Episode #12 – Unlocking Homeownership: A Guide to Mortgages

Welcome to the Millennial Money Moves Podcast. The podcast where we’re breaking down the financial stuff that actually matters to your real life. In today’s episode, we’re driving in the world of mortgages.
Maybe you’re considering purchasing a home for the first time. Maybe you just bought a home and you’re wondering, when will I ever get to refinance this thing?
Or maybe you’re just thinking about it and you’re curious, what’s it gonna take to achieve my dream home? What kind of down payment? What are interest rates doing?
This episode’s for you. Blake and I are sitting down with seasoned mortgage professional Jamie Fernandez, who has been helping his clients navigate the home ownership process for years. A lot of good tidbits in this one.
We appreciate you for listening. This content is purely educational and does not tend to be financial advice or financial planning.
Please consult your professional financial advisor or tax professional to receive tailored advice to your personal situation. Babin Wealth Management is not responsible for action taken by listeners based on educational content provided.
If you would like to receive personal financial advice, please reach out to Babin Wealth Management directly at babinwealth.com. Let’s make moves. Welcome everybody to another episode of the Millennial Money Moves podcast.
I’m your host, Sean Babin. We got our Goose Blake Bandani back at it again with your boy. Good to see you, man.
How you been?
You already know the one and only baby. Good to see you.
The one and only.
The one and only.
Yeah, man. Good to see you again. Good to be back in the recording webs here.
We have a very special guest for our listeners today. We got Jamie Fernandez, who is a mortgage broker, entrepreneur, burial hustler. So, thanks for having you on.
I really thought this would be an awesome conversation for us to just get to know you a little bit better. And then let’s talk about what the heck is going on in the mortgage world right now.
Like, I feel like a lot of our generation that doesn’t own a home wants to own a home. And it feels like a daunting mountain to climb. I love the gifts where it’s like, I should have bought a home when I was five.
I should have invested when I was five. Like that’s what’s going on right now. And I think a lot of our generation just feels kind of at loss when they see what interest rates are and how expensive things have gotten since COVID.
So love to dive into that and just kind of, and then some money moves from you brother. So thanks for being here. Good to have you on.
Cool.
No, it’s a huge honor to be on the podcast.
You guys are killing it. I see it.
Appreciate you.
Ever since it first came out, I’ve been watching religiously.
What a guy.
So I’m on those money moves, you guys.
Let’s go.
Yeah. Iron sharpens iron. I think that’s probably the biggest thing that has helped me out in my career.
Being a mortgage broker has been a blessing in itself. And it’s funny because I kind of fell into that world is how it worked out for me.
So just to kind of give you a little background on me, I’ve been in the finance industry now for coming on 12 years, 12 on my 13th year now, and it’s been awesome. I started with the banks and it’s crazy. I started with JP Morgan Chase.
That was like my first job ever. And I remember when I was working there, I used to see the financial advisors and I’d be like, dang, like I see how they be moving it. You gotta start a suit on.
I was like, man, I gotta strive for that. I used to always, I was a no name teller, man. And I was just trying to figure it out.
You gotta start still, Merchlin.
100%.
And that’s really where I really started to grind for it. I said, hey, I remember telling the manager, I was like, hey, I wanna be in that guy’s shoes over there and appointing Mr. Pretty Guy in the scene.
Wink tips.
Man, three piece suit, the guy looks sharp.
And I used to be like, wow, what a power move. And I really dedicated my life to banking and in that short time, I was 18 years old when I started with the bank and I just didn’t look back.
I really, every year I progressed and I got into a new position every year with JP Morgan back in the day. They used to have a rule, you had to be in your role for at least one year before they can give you a promotion.
And so finally got to the point where they gave me the opportunity to take my investment licensing. I jumped on it. I got my Series 6, my 63.
I applied for my SIE. I thought I was, and I was like 21 too at the time. So I thought the world was behind, you know, the world is mine.
I can do whatever I want.
The world is your oyster, baby.
Oh yes.
You can sell mutual funds now. Let’s get it.
Uh-huh, I felt like I was up there, you know? And then I made a healthy transition over to this credit union working for JP Morgan for a while in the investment world and just consumer banking and that was cool.
And then moving over to the credit union, that’s where I got a lot more dangerous, I’d actually say. That’s where I really started to learn how credit works, how you can really understand someone’s finances.
The credit union had different programs, a little bit more hands-on than a retail bank, like these big box office brand names that you know of like Chase or Wells Fargo or Bank of America, just name a few. And working at the credit union was so cool.
I learned so much about the process, how credit is actually used and how you can actually use it to your advantage and get you in a better position financially.
I learned a lot about debt consolidation and then going into getting out of the credit union. I ended up kind of joining the ranks a little bit in the retirement 401k sales world and that was fun. I love it.
Shout out MassMutual, Phoenix.
Shout out Mass, yeah, MassMutual was an amazing company to work with.
I really got to spread my wings. I really got to rub shoulders with some big names. Definitely some big names or some big hitters in that industry and that just gave me more confidence.
I think that was the biggest thing is in this world, in this realm that we’re in. Confidence is key, you know, and then you got to back it up.
So, you know, you could talk the talk, but you got to walk it too, you know, and that’s where I really got to learn hands on the confidence piece for me, I think exploded during those years.
Well, real quick, Jamie, fun story, fun fact. I had moved from the East Coast to the Phoenix office for MassMutual, that’s where I met Jamie. And I still had East Coast coverage in Phoenix.
So I was coming in at like 536 in the morning to stay on time on the East Coast. Jamie joins the team and I never seen anyone hungrier. And I kid you not, I think what you said, Sean, serial hustler is what should be your name tag, Jamie.
It’s like after going through training, which I don’t know what a couple of weeks a month, Jamie’s like, Hey, I want to join you. I want to sit on your calls.
And this guy would come in the office at like 536 in the morning, sit next to me, tag along on my phone calls. I was like, this guy’s going to do it, man. He’s going to make it.
So just had to give you that shout out, Jamie.
I appreciate it, man. And kudos to you too, Blake. I mean, it was huge, man.
I definitely came in with that mama mentality.
I love it.
Everywhere I go, I’m like, okay, who’s first? And get ready to play for a second, because I’m coming. That’s the type of mentality I always had.
And it’s funny because coming into it, understanding how finance worked, I was really able to incorporate it with my real estate portfolio. And when I got to Mass Mutual, I was at a, I felt like I was at a height of my career.
But then coming into Mass, I was like bottom of that list. You know, I felt like dang, I was like a good size fit. I think I grew my pond that I was in.
And so going over to Mass Mutual, I found out I was little fish in the pond. And then seeing somebody like Blake, I mean, that guy, talk about killers, man. That’s one of them for sure.
Like I said, iron sharpens iron, real recognize, real whatever the saying is. I knew I was like, that’s the guy right there. I was like, that’s the top guy.
And so I really wanted to learn from him. My shift didn’t start until nine, but I didn’t care. I wanted to get there.
I used to hear him in on calls. I used to pick his brain and definitely made a better man out of me doing that.
Well, and then I would leave around too and Jamie would stay till five. So I was like, man, you might surpass me quicker than I thought.
I definitely put in that work and I really couldn’t have done it without you, man. And it was a lot of help. Yeah, it definitely was super influential to my career.
And then Mass, whether the viewers know or not, Mass Mutual went through a buyout. They got bought out by Empower and when they did, I remember the sales director there was like, we’re not getting sold, we’re fine.
Don’t listen to the Reuters articles and we’re doing teams calls in the background like, oh, I think we might be getting sold here. It’s, he’s selling this a little too hard. And to be on the up and up, that’s when I decided to say, you know what?
I really love financial consulting. I feel like I’m in a spot in my career where I had just the best of everything. I was definitely a Swiss Army knife in my career at that time.
I knew a lot about investments. I knew a lot about financial debt consolidations, putting yourself in a better position. Financially, I’ve said, hey, you know what?
I think being an independent mortgage broker would probably be a good spot. So I got my license in 2021. Or I’m sorry, I’m lying to you.
In 2020, I got my license. I jumped on with an independent mortgage company. It was really solid.
I loved working with them. And the dream really began from there. I really started pushing hard.
I really started pushing hard, applying myself, reaching out to people, hitting up my current sphere, my SOI, my sphere of influence, people that I knew, that knew me and said, hey, Jamie’s now an independent mortgage broker. How can I help you out?
How can I get you guys going? And man, you’d be surprised. 2021 was such a great year.
And then 2022 with mortgage rates really took a huge, huge uptick. And when I say uptick, I mean, we’re talking, I remember a client, I had them approved at 3.99 back in 2022. And this was in March.
And beginning of March, look it up, you can Google this info. And it really did happen. It was a huge jump.
I would say by April, that same client would have gotten four and a half. And a couple months later, it was turning into five and a half, six and a half, and then seven and a half.
And then we were going all the way up to about, I was seeing clients getting approved at around eight or 9% interest rate.
Wow. And that’s scary as a buyer, right Jamie? Like, and I think that’s to Sean’s point, like, and that’s why it’s such a good, good timing to have you on there is a lot of those clients probably never bought a house before either.
So they don’t know what to expect, right?
It’s crazy. I bought my first house in 2013. That’s when I bought my first house.
And when I purchased it, my interest rate at the time, I was 20 years old when I bought that house. The 19 just turned 20.
And I remember when I bought it, four and a quarter, and people were looking at that time, the rates were actually a little bit lower than that.
I remember people were telling me, Jamie, you’re getting hosed, you’re getting robbed, you know, this interest rate is super high. And I remember at the time, I was like, honestly, you guys, it’s all perspective.
I was like four and a quarter to me, sounds like it’s doable. I was more focused on, I knew better because I was more focused on what I could afford. I live within my means.
I said, hey, yeah, the rate’s four and a quarter. You guys are getting approved at three and a half or three, but my mortgage payment was 600 bucks a month. So at the time I bought a two bed, two bath townhouse.
And I was like, I can manage these payments. It’s not a problem.
Jamie, I might kill someone for a $600 mortgage right now, to be honest.
It’s crazy because I still have that payment today. I still have that mortgage payment to this day. I still have that home.
I always kept it, interest rates fixed. People are like, oh, why don’t you ever refinance in 2021? I had the opportunity.
I told myself, you know what? I’ll leave that money in there. I’d rather just have that sucker pay down.
Well, I think also you hit a key word or key phrase, living within my means.
And I think that’s probably a dream client for Sean, is someone that can recognize budgeting and not living outside of those means, right? And I think that’s just so impressive.
And it’s probably tracks back to just being in that industry so early on in the bank and stuff like that, huh?
Yeah. And I’ll even throw in a Millennial move early in this club. That’s definitely it.
Let’s live within your mean, folks. If you’re listening to me right now, you’re coming out of my mouth. Yes.
Live within your means. Most, I’ll tell you what I’ve learned from from being around the block here with these with these loan officers is different.
A lot of loan officers will tell you, hey, you’re qualified all the way up to a million, two million dollar pork purchase. Doesn’t mean you’re gonna go out there and go get a million, two million dollar home.
I always tell my clients, hey, what are you comfortable with paying monthly? Let’s start with that. If you can’t handle a monthly payment in the $3,000, $4,000 range, then why are you looking for houses in that price point?
It doesn’t make sense. Yeah, you can qualify on paper, but then IRL, right? In the real world, in real life, how are you actually going to make it happen?
How are you gonna survive out there? That payment’s killer. And so I always try to put that in perspective for my clients when I talk to them now as they go, hey, what’s something that’s within your budget?
And then once they tell us, and it’s usually reasonable, most times when clients come to me, I’ll tell you, it’s a 90-10 split.
90% of them have already been looking at Zillow, they’ve been looking at those million-dollar homes, we all know we can’t afford. I’ve been looking-
A kid can dream, Jamie, a kid can dream.
Hey, you know, and I be dreaming. And I look at that and I go, oh wow, these houses are so cool. I play around with that little mortgage calculator that’s on that Zillow app, and I get a good idea.
So I would say 90% of my clients tell that come to me, already come saying, Jamie, I have an idea of what I want to get, and then the other 10% are clients that are just really brand new, they’re green as the grass grows.
Someone put an idea in their head to say, hey, let’s go buy a house, and they said, okay, let’s do it, but I don’t know where to start. And so I really tailor every client is like a snowflake.
You really, you’re unique, you really got to tailor them down, you got to adjust to their speed and their level and their personality.
So, you know, it’s very similar to, you know, in the financial advisor world too, you really got, you have so many different personalities of people you got to work with in different walks of life.
And so you definitely have, patience is a virtue in this game for sure.
Yeah, man, well said. And I think it’s so interesting because buying a home, you do have to start with that monthly payment and you got to be upfront about like what you can afford right now. It’s the complete opposite when you go buy a car.
You never tell those people what you can afford because they’ll just stretch that five year loan to 10 years and make you get your ass in that $80,000 car. Yeah. Anyways, but yeah, man, I think let’s just start there a little bit.
Like I love that that’s your bread and butter. One of the reasons I wanted to have you on here, like getting some green first time home buyers into a house.
Like the American dream is owning a house and that used to be, it kind of still is like the gateway to the upper middle class.
And it just feels like, and since COVID, like if you didn’t buy a house in 2020, 2021, you’re kind of like, it’s very difficult unless you’re making a lot of money or get some kind of inheritance to buy a house with a two or $3,000 a month mortgage.
So walk me through like what you’re seeing out there and kind of how you go about working with kind of these first time home buyers and what are maybe some pitfalls and traps and just some things that some, some listeners can easily take away from
I think some of the biggest, some of the biggest key takeaways, if you’re, if you’re listening right now and you’ve never purchased a home right now, you don’t know where to start and you want to, you want to get in there.
It’s really just having the conversation. I think that’s the first step is just find, it’s almost like having a map in front of you. You got to find out where you’re at first.
You got to find out where, where do you stand? And what I actually do for my clients is most loan officers like to jump right into bed and pull credit. They want to just jump in there.
Let’s pull credit. Let’s see what’s going on. A credit pull dings you seven points on average on a hard pull.
So fun fact to know, I like, I work a little old school and I tell all my clients, I work old school. I like to look at your income first. Let’s talk about your, your debts.
I have the mental, the aptitude to say, Hey, you know, I can kind of figure out where you’re at. I have a good idea.
You can, you know, when you’ve been in the industry for so long running numbers, you hear it and if it doesn’t sound right, it doesn’t sound right. And so from my point of view, I really try to, I put myself in the driver’s seat.
I got, I got my clients in the back seat and I’m telling them, Hey, buckle up. These are the rules of the road. These are things that you need to understand.
It really is just having that first initial conversation of, okay, this is how a mortgage works. Most people, I’m at the busiest, I’ll be honest, I’m at the busiest point in my career right now. I’ve never been busier, which is such a blessing.
I remember, thank you. I remember in 2022 when rates were, were, were just at all time highs. I remember just telling my wife, like, wow, how am I going to do this?
You know, I don’t know if it will be much longer. I was like, it’s, it’s slim pickings. I remember I was scraping the bottom of the barrel.
I was pressing. I was trying to make it, I was trying to make a dollar out of a nickel. I really was back then.
And it’s crazy to see the growth in just these last three years. It just been exponential, literally two, if not three X from the year before. And it really just started blowing up once we started seeing more and more growth with, with the market.
2023 was kind of a weird year. 2024 started to pull back a little bit. And that’s when we started seeing a huge growth.
That’s when the three X came in was last year. And then this year we’re on track to about double what we did last year. And most of the most of our clientele, it’s such a healthy spread that I have that I’m working with right now.
So for example, it’s anywhere between FHA, which is the Federal Housing Administration, the government type loans to help first time home buyers. It gives them an incentive. You often hear the term when people say, oh, I’m a first time homebuyer.
So I get first time homebuyer benefits. Right. And it’s true, but to a certain degree, there are, there is some devil in the details with that.
Your next level up from an FHA loan would be your conventional loan, which also still offers first time homebuyer programs. It just offers you better incentives. So that means that you can put a little bit less money down to buy the home.
Not always the best option. If you do have a little bit more money to put in, that’s kind of where somebody like myself would tell you, hey, this is the way I would structure your loan.
So you can have the best of both worlds, have the payment that you want and have something affordable in your day to day for you and your family.
And then, well, I was just saying, Jamie, let’s unpack that too. So, I don’t know, I think if I’m giving you my personal opinion, it’s always felt like you should have a little bit of a nest egg when you’re ready to buy.
But then, kind of just hearing you in the last 15 or so minutes, it’s, am I wrong to say that maybe you don’t necessarily need a huge lump sum when you’re ready to buy?
Like if you are pretty tight with your budget and you can make, do you really need a hundred grand in a cash account to start looking? Or do you need 20 grand? Do you just need to cover that up front?
Like what do you typically see or what do you recommend to clients? If they come in, you’re looking at income, you’re like maybe you should wait a little bit, start saving or like is there a…
And maybe there’s not, but is there like a golden time where you should say, hey, I’m ready to start looking, I feel pretty secure?
Yeah, that’s a great question. I think pro tip would be that’s also falling on along the lines of living within your means.
So when we look at your income, we compare your income on a month to month basis compared to your monthly debts that you’re paying on a month to month. The monthly minimums, not the extra amount that you put in over the minimum, right?
It’s the monthly minimum. So if you have, for example, like a very expensive car payment, we got to talk about it. We got to talk about how we can get you restructure.
Because at the end of the day, if you have too much debt and you don’t have enough income, it’s actually going to be represented in the form of a percentage. And if that percentage is too high, the bank won’t prove you.
Is that the DTI, Debt to Income? Do I got it?
That’s the DTI, it’s certified NMLS on your way, man.
But no, to your point, if your DTI comes out pretty high, that’s more of the golden rule. Like let’s get this down before we worry about a cash account or let’s get the DTI number down.
And does that ultimately allow you to get approved for better rates, of course, or not necessarily?
Yeah, it does actually. Great question. So the lower your DTI is, the more conservative, your file is going to look to the bank and the bank is going to get you better.
It’s crazy. When you are at the end of your rope, the bank charges you the most. Crazy.
They almost decent advise you to want to buy a home. But when you have great credit, you have great credentials, you have a great credit score, you have great financials, the bank is more incentivized to give you better deals, better offers.
They actually help you out more on your mortgage. So really cool pro tip on that end is the lower your debt to income is. So for example, let’s say in the world of finance, FHA can go up to 56%.
I don’t recommend it. That means for every dollar… Break that down.
Yeah. Every dollar of income you make, 56 cents pays your debts, your monthly minimums. And so I really like to have my clients under 50.
And honestly, if you’re asking me, I’d loved it for you to be under 45. Under 45%. I think under 45%, debt to income is a very healthy range.
A lot of people qualify with 45% debt to income and still have leftover, you know, that remaining amount per dollar that you can apply towards your monthly minimums, your method of live, your style of living.
If you have a certain way that you’re accustomed to living, those things are all going to play a part in that equation.
And then I’ve also heard before, like, I think you touched on it, but like a first time home purchase versus a conventional purchase, right?
Break it down, like, I’m sure people that maybe don’t, hopefully they go through you, but they’re talking to someone like, and maybe everyone has, maybe you ask 10 mortgage brokers and 10 have different answers.
But in your opinion, like, do you do the first time home purchase route? If you have the means, do you go conventional? If you can cover it, like, what do you think on that note?
So the biggest thing, and it’s a great question, it always feels a little loaded because I might unpack a little bit here, but I’m going to try my best to kind of stay on the straight and narrow on this topic.
So with FHA, what’s cool with when people say first time homebuyer program, it’s usually just a hook just to get you involved, just so you can tell people and brag and say you have a first time homebuyer program on your home.
FHA minimum down payment is three and a half percent when you’re buying a home.
The reason why a lot of people would go FHA versus conventional sometimes when you’re buying a home is if your income’s a little bit on the lower side, that income’s a little bit higher.
FHA loans are a lot more forgiving, so they’re a lot more forgiving. So it’s for somebody that’s not a perfect star, but they want to buy a home, and they really want to do it.
And they said, hey, I have another partner, but my partner isn’t all the way with their income, so I’m not going to have them on the loan. But I know that once I get this home, we’ll be fine.
As long as that individual can qualify on their own, we can get them a mortgage, and they have a plan. We’ll go for a full seam ahead. Another thing to also keep in mind as well is with FHA, you also have access to lower interest rates.
So FHA always think 3.5% down, lower interest rates, and they have a little bit more lax guidelines for approving people.
I’m sure, why would I ever not do it if you’re allowed to do one? Why would I not do it? I mean, where does conventional come into play?
So conventional comes in because you could put a little bit less down.
Some people say, hey, Jamie, I want to get into a house. You can get in if you’re a first time homebuyer on a conventional loan product. You can get in with as low as 3% down.
So it saves you stuff about half a percent. There is mortgage insurance. You have to keep in mind to the mortgage insurance and the interest rates are a little bit higher on conventional.
But if the condition of the home, let’s say has a couple things that would cause a problem on an FHA. FHA is government guidelines.
So if there’s certain, if an appraiser goes out there, for example, an appraiser is somebody that’s going to tell you what the value of the home is.
If somebody goes out there and they see some things that are actually violating an FHA guideline, you can’t even go FHA.
So that’s why some people will actually, and I’m actually going through that right now with a client where there’s so many repairs, the excess is over $5,000.
If the property has an excess of over $5,000 in repairs, the appraiser might just say, hey, you know what? And the seller doesn’t want to pay it.
We might just have to switch this over to conventional where conventional has a lot more relaxed guidelines on actually the power of the home to be habitable.
So if the home is habitable, meaning you can live in it, you know, it’s not the prettiest house on the block, but it does have some things that FHA would hold you up on.
You can switch it to conventional and still get you approved and still get you in the home. Little bit less of a down payment. There’s trade-offs, you know, higher interest rate, not that much more crazier, but it is something to consider.
And if someone’s going to put 20% down, last thought on this one is whether you go FHA or conventional, if you put 20% down and you go FHA, you’re still going to pay mortgage insurance for the life of the loan when it’s FHA, because it’s
government-backed. If you go conventional, since you’re going through private banks with a conventional loan and you’re putting 20% down, mortgage insurance is no longer charged to the loan.
You can save yourself $100 to $200 a month just in that mortgage insurance piece. It’s got its trade-offs.
Is there a dollar threshold on FHA loans? Will they go into the jumbo range? Could you be like, hey, I want to buy a million-dollar home as a first-time homebuyer?
Great question.
FHA definitely has its limits. Even conventional has its limits, too. For example, FHA, we’re looking at about $530,000 roughly, is the FHA Maricopa County limit.
Now, every county is different depending on what state you’re in, too.
So if we have listeners in other states, easy way of checking it and finding out is just typing in, you can go to Google, type in FHA County Loan Limit and put in the county that you’re living in, and it’ll tell you what that limit is.
Every state’s different just depending where you’re at, whether you’re in California, Florida, those numbers can change for sure. Texas. Arizona, though, it’s $530,000.
So anything that you find as a home, as long as your loan amount is $530,000 or less, and there’s a little bit extra to that $530,000, but we’ll just, for the sake of the commerce, easy numbers, $530,000 or less, you can use an FHA loan for those
types of products. So what’s great about that, and one last touch on FHA is you can also use down payment assistance programs, and you can actually apply down payment assistance for an FHA home purchase of up to that $530,000 limit.
So for example, I had a client last year we helped out with, we did an FHA down payment assistance program, how those programs work is that the local housing authority or some local authority will give you a grant or it can be a loan depending on who
you talk to. So make sure you reach out to me, I can get you set up.
But basically how it works is that you’ll get a grant or a loan in the amount of whatever the minimum down payment is, which is 3.5%, and then the borrower is responsible, the buyer is responsible for their own closing costs.
Now, if you can get the seller to give you some credits, those are incentives for them to buy your home, you can cover those closing costs completely. So in reality, you can get into a home with under $1,000 all day long.
As long as you can get seller credits to cover your closing costs, and if you can have a down payment assistance program where the local authority is gonna cover your down payment, it’s a home run. That’s how a lot of people can do it.
So a client of mine, now the only trade off to doing a down payment assistance program is the interest rate is higher, and it is higher than a conventional loan.
We’re talking about rates in the sevens, high sevens, low eights, is what you’re gonna be looking like.
But if you’re buying a $400,000 home at three and a half percent, you’re saving yourself quite a bit of money north of $14,000, $15,000, depending on just a down payment alone that you don’t have to pay.
And if you do a grant program, it’s completely forgivable. You don’t have to pay it back. It’s free money.
This is a grant. Now, some people will often opt in for a loan on that down payment, and it comes in the form of a second mortgage. It’s the second payment that you have to do.
You make your mortgage payment like you normally do. You have your second payment. The reason why someone would get a loan is because the interest rate would be a little lower too.
So you really get to pick your poison as far as where you want to go when you’re buying a home. If you want the government to pay, it’s going to come at the most expensive cost. Get a loan is a little bit less.
If you pay it out of your own pocket, you’re guaranteed to get the lowest interest rate possible.
If you go through where you have to cover and include mortgage insurance, which did that come out because of the whole market crash? Has that always been a thing? I don’t even know.
That’s a great question.
I know with mortgage insurance, it’s really just a protection that the bank puts. The bank wants to protect the bank puts. Yeah.
I think that, correct me if I’m wrong.
It might have been around.
Yeah. It’s been around for a while. I know that.
But it definitely got high-end after the market crash, I bet, where banks were losing.
But is that for the life of the loan, you pay mortgage insurance or does it get cut off?
So it just depends on what type of loan you get. So if you have an FHA loan, you’re going to pay mortgage insurance for the life of the loan. Whether you like it or not, you just got to pay it.
What most people do is they’ll get into an FHA loan, and then when you have enough equity, and that equity amount is if you have at least 20% of equity in your home.
You can always switch it over to conventional, you can drop off that MIP is what we call it, mortgage insurance. For FHA loans, they call it mortgage insurance premium or mortgage insurance for short.
But when you go conventional, if you have less than 20% equity in your home, you have to pay mortgage insurance.
Or when you do a conventional loan, you’ll notice it’ll tell you like from years 1 through 12 or 1 through 10, it’ll tell you your payment’s going to have a mortgage insurance and then years 12 and on or years 11 and on, you’re not going to have
mortgage insurance. The idea is that when you get to a certain point on a conventional loan, if you have 20% equity, and this is free game for anybody listening right now, but if you’re sitting right now at home and you’re listening to this and you
have a conventional mortgage and you have more than 20% equity in your home, you can actually call the servicer. You pay a small fee to have an appraiser come out. The appraiser comes out and says, hey, your home is worth this much.
And compared to what you actually owe on the home, if you have that 20% equity, they actually will remove that BMI off of your conventional loan, which is such a sweet hack.
Yeah, they’re not going to call you and let you know that you’ve hit 20% equity in your home.
Oh, no. Yeah.
You can pay that for the rest of your life if you don’t take any action.
Crazy.
So that’s some free game that a lot of… I’m so surprised how many people don’t know that.
And I always try my hardest to tell my clients, especially when we go conventional, hey, once you have 20% equity or we start seeing market corrections, where we start seeing rates coming down, values of homes usually go up.
I always tell them, think of it like a teeter-totter. When you see home prices go up, chances are interest rates are going down and vice versa. It’s definitely a good time to say, hey, when you think that…
And you can always call me and ask, and I’m more than happy to just jump on and say, yeah, no, hey, you know what? You’re ready for this.
Call your servicer or you can always refinance it if you’re in an FHA loan and you want to get rid of that mortgage insurance premium. That’s where we can definitely put some damage on that loan.
I think today’s day and age, Blake started this whole conversation off with it was the idea of that you need a bunch of money down payment to buy a home.
I think now it’s just the conundrum is like, you need that money to make an affordable monthly payment for the homes that cost.
It all depends on your market and your areas, but starter homes up here in the North Phoenix, North Scottsdale area are $750, maybe $650. And so, one, those are beyond the FHA limit to just put pretty much nothing down.
So you got to come up with something.
So long-winded question here, but have you seen it pick up in co-buying agreements, like people that maybe aren’t married, but college roommates or something, like buying homes together to try and make that more affordable to them just to get into
Oh, absolutely.
And I would almost definitely have it down in writing, always have a contract. You can definitely get yourself into some weird situations.
For sure.
But I would say…
We shook hands, Jamie.
Was that?
We shook hands. You promised that half of it was mine.
Words bond, right? Yeah, no, I would say, I think that’s a great idea. If you have, if you’re listening right now and you have a buddy or two that you guys say, hey, let’s pull some money together, let’s buy a house.
Once it goes over that $530,000 loan limit, then you go into the conventional side of it. And then even conventional has a limit. And once it goes over that limit, then it goes into a whole other realm.
And we’re talking jumbo loans. And those are high cost, high value loans. With that, though, going back on topic with that idea, I have been seeing quite a few people that they’ll get qualified on their own.
They don’t like what they’re qualified for. And so that’s when you’ll hear a loan officer say, hey, let’s get another applicant on the line. Let’s get somebody else to join on with you.
Like a co-signer kind of thing.
Bang, there it is.
So it’d be exactly like that. It’s kind of like the car dealerships, right? Where they’re like, hey, you know, we got you here for this loan at a 360 month deal.
You know, we’re trying to get you qualified. We need, you know, can we get mom on? Can we get, you know, someone you trust?
I would tell you, if you’re gonna do a mortgage, get someone you trust completely. It’s somebody that you trust. Have some type of understanding, write it down.
Maybe have a nice mutual agreement of like, hey, if we were to sell this property in the future, we could split the profits 50-50 after the loan’s paid off or whatever split you and your friend decide to do.
But I have been seeing that more and more people have been getting on just because interest rates are still high. Interest rates are still high compared to where they were back then. And so, that’s the biggest thing.
Interest rates are high, home values are high, and they haven’t budged not a lot since the tick-up in interest rates.
And I think that’s the conundrum that most people who aren’t home buyers sit in right now. It’s like that $700,000 home that has now become for whatever reason in certain areas of the country a starter home. What is that?
You tell me, but I’m throwing out numbers here, like $5,000 a month. You know, if you’re putting a certain amount down, 10%, 20% down.
So, I’ll tell you, it’s a very wide range, because it’s just every person is so different. Their financials are so different as well. And one thing that I will say that…
So, there’s this report that goes out every month. Her name is Tina Tambora. She comes out with this report called the Crawford Report.
And in the Crawford Report, she actually talks about market analysis. She sees how, just specifically for Arizona, for the Arizona market. And she talks about how the values of homes, how they’ve been and how they’ve swung.
The last report that she had was actually a couple weeks ago. And she was talking about how expecting prices of homes to have a correction of 5%.
So, for what it’s worth, I’m not telling you that that’s gonna happen, or that it’s written in stone, and that’s, you know, start buying houses now.
But it’s not to generate more activity, but it’s just the truth that you’re probably gonna start seeing houses take a little bit of a downtick on pricing of homes. And it’s just because, mainly because of the tariff situation.
I think that’s probably what everybody’s all freaking out about.
The market makers, when you see people in Congress saying certain things, and then you have the Federal Reserve with Jerome Powell not making changes to the interest rates, that’s also gonna, that’s gonna affect us.
That’s definitely gonna affect, because the Federal Reserve really does have a say on are we gonna cut interest rates down, create more economic easing into the economy, or are we gonna have to tighten up, you know, and put it in a position where
And I think that dance is when the economy is forever kind of walking.
And it’s crazy that there was that like opportunity or that moment in time where rates were like 0% and mortgage rates were 2.2 for 15 years and 2.9.
And should have bought.
I try to tell all my clients to like, don’t, it’s just like trying to time the stock market. It’s like, don’t wait for that moment. Like I don’t think I have no idea.
No one has any idea if rates ever go down that low. But that was always the thing in 2021 and 2022 is like, I’ll just wait for them to come back. I’ll wait for them to come back.
You know, it’s working with the professional like yourself, Jamie, like if homeownership is your dream and what you wanted to get into, there are ways to make it work.
Now, is it going to be like you said, that 800 million dollar home that you see on Zillow that your wife sends you every week of, hey, look at this one I found in the price of 1.4 million? No, it’s probably not going to be that half.
But if it’s a realistic goal for you, like you can still do it. It’s just, again, like you said at the jump, living within your means.
And that is the hardest thing for any of us to do, especially as we start making more money, we do that spending creep. And it’s just, we want more, we’re making more, we want to reward ourselves more.
And that is the capitalistic environment that we’re in. And just we as kind of humans, we want more, need more, bigger, better, badder. So yeah, man, I appreciate you sharing that because that was, you know, the dream’s not dead.
That’s what I really wanted you to have you on here. It’s like the American dream is alive and well. Homeownership hasn’t gotten harder.
Absolutely. Are you going to get into that luxury home or that is your first home going to look like you thought it was? Probably not.
Is it going to cost what you thought it was? Probably not. No, but it’s still a possibility for you.
And there’s a lot of creative ways that working with someone like yourself, not a quick in or, you know, 1-800-CHASE-BANK, you know, working with an individual that can really get to know you and your finances and craft a game plan for you, I think
And I do want to share one really cool win.
This one’s always stuck with me. This one’s always stuck with me. And I’m not going to lie, man.
It makes grown men cry. I think it’s pretty cool. I remember I had a client, he had an ITIN, but an ITIN is somebody that has an identification taxpayer number that you have when you don’t have a social.
So that means that you have either a permanent resident status to be here in the United States. And this all happened actually in 2022. And when rates were at an all time high.
And I remember this borrower came to me and he told me a situation. He had three children, three children, all young. Him and his wife were living in a two-bedroom apartment.
Him and his wife slept in one room. He had all three kids in the other crammed in there. And it’s an apartment, so it can’t be a huge room, right?
I remember him telling me, man, I really want to have a room, each room for my kids. That’s what I want to have. I want them to each have their own identity.
And as a father myself, I have a father, I have one with another one on the way. At the time, my daughter was going to be born that year. And I remember just it hit me.
I was like, wow, like, you know, it’s crazy. He got declined by three other lenders. And the main reason for it is because it just wasn’t traditional financing.
He didn’t, he couldn’t qualify for a traditional home mortgage. And this is for somebody that can’t qualify FHA or conventional. There’s actually another realm and it’s called non QM.
It’s non qualifying mortgages. So it’s a whole nother realm of financing. And it’s not just for people that have items.
It’s actually people that are also business owners.
If you’re a business owner and you write a lot off on your tax returns and you can’t qualify with your tax returns, normally there’s bank statement, there’s bank statement loan products that we can use.
So basically how that works, we use the last 12 months of your bank statements and we use those deposits as your income. We don’t even look at your tax returns at all. And I remember telling my client, hey, let’s make something happen.
It’s going to be a little more expensive because non QM is one of the most expensive loans out there. I’m not going to lie to you. I’m going to be as upfront as possible.
Those are going to be one of your most high cost loans. But with that process, we got them approved for a home out in Phoenix. So four bedroom home, four bedroom home with a big old backyard.
Wasn’t in the prettiest condition. This borrower was in the construction industry. He invited me last year for a cookout.
He goes, Jamie, I wanted you to come over and check out the house. And I was like, oh man, I’ve been waiting for the call. I was waiting for you to tell me that.
I came by, I got invited to the carnesada, as they say. And I got some carnesada with the fam. And it was so cool to see how much addition, how much change he’s done.
The house is not even recognizable. I pulled up and I was like, wow, he painted the whole outside, painted the whole inside, new flooring. Each room is customized to the kids.
It made me cry, I’m not gonna lie. I remember getting back in my car and being like, dang, I made a huge impact in that person’s life. And that was somebody that was crammed, three kids crammed in a room, to now each kid has their own room.
Seeing them running around smiling in the backyard, it’s nostalgia, man. It’s like, wow, this is why I do what I do. I’m so blessed.
I’m so blessed to be in a position where I could really make a change in people’s lives. And we really do make a difference. And so I take my job super seriously, my career, I take it super seriously.
And then that was a huge eye-opening moment for me, seeing how happy it was. And I just remember getting in the car, my wife’s like, you just finished smelling onions or what?
And I go, well, Sean’s point, the American dream is not dead, right? And you made it happen, man. That’s awesome.
Yeah, man.
It was really cool to see that.
You have the ultimate job, man.
You’re putting roofs over people’s heads. Like, that’s awesome and very heartfelt and comforting.
And especially when you can take what might have not been a good situation or like maybe not have worked out for that guy into something like changing the stars and putting them in a house. Like, that’s insane. Like, that is an awesome win, man.
Yeah, definitely.
No, that one’s always going to stay with me in the books. I’ll always think of that guy and that fan. It was probably the first time I’ve seen, like, so much happiness out of just that family.
And that guy, I remember him telling me we’re hanging out. He’s like, yeah, you get the good piece of meat, man. You got me in the job.
I started laughing. You’re too much. And I remember him telling me, hey, you know, when I was leaving, he goes, he shook my hand and he held it.
Like, right when I shook his hand, he held it just an extra second longer. And he looked at me and he’s like, hey, thank you. And that was just chills, man.
It was the coolest thing ever.
Awesome story and glad you shared it. Because yeah, I said it again. It’s just cool, man.
It’s good when you do right for good people and you can make their life better by just doing your job. I think that’s what you’re passionate about. Me too.
I know Blake is like, we’re both, we all three sit in awesome positions to help people be better, financially equipped, more successful, whatever the case might be.
And we just have to show them like kind of that vision in that line and just care, like just want to help people kind of cross over that finish line.
So I think an awesome place to end this conversation, man, is let’s jump in to some money, like what you would consider, like if you would look back 10 years and you had to talk to younger Jamie, like what were some money moves?
Like, hey, I’m glad we did this. And you know that you might tell kind of our generation out there that might need some direction in real estate. Just, you know, I loved what you said at the jump.
That’s a money move. Know your budget. No living within your means.
Huge.
That is the hardest thing in my entire job for all listeners out there.
As a financial planner is getting somebody to sit down and go over their income and expenses. No one wants to look at it. No one knows what the hell is going on with it.
Out of sight, out of mind, Sean.
It’s the only place you have to start.
It’s like we have to figure out where your money is going and no one wants to do it. So we’ll do a whole episode on budgeting. It’s going to happen.
It’s got to happen. So Jamie, kicking it to you, though, buddy. Just hit us with some money moves that you feel like you just got a you got a shout out there for us.
Yeah, definitely.
If I would have talked to young Jamie, I would have told him, don’t buy that really nice Mercedes Benz. Yeah, car payments are the worst.
Don’t do car payments. Big car payments screw you.
That will kill your purchase. They call it purchasing power, how much you can afford on a home.
So if I were to talk to young Jamie again, I would have been like, hey, stick with your your busted up, souped up V6 Mustang that you got and tough it out right until the wheels fall off. That’s what I would have told myself.
I did listen to myself when I said, live within your means. I did do that. But the car payment thing, I can’t stress that enough.
I just got dumb lucky because the mortgage was so low. My car payment at the time, I think was 300 bucks a month. And I thought that was highway robbery.
But the car payments I see on people today, four or five times, I saw a $2,000 a month car payment. I go, what do you drive, a tank? It was 2,000 a month.
You know, I remember.
It’s not worth it.
It’s not. If you’re asking me a little page of just staying lean, stay lean as you possibly can. That’s what I would have told myself to stay lean on.
What I mean by staying lean is saving up your money, investing it with somebody that’s super knowledgeable like Sean. And they could tell you how to invest that money. I would have invested money sooner.
I think I would have done that way earlier in my life. If if someone had told me, just gave me a little bit more guidance on that. I learned so much out of just being around in the banking industry.
I learned so much by just hanging around with these top dogs and seeing how these guys didn’t have car payments. They didn’t live, they all live within their means.
I found out right away, you get one or two that, you know, they like to think that they’re… Yeah, yeah, Leonardo DiCaprio in the week one, right?
But then you also had some people that were just, I’ll never forget this one, a client of mine, he used to always come into the bank and he had overalls, he had dreads, he always looked dirty.
But every time I did a withdrawal for him for 100 bucks, he had almost two, a little north of $2 million in his account. Wow. And I used to be like, wow, don’t judge a book by its cover.
I used to look at him and people would make looks at him. And I would be like, no, you wouldn’t even know it. That guy has more money than you would ever think.
And so I would tell myself as a solid pro tip, stack your cheddar, stack up your money, save up as much as you can, get yourself prepared. Don’t have don’t get yourself into high debts. Don’t don’t do that.
Don’t don’t try to keep up with the Joneses. Keep those payments down. And then three, I would say a partner.
Partnering is not a bad idea. We do a lot of investor loans, too. As long as you have it down in writing, I think you always put yourself in a winning position.
And you’ll speak clearly, because a lot of people have this idea of like, oh, let’s get a house together and let’s figure it out. But they don’t figure out the logistics of it.
And that’s where you want to have someone like myself that could say, hey, you know, wouldn’t be a bad idea to think about this and this if you guys are going to do this together. And then I would have told myself to buy more homes.
That’s what I would have told myself. I would have told myself, buy more, buy more, Jamie. You’re doing good.
In 20, was it? I want to say right around 2017 or 2018, I had three homes. I had three homes under my name.
And by law, when you buy a home, there’s something called an intended occupancy.
So that means that you intend, you’re signing something at the closing saying that you intend to occupy this property as your primary, meaning that’s where you’re going to go home to rest your head at night.
And you have to stay in that property for at least one year and a day. Okay, that’s the intended occupancy. After a year and a day, you can go buy another property if you can afford it.
And so what I would have told myself is every year and a half, every 18 months, check where your finances are at, seeing if the property you can rent it out, so you can go out there and buy another property.
And saving up in that 18 month time frame, just so you can get yourself another home. Doesn’t have to be a bigger home necessarily. I know people that have 50 doors, they own 50 homes.
And all of them are all in the sub 400 range on a purchase price. So you don’t have to go buy a million. You could sell all of them and buy a million dollar property.
He chose not to. He definitely picked a more, his route was, okay, more people can afford 400, $300,000 homes. Not many people can afford to rent out a million dollar property or $850,000 property.
There’s a demographic for it, sure. But will there be enough people to do it?
And do you have enough time to cover those hard costs, what they call them, your mortgage payments, your utility bill payments on that home while you’re trying to get it rented?
So there is a fine line of how you can plan and get and set yourself up for success. So definitely if you’re interested in wanting to do fix and flips, you want to do rental, you want to create your own rental property portfolio. Definitely.
I’ve been around the block a couple of times. I’ve done it myself. I’ve done fix and flips.
I currently hold three properties still to this day. Working on the fourth now. And it’s nice when you can put yourself in a position where now I feel like I have 50-year-old Jamie telling me what to do.
And it’s something that I wish I told myself when I was younger, like, hey, keep stacking up. You’re doing great. And at the end of the day, comparison is a thief of joy.
So don’t compare yourself to someone else’s progress.
You stay in your lane, do the best that you possibly can, consult with professionals like Sean, Blake, myself, consult with us so we can guide you in that direction and tell you, hey, you’re going right. You’re doing great.
I think those are some pro tips to really take home.
That was beautiful, man.
Well, it really was. It was good. I might put a teaser out there.
We’re going to have to have you back because we didn’t get into it. But, you know, I feel exponentially cooler when I say HELOC. But I want you to dive into, you know, how to take advantage of HELOC.
Well, what should people be wary of when they’re dealing with mortgage brokers?
Right.
I’d love to get your insight on that on another episode. But Jamie, man, you’re a true professional. We appreciated it.
Thank you.
You’re the man.
Yeah, brother.
Thank you so much for coming on. Learned a lot from you. And yeah, dude, just thank you for being the gentleman that you are and the family man that you are.
Yeah. Blessed to know you, buddy. So thanks for all the insight.
Thanks for coming on. Blake, good to see you, buddy. Have a good weekend.
And real quick, just to end it off, for Jamie’s time.
Jamie, how does someone find you? Is it LinkedIn?
Thank you.
Yeah, that’s solid. Oh, I love that. Thank you.
How does someone find you?
So shameless plug.
Shameless plug. I’m going to pull up my Instagram right now. Let me throw that in there real quick for everybody.
My email is jf at niftylending.com.
You’re going to have to spell it nifty.
Yeah, nifty is spelled N-Y-F-T-Y, lending.com. And my Instagram handle is jamie underscore mtg underscore advisor.
Follow the guy. He’s got your back. We appreciate you, Jamie.
Thank you.
I appreciate you guys. Thank you so much. It’s a blessing.
Thank you guys for having me on.
Absolutely, man. Thanks for coming on. See you guys.
Take care.