical."
"What should people just not do before they close on the house? Anything and everything to do with your Social Security number is off-limits. I don't care if you're checking out at TJ Maxx and they go, 'Oh, I see you're buying a lot of stuff for a new… Oh, you're getting a house?' 'I am actually.' 'Oh, do you wanna open up this…' No, we're not opening up any credit cards. There's no credit cards we're opening. We're not co-signing with our brother for a car because he got into a fender bender, and now he wants a new car, and he can't do it by himself 'cause his cre— we're not doing that. However your credit looked when you walked into the door and you had the credit pull should be exactly how it looks when you sign on the dotted line to close."
Hello, hello, and welcome back to the podcast. Thank you very much for being here. You guys, I'm so excited. One of my favorite people from TikTok is doing an interview with us today, and that is Jordan Nutter. She is the vice president… I'm gonna, I'm gonna read it so I get it right. The vice president of Creator Collective for NFM Lending.
Perfect. We're gonna — nailed it.
We're getting it right. Um, yes. So I am so excited, you guys, because Jordan is one of the few people that I follow on Facebook pretty religiously, and she has so much good information about mortgages. Even though, you know, you're on the Without the Bank podcast, it does not matter, because we are going to use the bank at some point. We're going to use lenders at some point.
And I have seen and talked to so many clients that have just gotten such terrible advice about, "Hey, you should get a mortgage, 'cause you're a man and you're getting married." Bad advice, in my opinion. You don't get a loan just because you're getting married, okay? Or people that are not told the truth about the types of loans they're getting.
And Jordan, if you don't follow her on any of the social medias, you guys need to, because she's just so honest about everything and does these fun little skits that I'm not good at doing. So, she's actually fun to watch as well. So, thanks for being here, Jordan.
Yeah, thank you for having me. I appreciate it. I'm excited. When you reached out, I was like, "All right, I love to have a little challenge potentially. We'll see. Without the bank, but we're the bank." But listen, we gonna roll with it, and I can't wait to answer the questions, and I think it's gonna be good.
Yeah. It won't be a challenge, 'cause we're not here to debate anything. It's more educate. Because I'm not, like — people always think I hate bankers, and I love my banker. I like my lenders. It's the banking system of fractional reserve banking that I don't love. We all are gonna be in a position at some point in our life where we have to go to a lender. But that just means we need to use the right lender.
Correct.
And education. So I kinda wanna break this into two segments. One, the first time home buyer 101 piece, and then I wanna get into some more advanced stuff, because I know I do have listeners that are buying rental properties, investing, and I know you have some rental properties. So I'd kinda like to break it into two.
So let's start with, like, the 101. There's so much there. Like, I have all my notes over here. There's so much there. Kinda the biggest one is people thinking that they maybe can't afford a home, but they're paying as much in rent as if they had a mortgage payment. Do you see that a lot?
I do. I do see where either they're paying maybe a couple hundred dollars under what their potential mortgage would be, or somewhere in that range, right? Whether it's a couple hundred under, it's right there, maybe a couple hundred over. So it is common, unless we're talking, of course, about those very high-priced areas, right? Like the LAs, um, San Diego, I mean, a lot in California, unfortunately. But then that's a case for, hey, it probably makes more sense to rent, unless you're outside, very outside of the cities, those major cities.
But yeah, it's very common. A lot of Middle America, it's very common. And unfortunately, even with the amount of education that I put out and other creators that I now follow that have kind of come into the mix put out, it's still very — it's not well known that you can get into a home with zero or very little down if you really take advantage of any sort of programs that the state offers or the lenders offer.
And I mean, you've watched me long enough to know that I don't believe that everybody should get a mortgage. There are people that I talk to that I actually say, "Hey, I'll do it if you really want to, 'cause I would prefer that I do it than somebody who will just say yes to you. But I wouldn't recommend it because of X, Y, and Z. But it's not my money at the end of the day, it's your money. So if I can give you all the information and you still make the decision to move forward with it, then I can't tell you… You know, if you qualify, I can't tell you no." But yes, there's very much that possibility of qualifying when you already pay rent.
Let's unpack that for a minute, because this is part of the thing that I kind of get annoyed with the lending system, is somebody can barely make the house payment, but yet you approved them. And Jordan and I are saying, "Hey, you probably shouldn't have a mortgage." But the lender is saying, "Sure, we'll give you the money." And then these people get into a house that they can't afford.
And you see this a lot, unfortunately, with new construction because — for anybody watching that doesn't know, if you go with one of the big builders, which I won't name, but most of the big builders have their own mortgage company in-house. So they will tell you, "Hey, if you want this massive credit, you have to go with our lender."
And the reason why they can do that is because, or how they do it, I should say, is most of the time they — the builder also has the mortgage company. Sometimes they even own the title company. So they're pulling in a little bit of the proceeds from all sides to be able to give you this massive $10,000, $15,000, $30,000, whatever it is, incentive. They also bake it into the price when they price the homes. So that's why a lender like myself can't give you these massive incentives.
But whenever you go into a new construction, we see this more times. I mean, you can scroll very easily through any social media where somebody will say, "Yeah, my mortgage was $2,400 last year, and now it's $3,200." And you're like, "How could that be possible?"
And it's because when you buy new construction, if you don't have a good lender, and your agent is not well-educated and does not help you understand, the lender will approve you and qualify you based on the taxes on the raw land, right? Because if they just built this home, and the taxes are being assessed on the raw land because the house has just been built, let's say the taxes on the raw land were $500 a year, and now the as— tax assessor comes out, and your taxes are actually, I don't know, $2,400 for the year, you're not only gonna have all that back pay that you owe, but also future pay.
So your mortgage drastically increases. So we see this a lot, unfortunately, with new construction homes. But yes, there's a lot of lenders that will do, unfortunately, stuff like that because they just wanna get paid, and they don't care, and they don't look at it as an actual family or a first-time home buyer or a single mom or a widowed husband, right? It's just, hey, it's just a paycheck to them. So that's where you see a lot, unfortunately, of these massive increases in housing, and then you really can't afford it anymore.
That's very unethical.
But they can get rid of — they can get away with it because they can pull the tax record and say, "Well, here, here's the — right there, it says $500 for the year." And any ethical, logical person in our industry would say, "Well, yeah, but there's not this 2,200 square foot home that's being assessed on the land. So it's actually not $500 for the year. It's actually $2,400 for the year," or whatever it ends up being, right?
So I would highly recommend anybody that's listening, if you are going with new construction, and you are going with the lender, because I understand having these massive incentives — make sure that you, I mean, heck, you could call me up and send it to me. I'll tell you this is not correct. But make sure you at least have an agent that's on your side, right? That's not the builder's agent, it's your own actual agent, and they're educated enou— enough to call that out so that you don't get bit in the butt a year from now.
That even would apply then if I'm buying kind of a rundown property, and I'm gonna put a bunch of remodel into it, clean it up. They're gonna come back and assess that property at more, and then you're gonna be surprised that your mortgage went up, and now you put all the money into the house, and you don't have the money to pay the mortgage.
Yeah. And I mean, for anyone watching, you know, the tax assessor's not coming into the home, right? But if you are getting permits for things to be done, they can easily pull those from the county or the city, to see what's been done. But yes, if you have a home that's essentially falling apart, and then now it looks brand new, whether it takes one year or two years, eventually those taxes will increase because they will see that the value has obviously gone up based on whatever work's been done to the home.
Since we're talking about dishonest lenders, let's talk about fees, 'cause I see that you talk about fees a lot. Like, they'll hide fees and stuff, or they'll move numbers around. If I'm a new home buyer, what do I need to watch for? 'Cause even as a seasoned buyer, I mean, we've bought several homes, I don't quite understand that whole fee thing because — oh, this person has less fees or more fees. So what do we have to watch for there?
Sure. So it's interesting in our world because anything before your loan estimate essentially means nothing. And I hate to say that as a lender because to me it means something, and I am very transparent upfront where I say, "Hey, these are probably 80, 85% accurate, or maybe they're 90, 95% accurate, and this is why."
But you will get some sort of fee sheet. Now, every lender can use whether it's in their company offers one and it's a template, or they're using a third party where, like I use a third party where I can — it's interactive and I record the video and I walk them through all the fees. So they're not all gonna look the same.
But lenders charge fees, and if they put anything on the very first, we'll call it a fee sheet that they send you, that doesn't mean they have to legally stick to that. Once you go under contract and in your portal, your secure portal where you sign your initial disclosures, there's what's called a loan estimate. And that's where it becomes official. Things can only vary — there's certain fees that can only vary slightly.
Now, when it comes to lender fees, and this happens a lot where I'll have a client, this just happened a couple weeks ago, and they say, "Well, Jordan, your interest rate is more, so I'm just not gonna deal with it. I'm gonna go with the other one." I said, "Okay. If you wouldn't mind, you know me, I'm transparent enough. I'd love to just take a look at it and make sure we're looking at this apples to apples." And their interest rate was lower, but their fees for that rate were much higher.
And personally, I sit on the side of unless somebody specifically asks, "Hey, I wanna buy my rate down," or, "I have this extra money to kinda play with," we're gonna kind of sit on the higher end for your interest rate to play it safe.
And so fees that the lender charges are origination, or origination points or discount points. So those are application fee, processing fee, underwriting fee. So on ours, it's called an application fee. That's it. We don't charge additional ones, and the application fee covers your processor and underwriter. But there's some lenders that actually break it down into processing, underwriting, application. They can be flat fees. They can be percentages of the loan. So they can vary by quite a bit.
And then there's the points, and there's a misconception because they're labeled as discount points. People think that it's a discount, and it's actually not. It's a cost to you, and it's a one-time cost that you pay at closing that buys down your interest rate, whether it's on a permanent basis or a temporary basis. But those are the fees that the lender charges.
Now, things like appraisal and credit report, yes, we order them, so it is a third-party company and those are already preset. But things like title and taxes and insurance, HOAs, those are things we don't have any control over. So it doesn't matter if you go with me or you go with Steve down the street, right? We have to charge you the same thing based on whatever the county gives us for taxes or your insurance company gives us.
So really when comparing lenders, I always say, one, how do they make you feel? Are they making you comfortable? Are they answering the questions that you have? And outside of that, yes, the cost does matter, especially if you're a first-time homebuyer and you don't have a lot of funds.
But there's been many times I've had been compared with another lender, and our fees maybe have been a few hundred dollars more, and they've gone with me over the other lender because I'm willing to answer the questions and hold their hand. And I understand costs are tight, especially again, for a lot of first-time homebuyers, and we try to be very intuitive of like, "Hey, this is the amount that we have. This is the budget we're working with. Let's see if we can get maybe the seller to help with closing costs," because the market's allowing for it at the time.
But I would definitely recommend trying to figure out who makes you feel the most comfortable and looking at fees from there, and very much choosing who you want to use before you go under contract, because there are too many moving pieces once you go under contract: inspections, appraisals, insurance, earnest money. It's just too much. And then if you're still deciding for a lender at that point, it just becomes too overwhelming. So I would definitely recommend figuring out before you actually start putting offers in and going under contract.
That's interesting. I would have not thought that. But I wanna make one point here, and I am very adamant about educating my clients. If it is, you know, at the end of the day, I'm selling life insurance, and I'm gonna educate you on all the kinds, and I'm gonna show you everything, and I'm gonna answer your questions exactly the same as what you said. Because if you — I don't want to come in and understand how to be a lender. Like, that's not the point, but we almost have to.
We're going into contract, and I don't know if you guys do it, but some of those loans get sold off, and then the servicing is with some random company, and you can't even call them to get help. So you probably should know exactly what you're doing before you do it. And not just even take a referral and be like, "Oh, I was referred to Joe down the street, and they said, 'Joe's great.'"
Well, so? Even my own son, I said, "Do not go to that lender because you are not gonna get told exactly what you need to be told. I know that bank is notorious for doing that kind of stuff." Well, he didn't listen, 'cause what do I know? I'm Mom, you know? And so, lo and behold, he got, you know, one of the low interest the loans that you can put down, like 2% or whatever it was, and then he sold his house in the first five years and had to pay some of that back.
Well, I found out from who I told him to go to, but he was never educated that was gonna be the case and that he was gonna have to stay that long. And so if you're not wanting to be educated, then I guess probably don't call Jordan. But if you want to understand what you're getting into, 'cause it is a big purchase, then I would probably call Jordan and be picky about who you're going to work with because it is a large amount of money. You don't wanna come up short one month and be homeless.
And the last thing you want is to go under contract and then start getting kind of ghosted or pushed to the side, right? And it's like, "Well, I still have this question." Like, "You walked me through everything, and now I don't… what do I do here?" Or like, "What does this mean?"
And so just like you were saying, I don't think people truly understand and really take a step back and go, "Wow, this is…" Doesn't matter, right? It could be a $100,000 home. It could be a 500 or a million dollar home, but I am buying this. Like, this is now my responsibility. I can't just move out whenever I want. And so whoever you choose to take on that journey with you should hold a lot of weight to that decision.
Same with your real estate agent. You should put a lot of thought. And there's no harm in, right, taking referrals, but if somebody gives you a referral, if you call up mom or dad, or your sister or whoever bought a house and you're like, "Hey, who did you use?" And they say, "Oh yeah, so-and-so was great." Well, hey, if you're talking to mom about it and mom says, "Yeah, they were great," well, mom's already bought four homes, so I'm a first-time home buyer. "Hey, Mom, is that person, like, are they good at walking you through? Did they answer your questions? Are they kind of just were hands-off?"
Because you want somebody that understands your situation and will sit there with you along the way. Because you don't want someone who just doesn't really care or just has done it for so long and they really only work with move-up buyers or investors that they don't really have to hold their hand, and that's not gonna be the right loan officer for you.
I'm not the right loan officer for everybody, as much as I would love to be, but that's just not the case, and I'm okay with that because some people want certain things, and we don't always align personality or timeline or whatever it is. But I would definitely put some thought and weight into who you use as a lender and who you use as a real estate agent, and don't just automatically take the first referral without having some sort of understanding of their background and why that person's referring them to you.
I have some friends that we helped out, and I said, "This is a realtor that you should use." Well, he didn't listen. So they go to a different realtor, and pretty soon he calls, he's like, "Yeah, we're going through Rocket Mortgage." And I said, "What? Like, you have never bought a home before. No, you're not going through Rocket Mortgage." And he's like, "Well, that's who our realtor works with."
And I said, "I don't care. If we're gonna help you, you're not going through Rocket Mortgage. You're gonna go to so-and-so locally." And he went to see Pam, and thank God, because I was like, "They're gonna sell — like you're never gonna get ahold of them again. You have no idea what you're doing. You've never purchased a home. Absolutely, and I'm not dealing with them if I have to help you, so — not happening."
But I was like, Rocket Mortgage? Like, I didn't even think people used them anymore. But it was a huge eye-opener to me, 'cause I did not know, Jordan, that some of these realtors get kickbacks from Rocket Mortgage if they refer. And so I was like, I'm surprised that's even legal. But, another thing for people to watch out for.
Yeah. There's a certain way within the paperwork that can be signed off if they are part of — there's like some sort of partnership, I forget how it is because I haven't specifically looked at Rocket's paperwork. But I know that there are like partnerships that you can have where if they do come back around and refer, they can get paid out. But there, it's some sort of loophole, and I think you have to be on payroll. I can't remember how it is. But yes, there is unfortunately —
They get — she got like, it was a referral. I don't know. I just was like, "That's crazy. No, not for a first-time home buyer."
Let's talk a little bit about the servicing, 'cause that is super important to me as a person that carries a mortgage. I wanna be able to walk in the bank, and I did this at one point, we got our mortgage statement and it went up 100 bucks a month. And so I called the bank and I said, "Why is it going up by $100 a month?" And they said, "Well, it's 'cause your insurance could go up." And I said, "Okay."
So I called my insurance company and they're like, "No, your insurance didn't go up." I said, "Well, if my insurance didn't go up, then why are you taking another $1,200 for insurance essentially purposes that if it goes up?" I'm like, "No, I'm gonna keep that $1,200 a month." So I just called the bank and said, "Hey, I don't want escrow on this loan anymore. I'll pay my own taxes, I'll pay my own insurance." And it got taken off no problem, right? It was like either I walked into the bank or I called. It was a very quick three-minute phone call.
And that does not happen always if you sell off a mortgage. So do you guys still keep the servicing in-house with all of your stuff?
Two parts to that, 'cause I do wanna touch on the escrow part afterwards. But so we are not technically a bank, right? We're not the Chase, the Wells Fargos, or the credit unions where we have the reserves to house all of the loans. So there is — we do have our warehouse lines of credit, where that's how we're able to fund constantly throughout the day and month and whatnot. And then we have our portfolio. It is small, but we do have a portfolio of some loans that we do service.
It's rare. I would say majority of our loans, at least at this point in time, we don't personally service. And when we closed on our houses, I mean, it was anywhere between we — NFM held onto them for one payment to two payments. So there's not like a, "Hey, this is exactly when you would potentially have your servicing transferred."
I do know that we tend to sell to the bigger companies, not like the small ones that are gonna be really hard to get ahold of. Every loan that I've had has been sold to one of the larger companies. So there is that, right? And whenever it does get sold, you get notified, you get an email, you'll get it in writing. There has to be a thirty-day legally notice that gets sent to you.
And then you do have a grace period if your loan ever does get sold, the servicing gets transferred, that there's a grace period if you made a payment or if you have it on auto-pay, maybe you forgot to open up your mail, that if you make a payment to servicer A, and now it's went to servicer B, you wouldn't get penalized.
So if that does ever happen… And servicing sometimes can change even after that. I mean, the one loan, my very first loan that I opened almost six years ago, that's been with the same servicer. And then my other two loans, those have been with the same servicer. So, I think COVID there was a little, because everything going on, like there was some servicing changes, but most of the time, once it's sold, if it's especially if it's a bigger one, they generally tend to keep it.
My problem way back when was, where we sold it to Wells Fargo or somebody — and I'll say their names. You don't have to. And we are, and this, you can't get through. Like, you just can't get anybody that knows anything. So, you're not experiencing issues with the servicing side? With — 'cause mine is still sold off from my bank, it's just that my bank is servicing it. But they don't own it.
Okay.
So my thing is, like, I don't really care who has it, as long as when I call, I can get service and the phone gets answered.
Yeah, the companies that we've sold to, and, like, my loans are, they only do mortgage. So it's not like the Wells Fargos and the Chases. Like, it's Freedom Mortgage or it's PennyMac, I think, is my other one with. But they're solely mortgage companies, and so it's a lot easier to get ahold of someone. We had an insurance claim we had to do, and I went on their website and typed it. So, I personally haven't had any issues.
I can't say that I've had a client in many, many years that have come to me that said they have issues. But, I feel like a lot of it now, especially 'cause I work with first-time home buyers, everything they like to do just online, electronic, like, let me just log in and pull up my electronic statement and go into the chat and do the AI chat. And I'm like, "Okay."
But I do understand where you're coming from, 'cause there are times where anything, right, that we have a problem, it's like, can I just talk to a real person? Can I talk to somebody? I don't want the AI agent to be like, "Oh, hello, blah, blah, blah." And you're like, "I already said that three times." "Give me a customer service rep." Oh, that drives me nuts. It drives me crazy. I'm like — you're not fooling anyone, you're 40. I know you're an AI.
That shows your age a little bit. You look young, but even at your age, you're like "I want a real person."
Oh, yeah. I want a real person.
I was fighting with the Delta AI agent the other day. I'm like, "I already told you this. Just representative, please."
Yep. Yeah. I'm like, "Guys, if we're gonna roll this out, especially the big companies, like, can we roll it out, like make sure it's good before we actually roll this out? You guys are worth billions and billions of dollars. Come on now."
Right. Oh, so let's talk about the escrow thing. What's your take on that? I think it's great. Here's my take, and then you can tell me what your take is. I think it's great for people that can manage their money and for people to pay attention to what their insurance is and their taxes.
When I escrowed everything, I did not pay attention to my insurance and my taxes. It was just like, "Sweet, it's all taken care of. It's grand." It's easy. And I think that we don't shop around for insurance enough then. We don't understand our insurance policies. We completely ignore what the county's doing and what they're upping our taxes for. But it's not for everybody.
Right. It is not for everybody. So a lot of loans will not allow you to waive escrow, just as a heads-up. So a lot of like FHA and such, you have to have an escrow account. Now, conventional loans, when you put 20% down, you are allowed to waive the escrow, and then in your situation, right, it was after the fact, and you've probably had enough equity at that point where you could call them and say, "Hey, I wanna get rid of the escrow account."
Most loans won't allow you to. They will ask for that cushion. However, if you have the ability, right, you're putting 20% down on a conventional, or there's another loan that maybe you're going with that you can waive the escrow — I do think that you have to be very on top of it, right? 'Cause you don't want it to creep up.
Like for example, in Georgia, we pay our taxes in November in arrears, so we're paying it this November for 2026. And that's around Christmas time, right? So it's like, "Hey, if I got this bill for $3,600 and I haven't been putting money away, what am I gonna do? I have to pay this bill." And yeah, sure, there's a slight grace period, but you still have to pay your property taxes.
And so I would recommend if you are looking at waiving escrow, one, you at least get a high-yield savings account to put the money into every month. And if you're W-2, you get direct deposit, I would say to make it even easier on yourself to just have that dollar amount, whatever you figured for your taxes and your insurance — whatever, let's say it's $425 a month — and just have that portion out of your check automatically be deposited into a high-yield savings account, and it can be separate, right?
Like I bank with Chase, but my high-yield savings is with SoFi. So I don't even look at that account. And that would be my, at minimum do that, so it's already coming out. It's deducted from your pay. You don't have to do the extra step. You don't even worry about trying to spend that money, and it's at least accruing some sort of interest on it.
Yeah. And you're not — my thing is, is just you gotta have it, 'cause if you don't pay your taxes, you know, gonna auction off your house. You need to pay your taxes and your insurance. So it's not for everybody, but the majority of the people that listen to this podcast are financially savvy, or they wouldn't be listening to the podcast. We don't have, like, the Dave Ramseys fans of the world over here. And so why not pay for it yourself instead of give it to the bank, and they're gonna take more than maybe they need, or at least pay attention to those things as well.
What are the big things that people do in the middle of signing those papers that will completely be like — these are the best videos that you do. Like, these are my absolute favorites. So, like, how do people not know this? How are they making and buying all this stuff they should not be? So what are the biggest things that, what should people just not do before they close on the house?
Anything and everything to do with your Social Security number is off-limits. I don't care if you're checking out at TJ Maxx and they go, "Oh, I see you're buying a lot of stuff for a new… Oh, you're getting a house?" "I am actually." "Oh, do you wanna open up this…" No, we're not opening up any credit cards. There's no credit cards we're opening. We're not co-signing with our brother for a car because he got into a fender bender, and now he wants a new car, and he can't do it by himself 'cause his cre— we're not doing that.
We're not helping Dad on his car, or Mom, or boyfriend, or who… However your credit looked when you walked into the door and you had the credit pull should be exactly how it looks when you sign on the dotted line to close.
The only exception, and I normally don't even say this because somewhere someone's gonna be like, "Oh, well, she said I could use my Social Security number." The only exception to this is setting up utilities, because they do a soft credit pull, and they generally need to do it to set the utilities up, and I'm not gonna have you move into your house without running water. That is the only exception without picking up the phone first.
I don't care if it's 0%. The amount of people that are like, "Can I buy furniture at 0%?" I don't care that it's 0%. It's still a payment. You're still borrowing the money. It doesn't matter that there's no interest. They're still hitting you with a payment.
So how you walk in, unless your lender tells you otherwise, "Hey, we're gonna work on these things to get your credit in a better place," we're not opening new lines of credit. You're not closing lines of credit. We're not co-signing for anybody, no 0% interest, and the only place and company you can give your Social Security number out to is the utility company. That's it. That is the biggest thing is credit.
And we're not moving money.
Money is probably the second-biggest thing. Credit's the biggest one I touch on, and then money's after that.
So, it's interesting. I'll get one of two clients. I'll get the client that gives me one account that they get, like, half of their paycheck in, and there's no deposits on there other than their pay… Like, no withdrawals, no movement at all, and I'm like, "Is this the only account? Why is this just the — there's not very much in here. What are we doing?" Then I get the other client who will give me every account under the sun, the Robinhood, the Finicites, the Chase. Like, there's like 10 accounts, and I'm like, "Okay, well, let's throw all these out 'cause I don't need majority of these."
So I want you to consider this when you are purchasing a home. When us as a lender will look at your accounts, every program's a little bit different, but most traditional programs look the last 30 to 60 days at your statements. And if we're seeing things like the Klarnas and the Afterpays and, hey, you're getting a lot of Venmos, and it's the same amount, or you're sending the same amount of Venmos pretty consistently, those are things that are gonna be red flags.
So trying to keep your account as clean as possible, let's just call it 60 days before you apply, is gonna be the best. And we don't need all of your accounts if you're not gonna be using all of your accounts. So I normally recommend, again, opening a high-yield savings account and putting all of the money in there, letting it sit. That's the only account. And then that way it's like, hey, I don't have to sit here and try to explain myself for this or that, the other. All the money's there. It's a simple statement. We call it a day.
But when you start moving money, then it's like, hey, well, you had this $5,000 deposit from account ending in 1234. Now I need, since that money we're using, now I need to see that statement. And people get upset, and I understand, but if you don't want us to see all the accounts, don't move the money within 60 days before applying. Let it sit there and vest. And then during the process, don't move money around just frivolously.
I'm just so surprised people do that. I get you're excited about your house, but I don't know where along the way you thought you should go buy furniture and mess up all of your monies, and then maybe not get to close on your house.
Because myself as the seller, we just had a really bad experience with buyers at our last townhouse at — or our last rental we sold, and I'm like, "How do these people…" Oh, they're pissing me off as the seller, 'cause I want this thing gone, and you guys keep screwing around and screwing around and screwing around, and you are now making me mad. You know? How do you — just stop, and besides, you don't even know if the furniture's gonna fit. So just wait until you get in there. Oh my goodness.
Those are the frustrating ones. Or, sometimes we'll have — this has happened twice now, where, you know, as a lender, when I'm helping you purchase a home, I'm only on your side. I'm not on the seller side of the time. It's rare that I'm, like, helping configure everybody because it's buying from dad, right? Or a friend or something. It's very rare.
But a lotta times — not a lot of times, but, uh, it feels like frequently — there have been a few times where because I don't see anything on the seller side until title tells me or the attorney tells me what's going on, there's been three instances where the sellers have not had enough money to close on the house, and I'm like, "What do you mean we don't have enough money?" Like, there's not enough equity.
We didn't send these numbers. Like, their agent didn't run through this scenario beforehand, before listing the home and figure, "Hey, we're gonna be short 10 grand. Do you have that in the bank to, like, make up the difference?" So that's been a pain because we've had to figure that out, and it's not our fault, right? Hey. Are we still gonna be good? When can we close? Our interest rate lock is gonna expire in a few days. What are we doing here? Can you figure out the money? So that's been real fun, too, to really sit in.
Well, that's very responsible on seller's side. Wow. And that, again, a good realtor is important in that equation as well.
We're almost out of time, so I wanna get to some of the season buyer stuff. Can you explain jumbo loans?
Yep. So throughout the US, there is a conforming loan limit that is the standard, like, kind of like the floor across the US, and that's for conventional financing. Now, there are places that are considered high-priced mortgage loans, so HPMLs, and those are places like in a lot of places in California, areas obviously up and down the East Coast, places in Colorado, a few counties in Florida, but where they consider the cost of living is higher, therefore the loan limits should be therefore higher. Every year, again, it goes up.
So let's say in Georgia, we don't have high-priced mortgage. It just doesn't happen here. So, let's say you're trying to buy, I don't know, a $2 million home, and you wanna put 20% down. You're still going to be above, I think it's, like, $860-something thousand, whatever it is for this year. You're going to be above the loan limit. So it doesn't mean you can't qualify. You just can't qualify for a conventional, traditional loan. So you'd be looking then at a jumbo loan.
So every lender is different what they'll work with. I mean, there's lenders that'll only go up to loan amounts of $2 million, some go up to $5 or $10 million. And so when that happens, when you're looking at jumbo loans, there's a lot of different investors that back jumbo loans. Therefore, their guidelines can be slightly different than what you probably went through buying maybe your first home with a conventional loan.
A lot of people will put, that I work with, they put 20% down. It's just easier to go that way. It's not a whole lot different normally for jumbo loans. You normally need a higher credit score. Conventional recently got rid of their minimum credit score requirement. So, the pricing's not great if you have a really low credit score, but there's loans that we've done for clients like that. But jumbos, you generally have to have a higher credit score. They like to see — a lot of investors like to see a higher down payment. But at the end of the day, it's not a whole lot different than a conventional loan. It just means that the loan that you're taking out is higher than the ceiling for the county that you're in.
Okay. What about ARMs?
So ARMs, I'm not opposed to. I don't think they're a bad product. They can be. They can be a really bad product if you're not educated on them. So for example, I have a client right now, they are wanting to move, and they know once their last kid graduates, they're going to downsize. And I said, "Okay." So they said, "We would like to look at a seven-year ARM." Okay, wonderful.
Essentially, what an ARM is — it stands for an adjustable rate mortgage. So that means there's… Let's say you look at a 30-year fixed rate, so your payment will never move based on the rate. It can move on taxes and insurance, but never the rate. Then you look at an ARM, an adjustable rate mortgage, and there's different terms. There can be a 5-1 ARM, a 7-1 ARM, and what that means essentially is on a 5-1 ARM, for the first five years of the loan, the interest rate is fixed at whatever your lender tells you, and then after that five-year term, your interest rate can, and more than likely will change, and it can change every year. That's what the 1 stands for.
There's 7-6 ARMs, so seven years it's fixed, and then every six months it can adjust. And there are caps to this. There's ceilings as to how much it can go up or down, for the life of the loan and for each term. So you could move no higher, let's say, the 2% up or down each time it changes every year. And your whole spread could be 5%. So you get a 6% interest rate. Your rate could be as high as 11% eventually, potentially maybe. But each term it wouldn't go over, let's say, 2% over. So it couldn't be more than 8% the first year.
So ARMs, I think if you know specifically that you're planning to be in this home for a set amount of time, you can look at it. There are times, depending on credit, down payment, things like that, where it could be slightly better of an interest rate. But again, if you're going into that, please make sure that you — I know we don't have a crystal ball and nothing's concrete in this world, but you're pretty certain that you're going to be out of that home within that time, or if not, you would still be able to qualify to refinance that before that term ends and you potentially get stuck into a very high interest rate.
When we bought our place that we're in now, we got I think 2.5% loan rate 'cause we bought in 2020. But I had to switch lenders 'cause I was so mad at the lender that we had always worked with for years, 'cause he just would not shut up about this ARM. And I'm like, "Dude, you know interest rates are going up. This economy cannot handle a 2% rate forever. So I know interest rates are gonna go back up. I mean, unless we wanna collapse the economy. So no, I don't want an ARM. Why would I do that?"
And I just could not understand, like, why is everybody pushing this ARM? I want a fixed rate. I'll refinance if I have to, but I would rather — and I'm so glad that, like, at least I understood that because now today we would not be in a 2.5% rate. That would almost double your mortgage payment.
Like, and I really had to do my homework on it 'cause I had never heard of it. I didn't know what he was talking about, and he just talked about it so nonchalantly that I was like, kind of like what you were saying. If you can't answer the questions and you can't explain it to me — I mean, I'm not here to be the brightest light bulb in the bunch. I'm not gonna admit that. But I'm just like, if you can't explain it to my simple little brain, then we have a problem and I need to go do some research, 'cause that does not make sense to me why I would have an adjustable mortgage.
I'm glad you didn't take that, 'cause yeah. That would've moved your payment up substantially.
Um, and then, the final question I wanna ask is, you seeing a lot of mortgages being assumed? 'Cause I have come across this with clients where they've been able to assume some of those low interest rates. And if we can do that, how do we ask? How do we find out?
Sure. So because we don't service, I wouldn't then be part of the process at all because they would be assuming — if somebody came to me and said, "Hey, I want to buy this house," and they have an assumable mortgage, I would then be cut out of the scenario because they would be working directly with whoever that bank is that has the loan.
Now, assumable mortgages I think are great. But there is this lack of information behind them. So I'll give you an example. Assumable mortgages generally are government loans. So they are FHA loans, USDA, VA, non-conventional. Now, my first house that I still have, it's a two-point-something percent, it's an FHA loan. I will never refinance that loan ever, even though I will pay mortgage insurance for the rest of that term. It doesn't make sense for me to refinance. So if you are going into an assumable mortgage, you're probably gonna have mortgage insurance for the rest of it, which, hey, you're getting a two-point-something or three-point-something, it's okay.
But most people don't understand is you have to come up with the difference. So I'll give you an example. Let's say the house, the seller has listed at $500,000, and their loan amount is $300,000. Where are you coming up with that extra $200,000? So you have generally one of two ways to do this. The most common, in the sense of it's not the most common that people just walk around with $200,000 cash to put down on a house, but the easiest. The path of least resistance would be if you had the money yourself to bridge that gap. So in this situation, $200,000.
Now, if you don't physically have the money to bridge the gap between the loan amount and the purchase price — I forget what the company's called, and even if I remembered them, I don't know enough about them. But I remember a couple of years ago, a few years ago, they came out, when rates started to tick up, that they offer the second mortgage, essentially, for you to take on. So you would take on the first mortgage of two-point-something percent, and the second mortgage of whatever it is, six, seven, I don't know. So there is that I've seen. I don't know enough about them. I've not done enough research. They've been around.
But you don't do that. So we can't go to a regular lender to get the difference.
Nope. No. Because we would need to service. Normally, when you're going out to go ahead and get a second mortgage, they're already servicing the first. The only time that's not the case is if you go for, like, a HELOC or a HE loan, which we offer. But then in that instance, you already own the home, right? So that house is already owned by you. So to take out a second mortgage on a house that you don't own, it's a very different scenario.
Okay.
And I don't know enough about it 'cause we don't offer it. It's not common.
I guess I didn't even think about it being a second mortgage because you're assuming the first mortgage. Yeah, that would make sense. Okay.
Well, Jordan, I need another hour 'cause I have a whole bunch more questions.
Well, maybe the next one we talk, like, investor products and, like, ways if you're trying to get into investing and you want to look at a bank. Or, there's a lot. I mean, we could talk a whole hour just on, like, loopholes for people that have unconventional income. That's a whole… I mean, there's —
I think we may have to make this a series 'cause there's so much that we missed, and it's so — I think it's so important to educate people on it. In the meantime, though, where do they go to find you? How do they contact you? All the things.
Yep. So, my handle is anutterhomeloan. So instead of "another," it's anutterhomeloan, so a little play on my last name. I am on all platforms other than LinkedIn. I don't really dabble in LinkedIn anymore. But Instagram, Facebook, YouTube, TikTok, you can find me on any of 'em. I try to post the same content across all of them, so you should get the same info for the most part.
And then all of my information's on there. If you ever have questions, I don't charge for phone calls. It's a free call. You can schedule it. Whether you need credit help or you have questions on credit or a first time home buyer, I open those up normally three days a week. I have my calendar open for phone calls. So if you have questions, you need somebody who's just not gonna charge you anything, very transparent, please feel free. You won't be wasting my time. I'm happy to always take a phone call if I can help you.
Awesome. Thank you, Jordan. I appreciate your time and your willingness to debate even though we're not here to debate.
Yeah. Well, I appreciate you having me on. This was great. I loved how we were just going back and forth, and you're right, there was so much more that we could have covered, so hopefully we can do this again.
We'll have to do it — we will definitely have to do it again, 'cause I think the investment side is also super important, and we didn't even touch on that. So thank you very much. I appreciate it.
Yeah, thank you.
All right, you guys, you know the routine. Comments, questions, concerns, maryjo@withoutthebank.com. And you have a fantastic rest of your day.
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