How to Buy a House: Guide to the perfect home buying process!

00:00:13 - Mike Mills

Well, I guess we're going to go I can't even talk today. We're going to both go on together there. So hello everybody. This is Mike Mills Mortgage and Finance, and I am your host, Mike Mills of with Mike Mills Mortgage and Finance. And today I don't have a bunch of teases and special hooks and whatever put into play because I brought in a good friend of mine today. We're just going to get right after it. This is Jen Gaudio. Hello everybody. Say hello Jen.

 

00:00:39 - Jen Gaudio

Hello.

 

00:00:40 - Mike Mills

Get your clapping and cheering going on. So Jen is a repeat offender. She's been on my show multiple times now because she's a good friend of mine. And anytime I need someone to come help me talk about mortgages because we talk a lot about real estate, I talk a lot of things to help agents and I talk a lot about investing and things of that nature. I'm even doing. Have you seen my little series that I started with my daughter about?

 

00:01:04 - Jen Gaudio

Yes, child finance.

 

00:01:05 - Mike Mills

She's really fired up about it.

 

00:01:06 - Jen Gaudio

By the way. I think that's super cool. I'm going to make Lily watch.

 

00:01:08 - Mike Mills

Let me just tell you how excited she is about that. Let's just say there's car rides that involve us screaming at each other on the way that we went to the bank yesterday to open a checking account and I made her take some pictures and do a little video recording and she was real thrilled about that.

 

00:01:24 - Jen Gaudio

That's awesome though.

 

00:01:25 - Mike Mills

Yes. No, it's great. But see, I'm not even proclaiming to be an expert on this. I'm just presenting the hey, this is me and my 16 year old daughter's journey for the first time. Me telling someone in my house. It's one thing for me to tell you how you should do your finances and check. I mean, I have a little bit of experience in this, but it's a whole other thing for me to tell my daughter who thinks that I'm a moron 90% of the time and isn't going to listen to anything that I say.

 

00:01:51 - Jen Gaudio

I think it's awesome though because they don't really teach us stuff in school.

 

00:01:55 - Mike Mills

No, not at all.

 

00:01:56 - Jen Gaudio

I mean they have like a dollars and cents class, which is what Lily is in right now.

 

00:02:00 - Mike Mills

That's a joke.

 

00:02:01 - Jen Gaudio

But they don't teach you?

 

00:02:02 - Mike Mills

No, they don't teach. And you know know, I think there is a one size fits all to some extent when it comes to personal finance, but there's little nuances to it. And depending on what your parents taught you, because that's the shame of it is you know as much as what somebody else taught you or what you chose to go find out on your own. And I grew up in a house and I think you are the same that there was little to no financial education at all. I didn't get it at school and I didn't get it at home. As a matter of fact, it was kind of the opposite. It was like, you don't get to ask, and we're not going to tell you. So if I even ask, how much money do you make? Mom? Oh, my God. You want to talk about shut the blah, blah, blah, every explicit out there, it's none of your GD business. It's like, oh, okay. Was that your house, too?

 

00:02:53 - Jen Gaudio

Yeah, my grandmother just we didn't talk about any of that stuff.

 

00:02:57 - Mike Mills

You don't talk about it. It's not right or wrong. I don't even blame my parents for it because they weren't told, and there wasn't, like, anything in the public zeitgeist that was like, hey, you need to kind of explain how your kid to your kids, how money works. Like credit cards, for example. And the boomer generation didn't understand credit cards. I still think many of them don't. And they certainly didn't pass down that information to their kids of, hey, you're buying that pair of shoes for $100, but you're actually paying 125 the first month that you have them, because the credit card interest is 20%. Right. And that information is not being passed on to kids. So, again, I don't even blame the parents because they didn't know any better either. But if you do know better and you are aware, then it's your responsibility to pass that information to your kids.

 

00:03:45 - Jen Gaudio

Absolutely. We did that with Alyssa. She made her first big girl purchase on a credit card that we added her as an authorized user, and we went through the steps, and we sat down and talked about it. But, I mean, you're absolutely right.

 

00:03:54 - Mike Mills

Nobody talks about no, no, they don't talk about don't. They don't tell you what they want.

 

00:03:58 - Jen Gaudio

You to get into.

 

00:03:59 - Mike Mills

Debt.

 

00:03:59 - Jen Gaudio

Lots of debt.

 

00:04:00 - Mike Mills

Yes. I'm still trying to figure out who they are, by the way, because I blame they all the time. Those days are a bunch of assholes, and I wish they would stop doing that, but I don't know who they are. I'm still trying to work. I mean, I have an idea, I think, but then you get into conspiracy theories and all kinds of stuff like that. All right, so anyway, let's move on to what we're actually here to talk about today. So, again, like I said, we talk a lot of real estate stuff, but we don't get into the weeds on mortgages very often on the podcast. But that's why I always bring you in to do that, because we can do that together, because I could sit up here by myself for an hour and talk about mortgage pages and say everything I know, but that's boring. So it's much better to have an intelligent person across the way from me thank you. That we can even though I think.

 

00:04:45 - Jen Gaudio

You'Re, like, one of the smartest people.

 

00:04:46 - Mike Mills

Sure. You say that all the time. I appreciate that, but we can go through this. So the point of today is Jen and I are going to kind of explain to you now this is for Realtors, who are wanting to have a resource to help explain to clients how the process works. So if you have a client that you're working with and they're getting ready to buy a house and they want to know every detail about how this is all going to play out, this would be a good podcast for them to listen to, because I think we're going to go into quite a bit of pieces here. Not just the lending side, but just what to expect from buying a house, getting under contract and all that stuff. And I'm sure when it comes to the agent side, we'll probably maybe misstate something or make a couple of mistakes. So if we do ahead of time, apologize, but also we're going to talk about pull the curtain back a little bit on the mortgage side of things, kind of what you can expect when you're getting a mortgage. So as Realtors, when you talk to your clients, you can tell them, hey, when you're going through this process, this is what you can expect to happen. And the importance about understanding what to expect to happen is that when things don't go the way they should, it should raise some red flags for you. And the problem that I think a lot of people have right now as homebuyers is a. Either you've never done it before because you're a first time. This is something you've never gone through, or B you have done. It before, but it was ten years.

 

00:06:02 - Jen Gaudio

Ago and things have massively changed.

 

00:06:04 - Mike Mills

And things have changed and so you only don't know what you don't know. So turning it back to the whole thing about personal finance with your kids, it's like, how can you blame somebody for something that they don't know? So what we're going to do is kind of like I said, pull back the curtain a little bit, show you how it works on the lending side of things and go through some few scenarios, tell you what to watch out for, where you can have some pitfalls and all that kind of stuff. So let's just go ahead and get right into it. So first, let's start off, Jen, if you were Susie homebuyer and you were going out there today to start looking for a house, what would you do? Where would you go?

 

00:06:37 - Jen Gaudio

Well, I think majority of most buyers, me included, yes, I will sit on my couch and just see what's currently on the market. And honestly, I want to say what's really picked up quite a bit. I mean, Realtor.com is a huge one, right, that people just sit on it's user friendly and people just sit there and scroll through it, but then you also see them on your Facebook feed. Now, like, properties are just popping up constantly on your Facebook feed. So I think that's where the peak of the interest kind of starts, whether it's on their Facebook feed or if you're just like me and you just kind of want to constantly see what the houses that are on the market.

 

00:07:12 - Mike Mills

Like in your neighborhood or around or.

 

00:07:14 - Jen Gaudio

If there's cool houses like new floor plans or stuff like that. But that's kind of where I would start. But me personally, I don't really ever go on to Zillow just because I just don't really find it very user friendly, pretty.

 

00:07:28 - Mike Mills

So I use Zillow a lot when I look at properties.

 

00:07:30 - Jen Gaudio

You're also older than feel. Not that you're that much older, but.

 

00:07:34 - Mike Mills

Really taking shots here, man.

 

00:07:36 - Jen Gaudio

But I just kind of feel like Realtor.com from a user perspective. I just find it very easy to go through. I can go out, I can go in, and it doesn't lock up on me. The pictures are easier to look through. I just find it much easier.

 

00:07:50 - Mike Mills

So we got realtor.com. You've got redfin. Do you ever use a Redfin? Okay. I think a lot of people I was at something today and they were talking about the statistics for redfin that they've either been flat or down for users, which, I mean, I think a lot of the sites are down for users because there's not a lot of people, like, searching for homes right now for the rate, reason or whatever. But that's down a little bit. Zillow is obviously a big player Realtor.com, and then another one that's come up. Have you heard of homes.com?

 

00:08:19 - Jen Gaudio

No.

 

00:08:20 - Mike Mills

Okay, so Homes.com has a very interesting little thing that they're doing right now. So this is another thing that we talked about today. We're not going to get into all the lawsuits that are occurring with real estate agents and commissions and all that stuff, but this does relate to some extent because Homes.com has put a big marketing blitz out ever since all this stuff happened. And now Realtors Realtors out there hearing this. They can chime in on this, but they're getting stuff in the mail constantly from Homes.com. So my wife's a Realtor, and I signed her up for Homes.com.

 

00:08:51 - Jen Gaudio

She is my first.

 

00:08:52 - Mike Mills

Yes, she was always your first.

 

00:08:56 - Jen Gaudio

I was her first, that's right.

 

00:08:59 - Mike Mills

Yes. You all were each other's first. I know. That's so wonderful. But I signed her up for it just to see what they offer. And I'm actually in my market update that I publish on Tuesday, I'm going to break down kind of what they offer, what they do, but just as a little bit of a precursor essentially right now, and I say right now, there is no cost to sign up for Homes.com as a Realtor, okay? So if you want to put your listing on Homes.com, you can. I don't believe that they have relationships with the MLSs, because I believe their whole business model is to not have relationships with the MLSs, because all this lawsuit stuff the MLSs are having some issues and they're trying to create a national one. At least it seems that way. And so as a listing agent, if you put your listing on there, then anybody that clicks on your listing to look at it is your lead. So they are not like Zillow. Zillow entire business model is built on realtors paying for leads through. Right. And obviously that's suffering a little bit. Right. Well, Homes.com does not do that, nor do they charge right now to be on their site. Now I think it's just like anything else. It's like Facebook didn't charge forever for you to be a member, but then they take your ad space and all that kind of stuff. So nothing's ever let's let's be honest and clear about that. But so that's another site that people are going to to start looking at Homes is Homes.com. And they've picked up the they're I think they're second behind Zillow right now as far as, like, traffic is going through their site. So that's a way you can look for the now the next step would be, okay, I found a house that I kind of like. Right, okay. So Jen, what do you do next as a buyer, usually? Well, I think most what do buyers do? Not what you should do.

 

00:10:45 - Jen Gaudio

I think what most buyers do is they find a house and then they call their agent.

 

00:10:48 - Mike Mills

Correct.

 

00:10:48 - Jen Gaudio

Well, an agent.

 

00:10:50 - Mike Mills

Their agent. What if they don't have an agent or their agent?

 

00:10:53 - Jen Gaudio

A lot of the times I feel like they end up calling the agent that is on that listing.

 

00:10:56 - Mike Mills

Correct.

 

00:10:57 - Jen Gaudio

Because they don't know.

 

00:10:58 - Mike Mills

Right.

 

00:10:59 - Jen Gaudio

Or they end up calling no.

 

00:11:03 - Mike Mills

Okay.

 

00:11:04 - Jen Gaudio

Or they end up calling their aunt who just recently got licensed.

 

00:11:08 - Mike Mills

Yes.

 

00:11:09 - Jen Gaudio

And is maybe doing one transaction a year. Yes. And that's going to be their go to person.

 

00:11:15 - Mike Mills

Correct. So the general process right now is that they will go out and start they look for an agent. Sometimes they find it on the site. Now everybody's a little different how they do this. Sometimes they will call their best friend who just recently bought a house and said, who did you use? Sometimes a family member is a realtor, sometimes a close friend, whatever. And more often than not, I would say, or at least it seems like from my point of view, this is anecdotal that most people who are buying a house are working with a realtor that was referred to them from someone from someone else. Not typically just going on the Internet and finding a stranger most of the time. Now, I'm sure that happens, or it absolutely does happen.

 

00:11:53 - Jen Gaudio

Well, I mean, if you've never bought a home before, you don't know.

 

00:11:55 - Mike Mills

You have no idea.

 

00:11:56 - Jen Gaudio

And what if you don't know anybody that has bought homes before? I mean, you don't know where to go.

 

00:11:58 - Mike Mills

That's right. So as a consumer, you have now been referred somebody an agent that's coming to you. And then if you were a consumer looking to buy a house, what do you think you would look for in a Realtor that you would want to hire? And then we'll get to the lender side of things, which as we are, but what would you start with realtor.

 

00:12:18 - Jen Gaudio

Wise for both Realtor and lender? I feel like it's kind of one of those things that's like you go to a dentist, gets your teeth checked, and you go to a mechanic to inspect your car. Right? I'm not saying that. And this is kind of more on the lender side.

 

00:12:37 - Mike Mills

Let me phrase this something real quick. We both work for a mortgage company.

 

00:12:43 - Jen Gaudio

Yes.

 

00:12:43 - Mike Mills

We both do loans.

 

00:12:44 - Jen Gaudio

Yes.

 

00:12:45 - Mike Mills

Well, I mean, you do some loans, but you're our mechanic in the back, putting the loans together, making sure they get through the process easily. And we work with a lot of Realtors. Okay. So sometimes when we say things, it might be be careful because we don't want to upset anybody or put anybody feel like, by the way, we're not talking to anyone directly, we're just having a conversation. So we don't have people in mind when we're saying these things. But just to put a little bow around the situation, maybe our opinions are going to be a little biased.

 

00:13:16 - Jen Gaudio

It is a little biased.

 

00:13:16 - Mike Mills

Okay.

 

00:13:17 - Jen Gaudio

But I do kind of feel like it's kind of like one of those things that we do work for a mortgage company. This is our craft. Correct. We perfect this every day. Just as a heart surgeon. That is their craft. Right. Not saying anything about bigger entities who might dabble in multiple crafts. Not like your family doctor probably can tell you a little bit about your blood pressure, but might not be able to go in depth as to what's going on in your heart. Okay, so my suggestion is always to find a lender. That that is what they do.

 

00:13:49 - Mike Mills

Yes.

 

00:13:50 - Jen Gaudio

And that is their craft.

 

00:13:51 - Mike Mills

Correct.

 

00:13:52 - Jen Gaudio

Not also possibly taking your money, car.

 

00:13:55 - Mike Mills

Loans and checking accounts and all the other stuff.

 

00:13:57 - Jen Gaudio

Because if you're in America, that's just something on the side that they do, right? Yeah, it's just something on the side that they do. That's not their bread and butter and that's not what they do every day. So are they going to be great at it? Some might be. I'm not saying that they're not. I'm just saying majority of the time.

 

00:14:11 - Mike Mills

Well, what you're saying is proven in how this works. Is that the reason that when you talked as a buyer, if you talk to your Realtor and they will have lenders, that they are like, hey, I would work with these people, there's a reason they don't get money from it. There's no reciprocate. It's just, hey, I want your transaction to go well, and I want you to have a positive experience. So I'm going to give you to somebody who I know is going to give you a positive experience, and there aren't I don't know, do you think there's any realtors out there that are like, hey, call the American Bank and work with them or call the one that's running after you and work with them? I don't know. If nobody listens to this chase and bank of America, okay. Is anybody really referring they're not really referring the banks. No.

 

00:15:00 - Jen Gaudio

Now, for realtors, for me, what has been really important to me and what I have noticed from even people that I have referred to realtors is, geographically speaking, majority of the time, realtors will go anywhere and everywhere. They will. Okay? But what I do find that is also important is that just kind of maybe if you find a Realtor, I'll take your wife for is I feel like sometimes she's like the face of Mansfield moms. I just love Susan first and foremost, but she knows this area. She knows Tarrant County very, very well. She has a book of business here in Tarrant County. She knows all the areas you should be the perks, the downsides, the cons. She knows all those things. So you kind of want to work with somebody who is going to know those things in that general area. If I were to call Susan and say, hey, I think I'm looking at a house in Houston, she'd probably say, okay, cool, let's go do it. But you might not know that market as well. She's still going to be absolutely helpful, and most agents are still going to be very helpful in the area you're looking for. But I kind of feel like especially if you're trying to raise a family or looking for a particular area, you really kind of want to want somebody that one knows what they're doing as far as the transaction and taking care of you and walking you through the process so that you're educated. Because at the end of the day, this is the biggest purchase you're ever going to make. And the more you know about it, that's in anything, right? Like, we sit there and scroll and educate ourselves on I don't know how to make a pumpkin pie, and we're going to sit there and scroll and watch all these videos. Well, you need to kind of do the same thing with your agents.

 

00:16:32 - Mike Mills

Well, and I think that a really good question to ask an agent is how many transactions have you done? I think that's a fair question because the thing about that is that if you've done a good it's like with anything, right? When you pay the plumber to come to your house to fix your toilet, it might take that guy 15 minutes to fix your toilet, right? And you paid him $300, so you're like, what the hell am I paying for? Okay, well, you're not paying for the 15 minutes of service that you got. You're paying for the 20 years of experience that's right. That he's made mistakes, got the wrong equipment, broke pipe. Hopefully not. But all of those things have occurred. That's what you're paying for, right. So when you're hiring an agent to represent you, especially in today's market, I think it plays a big role. It's like, I would love to hire my nephew and aunt and uncle or whatever, but if they've never done a transaction or if they've only done one.

 

00:17:27 - Jen Gaudio

It just might be a learning curve.

 

00:17:28 - Mike Mills

Yes. And you say might is an important word because I would say the vast majority of real estate transactions go pretty smooth. Would you agree with that?

 

00:17:37 - Jen Gaudio

But then they also have mentors too. Yes, new agents have mentors.

 

00:17:39 - Mike Mills

They work for brokers, and they have help. So it doesn't mean a new person can't do it. And if you have a relationship with that person, you feel like they're going to represent you, then they're still totally fine. But I do think the transaction question is a fair question to answer or ask, because that gives you at least an idea of like, all right, am I going to be like the guinea pig here, or does this person know what they're doing and got it and.

 

00:18:00 - Jen Gaudio

Has the support to do so?

 

00:18:01 - Mike Mills

And, oh, by the way, just because you've done 100 transactions this is true necessarily mean you know what's going on. Either there's a give and take on all this, and I always personally in every decision that I make, honestly, when I hire vendors of any kind, is what's my gut tell me and how do I feel about it? Because if I look at that person, I feel like they're feeding me a line of BS. I don't care if they I think.

 

00:18:24 - Jen Gaudio

That'S in anything, you just got to.

 

00:18:26 - Mike Mills

Go with what your gut tells you. All right, so now we've chosen our agent, and now let's just say we're using the lender that they recommended, or we've called a couple of people, or however we want to go about that process. So when you're talking about pre approvals now let's go back to our original conversation. So in a perfect world, when would you go about getting pre approved?

 

00:18:49 - Jen Gaudio

So in a perfect world, if it was me, yes.

 

00:18:55 - Mike Mills

And I would say you, knowing what you know about the business, what you.

 

00:18:58 - Jen Gaudio

Would want to do is you would want to get if you know you're going to want to be in a home within the next four months, I.

 

00:19:05 - Mike Mills

Would say six or six.

 

00:19:07 - Jen Gaudio

Yeah, but from our perspective, right, your credit report is going to be good for 120 days, but anywhere between four to six months is great. Because let's say you feel like your credit might be a little bit questionable, then maybe start that process at six months so that your lender can help put you on a plan to get you ready for when you will become ready.

 

00:19:27 - Mike Mills

Or if you're self employed.

 

00:19:28 - Jen Gaudio

Yes, all of that. So we can look at all this stuff ahead of time, sooner rather than later. So it's kind of like shopping for a car. And I actually just had this conversation with my brother, actually, two days ago, his car got totaled. He's got to get a new car. And so he's like, okay, well, let's go looking for cars. And I'm like, how about we call the bank first and we're going to get you pre approved first to buy a vehicle? Yes, once you get pre approved for a vehicle, then we go buy a car. Right, because you don't want to walk in and go get a car. Just like you don't want to walk in with an agent and go do all these showings and find a house. And then all of a sudden, okay, now we need to go get a lender. And then the financing side, a lot of the times people feel like is the hardest side, when in actuality, if you get pre approved first and you go through that side, the hardest part is going to be finding the house. Yes. Honestly. Yes.

 

00:20:17 - Mike Mills

Well, and another part of that that I don't think people consider often, we do, obviously, because we have these conversations every day, is when you say get pre approved. What a lot of people hear is, especially people that have good financial situations, is that, what are you talking about? I make good money, my credit is good, I have the cash. Who cares? I'll be fine. You probably will. I would say 90% of the time. You would. And it's not that you would have an issue. The issue is then what kind of house are you trying to buy? Okay? Because in your mind, because you haven't shopped for a home in ten years, you're like, Well, I'm selling my house for $400,000, so I want to go buy a $600,000 house because I'm trying to step up. Right, right. Well, then let's assume you don't get pre approved. You go find the house that you love and that your wife loves or your husband loves and your kids love and everybody's in love with the house. And then you call the lender and like, hey, look, I know I'm good to go, but I got to get this pre approval letter, blah, blah, blah, blah, blah. And you go through the whole process, and then let's just even say you get under contract tracked because you don't have a great lender who doesn't explain to you everything up front. And then you get that contract, then you get the disclosure from the lender, and it says your mortgage payment is $6,000.

 

00:21:26 - Jen Gaudio

Yeah.

 

00:21:27 - Mike Mills

And you're like what? My mortgage payment right now is 2500. Well, yeah, but you bought that house ten years ago, and you paid 200,000 for it, and you're selling it for 300,000. And since then, the market has appreciated dramatically. Rates are higher, and property taxes. So now you're paying $6,000. And if you'd be like, well, if I'd have known that, then I would have maybe scaled it back. So the point of getting pre approved isn't just can you buy the house?

 

00:21:53 - Jen Gaudio

Correct.

 

00:21:53 - Mike Mills

It's what kind of house do you want to buy based off of what is available?

 

00:21:58 - Jen Gaudio

Yes. Are you trying to buy in Highland Park or are you trying to buy in Azel? Right. Still a rural area. And I feel like the education process of that whole pre approval side. So you have your pre qualification side and then you have your pre approval side. So your pre qualification side, we get your information. A lot of times we go by what you're saying. If you're a W, two borrower, not self employed, you're paid salary, you've got this much in the bank, right? Okay, cool. I think we can go ahead and get you pre qualified, pulled your credit, you look great. But then the pre approval side is where we get everything from you, right. So we can go ahead and get you into underwriting, get you fully approved so that at that point, there's no financial stress as far as you trying to figure out, one, can I get approved? And two, what are my realistic expectations of what it's going to look like? And I feel like lenders need to have a lot of originators. I know you do have that kind of conversation with clients whenever you're pre qualifying them because you're kind of saying it's kind of like, well, it's very opposite because I feel like people who have never bought homes before, they think, okay, well, it's similar to buying a vehicle. And the car salesman is like, what do you want your monthly payment to be? And we've all been trained to never tell the car salesman, I want my car payment to be this. Right? But it's a little bit different in the mortgage lending world because I kind of need to figure out where you want to be because that will be about what size house or what amount you're able to go buy.

 

00:23:21 - Mike Mills

And just to clarify on that point too, because we're only going to be here for about an hour, we're going to try to go through all this. So there's so many facets to this that you can drill down to. But just to clarify on the what you want your payment to be thing, there are four components of most payments, right? Principal, interest, taxes, insurance, and mortgage insurance. Mortgage insurance, once you know what type of loan mortgage insurance is, what you pay if you don't have 20% put down. Mortgage insurance. Once you know what type of loan you're doing, your credit score, your debt to income, et cetera, that number is set. It will not change. So you can't adjust that number. Your property taxes, once you pick the house that you want to buy, that number is set. It cannot be adjusted, and it's vastly.

 

00:23:58 - Jen Gaudio

Different depending on where you want to buy.

 

00:24:00 - Mike Mills

And there's a million reasons why that's right.

 

00:24:02 - Jen Gaudio

I always tell people, are you trying to buy a Midlothian? Are you trying to buy an Texas?

 

00:24:06 - Mike Mills

Or are you buying a house that has somebody's owned for 20 years and it's worth 250,000 on the tax rolls, but you're buying it for 450? Okay. That's a whole other thing. And that can change dramatically, by the way, and then you have homeowners insurance, which is substantially higher these days.

 

00:24:24 - Jen Gaudio

It is.

 

00:24:24 - Mike Mills

It's crazy.

 

00:24:25 - Jen Gaudio

New rates just came out, too.

 

00:24:27 - Mike Mills

But that number two, unless you're using a discounted service that you, by the way, don't want to do. Because if you ever have a home on your claim, on your home, it's a nightmare. And I won't name any companies, but I suggest the agent model, like working with a company that has an agent available that you can pick up and call. But even that premium, those agents, they're set, like, they can't adjust or whatever. So if you're getting a cheaper premium from a particular company, it just means that they're taking something away.

 

00:24:52 - Jen Gaudio

Something away. It's kind of like car insurance. I relate everything to cars. So it's either liability or full coverage. You don't need it until you need it.

 

00:25:00 - Mike Mills

That's right. But the point of that is that that number can't change very much. Right. 25, $30 if you're using a reputable good company, and then your principal and interest, which is the only thing that the part that actually pays the loan, that part you can impact, but not unless you have a substantial down payment, because ten grand saves you about $65 right now. Or there's a substantial change in the rates in the market. Right. Because an 8th of a point, even on a $350,000 house, is about $25. Right. So unless the market changes a quarter, a half, a full point, you're not going to see your payment change hundreds of dollars. So the point being is that you can impact your payment, but you can't really impact it dramatically. And once you pick a house, your payment pretty much is what it is. So that's why we ask, hey, where do you want your payment to be?

 

00:25:49 - Jen Gaudio

And where are you looking?

 

00:25:50 - Mike Mills

And where are you looking?

 

00:25:51 - Jen Gaudio

Where are you looking?

 

00:25:52 - Mike Mills

Right?

 

00:25:52 - Jen Gaudio

Yeah.

 

00:25:53 - Mike Mills

All right, so now let's say that we found the house, right?

 

00:25:57 - Jen Gaudio

Now, before you find the house and you've gotten pre approved or pre qualified, pre approved, whichever one, there are some things that are really important that lenders communicate to their buyers. I know you do this. I do this. A lot of originators do this and that's the do's and don'ts of now. We're in the middle of the transaction.

 

00:26:16 - Mike Mills

Yes.

 

00:26:16 - Jen Gaudio

Here are some do's and don'ts. Yes, please.

 

00:26:19 - Mike Mills

Okay, we need to talk about that.

 

00:26:20 - Jen Gaudio

Yeah, we need to talk about that because I had a client, one time she showed up to my house, and she was so sweet. Sweetest couple ever shows up. She sits down at the dining table, and she's like, oh, I just want you to know I did just get a car yesterday, and my face was, like, white. And then she just starts laughing, right? And she was like, I saw it on TikTok. I just wanted to see what she would say. But there are do's and don'ts, right? Like, there are some do's and don'ts that it doesn't matter what loan program, how financially qualified you are. There's some do's and don'ts.

 

00:26:51 - Mike Mills

Yes.

 

00:26:52 - Jen Gaudio

If we're tight, please don't go open new debt.

 

00:26:54 - Mike Mills

When you say tight, what do you mean?

 

00:26:55 - Jen Gaudio

Oh, on our debt to income ratio. So if we're already squeezing the max of what you're trying to buy, and you already have a lot of debt, that's on your credit with what you make per month. Right. If we take your monthly debts divided into your monthly income, and that is your debt to income ratio and everything's.

 

00:27:11 - Mike Mills

Monthly, we don't care that you owe $40,000 on your car. We care that the payment is $400.

 

00:27:16 - Jen Gaudio

Yes. And we're looking at your gross income, not your net income. So we take that. So if we're kind of high already, like, up in the 50s, then there's going to be like, let's not go open any new debt. Keep paying your credit cards. If you got credit cards, keep paying them. Pay them on time. One of the biggest dues or do nots is don't be late on anything. Don't be late. I don't care what you got to do, but don't be late.

 

00:27:42 - Mike Mills

That's right. Well, and here's the reason why. When you said earlier that the credit report is good for 120 days, it is. Okay. But every lender, we all run refresh reports for numerous reasons or whatever, and if something comes in and shows us that you were late on an account for some reason in the process of doing the loan, then the underwriter typically is going to trigger.

 

00:28:02 - Jen Gaudio

Yeah. And we're going to have to show it's. Now, current.

 

00:28:05 - Mike Mills

I need to know that it's current, and I may need a new report.

 

00:28:07 - Jen Gaudio

Because remember, you're asking to borrow a couple of hundred thousand dollars, correct?

 

00:28:10 - Mike Mills

Yes.

 

00:28:11 - Jen Gaudio

Okay. Yes. Dues, keep working.

 

00:28:13 - Mike Mills

Yes. Don't change jobs if you can all at all, man, that happens all the time. I can't tell you how many people are like, I'm changing jobs next week, so I'm ready to buy a house.

 

00:28:22 - Jen Gaudio

I'm like, yeah, hold on. Keep working. And if you do happen to change jobs, please don't change your pay structure. I don't care how much more money it's going to be. If you're going to go from a straight salary position to all commission, that's going to be a problem for us, because at the end of the day, we're looking at history and your reliability. It's just like a credit report all a credit report is, is a report card that makes me believe that you're going to pay your Mills on time. Right. And as far as when we're looking at your income, when you're trying to buy a home, I need to make sure it's reliable and stable. So if we're changing from salary position to 100% commission and on the road, I don't have the history of it.

 

00:28:59 - Mike Mills

Well, and you say reliable and stable and be like, well, I mean, I'm going to go sell insurance and there's insurance sold everywhere, so it's reliable and people make money. It's like no reliable for you because you have never sold insurance before. And so therefore, because it's all commission or in many cases, and you were a W two, where your employer was constantly writing you a check every single two weeks or whatever your pay structure was then that was reliable. We knew it would be there, but now we have no way to predict what you could be the most successful insurance person on the planet, but until you are, we can't project where you're going to be. There's no way to do it because it's about projecting into the future. And it's a reasonable assumption to project that if you've been on a job and you are working for an employer and they've guaranteed your employer, then it's a reasonable assumption to assume that you're going to continue on that job. Okay.

 

00:29:47 - Jen Gaudio

Same with overtime, too. If we're using okay, let's say it's not commission income, but it's still like overtime. Well, I need you to continue to work your overtime hours you've been working. If I'm using that income to qualify.

 

00:29:59 - Mike Mills

Well, and that's why the self employment thing or the commission structure or what we would call variable income, any of that income is difficult because or not difficult. It's not difficult to calculate, it's just difficult if you haven't been doing it before. Because we cannot project what it's going to be because we have no history of it.

 

00:30:15 - Jen Gaudio

Yeah, or it could be a seasonal, like it could be something that's like higher in the winter. But another do is continue to save. So you continue to save. I always tell people, listen, here's the number I need you to not put in your bank account at one time. Don't put more than that at one time, but I need you to continue to save. So continue to save. Don't touch it, leave it in a savings account and just keep putting it in there.

 

00:30:39 - Mike Mills

Well, but Jen, what if I'm closing in a week and you had this mattress money? Nebraska Furniture Mart just had a big sale and it only is going to last for this weekend. And if I open an account with them, then I get 25% off.

 

00:30:53 - Jen Gaudio

Yeah, you could totally do it. Go ahead. Except just know that even if it's 0% interest for the next 18 months, I have to take whatever balance that you just took. And I have to use 5% of what that balance is to calculate it in your monthly debts.

 

00:31:07 - Mike Mills

And you may be fine, and you may be fine. Yeah. It may not be a problem at all. Yeah.

 

00:31:10 - Jen Gaudio

But those triggers like this is things that we talk about up front so that it's not the day before closing or if you're thinking about it, always talk to the lender about it because you need to make sure that you've got that space well.

 

00:31:22 - Mike Mills

And if your lender that you're dealing with or who have dealt with, if the conversation with them is how much money do you make? Okay, this here's your credit score. Okay, great. Where do you have your cash? Okay, here. Okay, great. You're pre approved. You're good to go. Okay. Go find your house at this price point. And if you don't know any better, you're like, sweet, this is awesome. Right? But you don't have any other information about your situation.

 

00:31:45 - Jen Gaudio

That's right.

 

00:31:45 - Mike Mills

What type of loan you're doing? What kind of payments can you expect? Am I at the top of my range or am I at the bottom of my range? Does it matter where my cash is? Because, yes, I have 50 grand. Well, if the lender didn't go okay, well, where is it?

 

00:31:58 - Jen Gaudio

In an account or is it an account?

 

00:31:59 - Mike Mills

You get it from your mom. Where is it coming from? You want people don't take the questions that lenders ask as crying. Yes. Well, first off, it's our job because the bank's giving you several hundred thousand dollars for a home. But it's also we're trying to protect you because we want to make sure that nothing is going to happen to you. And that's why we're spending a little more time on the upfront. Because when we get to the end, you'll see how the rest of it should go pretty smooth. Yes, but the upfront is so important, and that's why the pre approval process is so important because there's so many things that you need to know about your situation. Now, the good news is once you know what it is, then it pretty much stays the same. There's not going to be massive changes that occur. I always tell people the first conversation I have with you is usually about 45 minutes because we're going to go through all of this stuff. And then after that you can text me and call me. But it's going to be pretty yeah. If you're still here and you're still there, you're fine. All these things are good. But that's why it's so important up front to get all of this established, because your expectations are going to play a big role. And by the way, realtors your clients expectations on what they're trying to get. And the reason why you want to put them with good referral partners is because they need to know what they're getting into. So you're not running around showing them houses that maybe they can qualify for, but then when they get the payment.

 

00:33:17 - Jen Gaudio

They'Re like, they're way out of their price range.

 

00:33:19 - Mike Mills

Yeah, they don't want to do that.

 

00:33:21 - Jen Gaudio

If they do find a house. What I always tell people is, before you put in an offer, call us.

 

00:33:26 - Mike Mills

Yes.

 

00:33:27 - Jen Gaudio

So that we can look, give me the address. Let's pull up the address. Let's see what the property taxes are going to be in that area. Let's kind of look and see what that payment is going to be and make sure that it fits. And this is something that the buyer is comfortable with.

 

00:33:39 - Mike Mills

And on the property tax thing, since it's there, there can be two houses right next door to each other that are the exact same price, the exact same neighborhood, and one can have $200 a month less in taxes. And the reason for that is because in the state of Texas, I don't know if this is everywhere, but in the state of Texas, you have a cap on how much they can raise your property value every year. And once the property changes hands, okay, now, that's only for primary residents. If you're an investor, this doesn't apply. But for primary residents, once that property changes hands, the county can come in and reevaluate that property to whatever level that they see fit. Now, as a lender, again, we can't make any assumptions as to what's going to happen because we don't know but.

 

00:34:20 - Jen Gaudio

What we typically do.

 

00:34:22 - Mike Mills

But I'm going to tell you, I'm.

 

00:34:23 - Jen Gaudio

Going to tell you property taxes are going to continue to go up. They're not going to stay the same. So you have a fixed rate. You have your fixed loan amount. This is your property. And taxes, let's say you pay your taxes and insurance with your mortgage payment where you don't make it separately. That's not going to stay the same over the next 30 years because what's going to happen is your property taxes are going to go up. So let's say you're at your I always have the conversation with the buyers as this might be your payment right now, but a year from now or a year and a half from now, that might go up and most likely will go up.

 

00:34:53 - Mike Mills

Yes.

 

00:34:53 - Jen Gaudio

Because the county is going to be able to come in and reassess. Remember, at the end of the day, the county is going to try to come in and make money where they can.

 

00:35:00 - Mike Mills

You yes.

 

00:35:00 - Jen Gaudio

Everybody's going to try to get a little piece of that little pie when.

 

00:35:02 - Mike Mills

They'Re slow and they're slow, and you may get by that first year and you're like, oh, hey.

 

00:35:09 - Jen Gaudio

And then you get one, you get shock, and then you get a phone call later.

 

00:35:12 - Mike Mills

And then my bank screwed me.

 

00:35:13 - Jen Gaudio

Yes. Now you're like, oh, my gosh, this lender and my mortgage payment is going to go up $300. Property taxes are going to forever go up. They just are.

 

00:35:21 - Mike Mills

But your lender should tell you, and that's the point of calling out the payment is I would say to them, hey, look, based on where it is right now, your payment is going to be this much, but the property is valued at 250 and you're buying it for 400. So just know your taxes are going to go up. Well, how much, I don't know. You maybe want to plan for double? I give you a rough idea, but there's no way I'm going to know. So I can give you a ballpark, but who knows at the end of the day because it could be less or it could be all the way to the value or whatever, follow certain.

 

00:35:47 - Jen Gaudio

Exemptions or things like that. Yeah.

 

00:35:50 - Mike Mills

So the point of this, again, is just that, and I'm glad that you took me down this road a little bit, is that everything, if you handle things up front well, okay. And you take care of things up front, then the chance for issues down the road are much, much less.

 

00:36:09 - Jen Gaudio

Yeah. You hear horror stories that people are like, we were supposed to close next week and then now we're not.

 

00:36:14 - Mike Mills

Yes.

 

00:36:14 - Jen Gaudio

Well, I mean, again, if a lot of those questions were answered up front and we kind of dove into everything, I always tell people, listen, tell me everything.

 

00:36:22 - Mike Mills

Yes, I'm the attorney, not the judge.

 

00:36:24 - Jen Gaudio

Yes, I want to know everything because then I can work around it. But if you don't tell me these things, I cannot figure out how to help you.

 

00:36:32 - Mike Mills

Correct.

 

00:36:32 - Jen Gaudio

Don't hide things I need to know. And it's okay. Any little question because we'll have, like, let's say as we get into the next feet, let's say you get an offer, you are ready to put an offer out. We talk to your agent. They are going to negotiate a price and they're going to put in an offer. All that means is they're going to submit, hey, this is what we'd like to offer you for this home. And then that seller can accept or not accept, right. And we always call the listing agent, especially if you're already pre approved. We call them and say, hey, we just want you to know our buyers already pre approved. They're good, you don't have to worry about anything. But at that point now, there's going to be other steps that have to go in play. So let's say your contract is accepted. Your contract gets accepted. Now what? Right now, the buyers will call and say, okay, well, I think we got a contract. What do we do now? What you're going to do now is remember that account I told you to continue to save in? You're going to cut your earnest money check directly from that account. Because nine times out of ten, I will say that a lot of the hiccups that we find in closing a purchase transaction is the money.

 

00:37:36 - Mike Mills

Yeah. It's always assets.

 

00:37:37 - Jen Gaudio

Yeah, it's always the money.

 

00:37:38 - Mike Mills

Because everybody's got six bank accounts and they're getting money from their mom and she paid them. The Christmas present she gave me was 5000 in cash. Yes. And then that's why the sooner you.

 

00:37:47 - Jen Gaudio

Do it, the better.

 

00:37:48 - Mike Mills

You have to establish what the situation is up front. Which is why we ask the questions, because we're trying to figure out, okay, I've got a puzzle here and I got to try to figure out it doesn't mean, look, in all situations we can figure out how to make it work. I say all situations. In most situations we can figure out how to make it work, but we're.

 

00:38:03 - Jen Gaudio

Trying to make it easier for you.

 

00:38:04 - Mike Mills

Yes. Have a good transaction.

 

00:38:07 - Jen Gaudio

Yes. What is the least amount that I can try to get from you because you're already stressed out with, oh my gosh, I'm going to spend a few hundred thousand dollars on a house. I got to get movers, I got to prepare. You're already stressed out with all this other stuff. The last thing I want to do is okay, well, because of the situation now we need to go get all of these things where if we had talked about it up front, it might have been one or two things.

 

00:38:30 - Mike Mills

Now, when it comes to putting together your actual offer, when you find the house, I'm just going to touch on this just briefly. I would say there's kind of two schools of thought. Let's say three is you either offer more, you offer the same, what it's listed for, or you offer less. Okay. Because remember, just because a house is listed for a price doesn't mean that that's what you have to pay.

 

00:38:51 - Jen Gaudio

That's right.

 

00:38:51 - Mike Mills

Now, what determines what's the good scenario is? A number one, if you have a good realtor, they're going to be able to guide you there. That's right. But if you don't for some reason, then on which you need to get one. But if you don't, then you have to understand that if you're offering less, then that would indicate that they don't have any other options. Okay. If that seller has other options and you want to offer less, then they're not going to accept your offer under 99.9% of circumstances. Okay. If you want to offer at price, then there's several other functions within the contract that can make your offer better or worse. Things like how much earnest money you're putting down. Yes. How quickly you can close, who's paying the title policy, if there's any seller concessions being requested, things of that nature, how long your option period is. All of these things are negotiable and can be changed on your offer to make it a little bit more attractive or less. And all of these situations all kind of dictate or are dictated by the market. Are we in a buyer's market? Are we in a seller's market? Are we in a balanced market? Well, up until very recently, maybe within the last twelve to six to twelve months. We've been in a seller's market for a long time, and a lot of buyers lost control and power, like, for years. If you were an FHA or VA buyer, it was very difficult, very difficult.

 

00:40:12 - Jen Gaudio

To get out for no reason.

 

00:40:13 - Mike Mills

For no reason?

 

00:40:13 - Jen Gaudio

For no reason.

 

00:40:14 - Mike Mills

Yeah, I mean, reasons that from a seller's point of view, that make sense. Well, just because of the guaranteed overprice and all that kind of stuff, you can't do that with FHA and VA, but that's going to determine what type of offer that you ultimately make, is what the market is. And that's why it's important to have a realtor because if you find a house, it's one thing if you're just, like, throwing offers out there, which I don't know many people that do that, but if you find the house because I know how it works. Every single house we've ever bought, we go look, we go look. We go look, we go look. We show up, we pull up in the driveway, and my wife's like, this is it.

 

00:40:46 - Jen Gaudio

Oh, yeah, my foot. Oh, my. When you know, you know, right? Susan called me and said, from a buyer, I was already like, we had already had one offer out. We didn't get accepted. I was don't. And it's like I always tell buyers, it's okay if your offer doesn't get accepted. That just means that's not the one. That's right. That's all that means.

 

00:41:12 - Mike Mills

Universe is telling you, got another one out there.

 

00:41:14 - Jen Gaudio

And so I was already kind of down, and then Susan sent me the house that we're in now, and I was looking at the pictures, and I was like, man, I just don't like it. I don't think I like it. And she was like, Just come look. Because at this point, you've already told your my I always tell the buyers, give your agent, like, your non negotiables. What is it that is most important to you? A big backyard or a small backyard and a big kitchen. You need to know these things because it kind of dials down what they're looking for so that they can show you properties and not waste your time. Not waste their time, sure, but that you're looking at homes that you would actually be interested in. So she talked me into going to look at it, and I swear to.

 

00:41:56 - Mike Mills

You, were there any non negotiables on that one, or you just didn't like the pictures?

 

00:42:00 - Jen Gaudio

I just didn't like it.

 

00:42:01 - Mike Mills

Okay, but there wasn't anything where you were like, I have to have this, and it would have eliminated no.

 

00:42:05 - Jen Gaudio

I trusted Susan. I knew she knew what I wanted. But I walked in, and I swear to you, my back foot, I was like, this is it. This is the one. I can see that this is the one. Yes. And we walked through it and know, I was like, okay, let's go ahead and put in an offer. And when we put in the offer now, me being in the mortgage industry, I kind of knew what was going to go after that. But what I have found is a lot of people, when you get an accepted offer, they don't know, okay, well, what's next? What does the option period mean? What is the inspection for? And people think that it's just the appraisal and it's not. And I always tell everybody, yes, a home inspection is optional, but please get.

 

00:42:47 - Mike Mills

It even on new builds. Especially on new builds these days.

 

00:42:50 - Jen Gaudio

Oh my gosh. We have a friend that literally brand new build house completely flooded in the first three months of piping. I mean, they just don't build homes like they used to.

 

00:42:59 - Mike Mills

Well, because nobody they're not putting the same kind of effort. They're trying to make money. They're not putting the craftsmanship into it.

 

00:43:04 - Jen Gaudio

That's not to everybody. No, but there's a lot but yes, the option period. So people, they don't know what that means. What does the earnest money mean? All the earnest money means is you're just putting a down payment to basically hold onto the home, not to the seller.

 

00:43:18 - Mike Mills

It goes to the title company. There's an intermediary.

 

00:43:20 - Jen Gaudio

You'll get credit for that at closing. I have to document it. So we always tell people, before you go cut the earnest money check, call your lender, just call them. They'll tell you where to go. Cut it from, make sure it's cut out to the right people. Cut it from a certain bank account. Don't have your brother write it for you because you couldn't get to the bank. So we'll kind of coach you through that.

 

00:43:38 - Mike Mills

Yes. Just because it'll make life a lot easier for you.

 

00:43:40 - Jen Gaudio

Yes. And then the option is to the seller.

 

00:43:44 - Mike Mills

Yes. That does go to the seller because that's basically your fee for writing an offer and for them taking their house off the market. But it gives you time to get your inspection done. So if there's anything of significance that isn't a deal breaker, then you can walk away. You get your earnest money back even if you've paid for an appraisal, but as long as it hasn't been ordered yet, you should get that money back as well. In most cases, if he's a good lender.

 

00:44:11 - Jen Gaudio

The other thing is why vetting your realtor is so important too. Is most realtors who've done many transactions have home inspectors that they do business with that are reliable and that are dependable and that are quick and that are thorough and good to protect you.

 

00:44:31 - Mike Mills

Yes.

 

00:44:31 - Jen Gaudio

And so if it's a brand new agent, a lot of the times they'll have to kind of get referrals from who they know. But if you do business with somebody who has done those transactions, they have a home inspector that can probably get out there in the next 24 hours.

 

00:44:42 - Mike Mills

Well, and that goes back to my point where we were talking about making the offer of if you have an experienced realtor that's been doing it, remember when they're telling you, we have to go in at full price or we have to go in over, they're not telling you because they want you to pay more money. Okay. Their goal is to get that offer accepted.

 

00:45:01 - Jen Gaudio

And they probably already know something.

 

00:45:03 - Mike Mills

Yes.

 

00:45:03 - Jen Gaudio

They've already probably called.

 

00:45:05 - Mike Mills

Yes. They're not trying to get an extra $100 out of your offer because, oh, well, they just want to offer. No, because remember, if you don't win, they make zero. Right. They get no money.

 

00:45:15 - Jen Gaudio

Right.

 

00:45:15 - Mike Mills

They want you to win. So they're going to try to write your offer strong to get it accepted. So that way, and especially if it's the house, if it's the one, then it's like, look, there's two other offers.

 

00:45:27 - Jen Gaudio

Because they've already called that I know of. Kind of got the little skinny. Yes, get the skinny on it.

 

00:45:30 - Mike Mills

So if you want this sucker, we got to go in guns blazing, or there could be the opposite. Yeah. The house has been on the market for 120 days. They don't have nothing, so how low you want to go. But there's a balance there, too, because if you go in and insult a seller, okay, they'll just say no. They won't negotiate. They'll just say, no, I'm not going to do that. We're like, what about this? No, screw you. That was insulting to me. Now, granted, there are some sellers out there whose house is listed for an insulting price, right. Especially right now. So, again, there's so many facets of this deal, which goes back to you got to have professionals that are representing you in this because this isn't just a, oh, I'll just go find a house and write a contract and see what happens. It's not how it works.

 

00:46:16 - Jen Gaudio

So much so much has changed.

 

00:46:17 - Mike Mills

Yes. And there's so much on the front side.

 

00:46:19 - Jen Gaudio

Yes. Once you get the inspection done, home inspector comes out. Right. That has nothing to do with us, the lender, that's just for you. And what people don't realize, and I find VA yes. But I find this more often than not, is that a lot of people don't know the difference between a home inspection and an appraisal.

 

00:46:36 - Mike Mills

Yes.

 

00:46:36 - Jen Gaudio

In a survey, all an appraisal is is an appraisal is just going to look at properties that are around this property you're buying that recently sold, that recently sold, that are comparable to the house you're looking at, and they're going to establish a value. That's all they're going to do.

 

00:46:49 - Mike Mills

And they know what the price that you're paying for the home is up front.

 

00:46:52 - Jen Gaudio

Yes.

 

00:46:53 - Mike Mills

Appraisers get a copy of the contract before they do the appraisal so they have a target to shoot at. Yes.

 

00:46:57 - Jen Gaudio

Now, your home inspector that goes in, they're licensed. And they're going in. I relate it to, especially for first time home buyers. What I relate it to is if you've ever rented an apartment, when you first walk into the apartment that you're renting, you have this big, long sheet, and you got to write down all.

 

00:47:15 - Mike Mills

The little stuff that you all the.

 

00:47:16 - Jen Gaudio

Little stuff, like every scratch. You saw every hole in the wall. You saw anything that does not look right, you write you don't want to.

 

00:47:21 - Mike Mills

Pay for it when you move out. Yes.

 

00:47:22 - Jen Gaudio

Because you want to get your deposit back, right? So the home inspector's job is to literally dissect that house and all your big ticket items, plumbing, found, station, electrical, your AC like roof. That is what they are looking at. They are looking at all the big ticket items to protect you so that when you do get into the home, because remember, the appraisal only establishes value. I only look at the appraisal. So unless the appraiser is going to call out something like that, that is structurally or health or safety, I'm not going to really know. Or foundation, then I'm not really going to know. But let's say you move in and now you have $15,000 worth of plumbing issues. That's why home inspection is so important up front.

 

00:48:02 - Mike Mills

Well, and you have to remember with the home inspection as well, the inspector's job is to tell you everything that's wrong with the house, everything. And if they don't, then they can be held liable in some cases. So if the bushes are too close to the brick, they're going to tell you, okay, it's going to be on the report.

 

00:48:18 - Jen Gaudio

A GFCI outlet you got. It's going to be on there.

 

00:48:21 - Mike Mills

Your inspection report is going to be like 150 pages. Okay? Just know that even on brand new.

 

00:48:25 - Jen Gaudio

Home, yeah, there's a little piece of the fascia that if I had a.

 

00:48:29 - Mike Mills

Buyer call me one time, they're like, this inspection report is 25 page. This house is a wreck. I'm like, that's a small one. You're doing good. It was only 20 pages. Wow, that's good. Yeah, I mean, it might be ten, I can't remember. But the point is that the other side of it is you have to get it, but you have to put it into context because there are certain things about the house you can't change. You can't change where it's at, you can't change the price to some extent or whatever, the neighborhood that it's in, the school districts that it goes to, all that kind of stuff, right. You can't impact that. What you can change is the type of flooring. You can change if a toilet is loose, right. Or you can ask for the seller to fix, or you can get money for it. There's a lot of things just because you have an inspection that's got some things showing on the house, there's something wrong with every house.

 

00:49:17 - Jen Gaudio

Yes.

 

00:49:17 - Mike Mills

Every single house. Okay.

 

00:49:19 - Jen Gaudio

Listen, my house was built in the 70s.

 

00:49:20 - Mike Mills

Yes, there's a lot of things and a lot of things you can change and a lot of things and some things you can't. So if you can live with some of the issues or get money for it or get the seller repair or whatever the case may be, then keep the house. Yeah.

 

00:49:34 - Jen Gaudio

And that's important to know that once you get your inspection back, I tell them, call the agent, okay, I got my inspection back. So they think they call us and we're like, no, I need you to call your agent because this is what your agent needs in order to kind of look through it and say, okay, we might need to go back to the seller, or I think we're okay, and we can go ahead and proceed as is.

 

00:49:51 - Mike Mills

And again, experienced agent will help you look, they're not going to go through and go, oh yeah, this house is perfect. No, they go through the, like, hey, look, this is not good. You probably want to ask we don't ask about this. This is fine, this is normal. I see this all the time. You can easily fix that or it's not a big issue or whatever. They're going to be able to walk you through what the issues are as opposed to because if you take it to your dad and you're like, hey, dad, look at this, you're like, oh, that's it. Don't buy that terrible.

 

00:50:18 - Jen Gaudio

And all of this is done during your option period that you negotiated on your offer. So if for some reason it comes back and it's something a little bit more than you what do they say? Bite off more than you can chew.

 

00:50:30 - Mike Mills

Right?

 

00:50:30 - Jen Gaudio

If it's something too much, then that is your option, to be able to go ahead and opt out of that property. It might be the one that you thought was it and it was beautiful, but then you got cast iron pipes that are busted and electrical issues that people have wired together, and you don't want a hazard later. And you want to opt out. That's your opportunity to opt out. Now you're not going to get your option check back.

 

00:50:52 - Mike Mills

No, because I get earnest money back.

 

00:50:54 - Jen Gaudio

But you'll get your earnest money check.

 

00:50:55 - Mike Mills

And you spent the money on inspection. That's a thing.

 

00:50:58 - Jen Gaudio

That's something to protect yourself. That's kind of like almost like the cost of doing business, right?

 

00:51:02 - Mike Mills

Well, and then to protect yourself. A foundation is a good example, especially in Texas, because soil shift all the time, I would say. I don't know what the number is. I would bet you 50% of the houses in Texas have had some sort of foundation work. Maybe it's 30%, I don't know. But there's a lot, right?

 

00:51:15 - Jen Gaudio

Yeah. Unless you're like us where we live by a creek and the soil is constantly wet.

 

00:51:19 - Mike Mills

Yes.

 

00:51:19 - Jen Gaudio

And we're fine.

 

00:51:20 - Mike Mills

Yes, but the soil shipped a lot. Well, just because it's had foundation issues or maybe even it currently has foundation issues, doesn't mean it could be an easy fix. It could be something that's insignificant. So there are times even with your option period, that you can extend it and say, hey, look, I know we did a seven day, but our inspector said we needed to get the foundation checked and we really love this house, so we're going to go hire structural engineer and have them come do an actual check. Don't hire the foundation company because a lot of them, not all of them, but a lot of them will. Oh, yeah, you need 50 peers.

 

00:51:55 - Jen Gaudio

It's going to be 20 grand. Hire professionals.

 

00:51:57 - Mike Mills

Hire professionals. The structural engineer will come out, he'll look at the property and say, no, you're good. And here's why it's settling in or whatever. So you might have lost out on a house just because your inspector said you had a foundation issue when you could if you just dug a little deeper, there wasn't that big of a problem. Or maybe there was, and that means you that's right.

 

00:52:16 - Jen Gaudio

And again, their job is to pretty much dissect that house for you. Again, it does not necessarily make them the expert in that realm.

 

00:52:25 - Mike Mills

Yes.

 

00:52:25 - Jen Gaudio

If they say the roof looks terrible, maybe a roofer needs to come out, their foundation looks terrible, maybe a foundation company or structural engineer comes out. They're just pointing out the possibles for you.

 

00:52:34 - Mike Mills

And since we talked about earnest option inspection, those are the three things of cash significance that you're going to have to write up front that's pretty much on every single transaction, you're going to write on the appraisal and the appraisal.

 

00:52:45 - Jen Gaudio

And that's the fourth, which you get credit for that.

 

00:52:47 - Mike Mills

Yes. But your earnest money goes back to your credit on your fees. Your appraisal goes back as a credit and the option money it does goes back as a credit as well. Yes. So those three things will go towards so if you needed $20,000 total to close and you put up, let's say, five grand up front between option, earnest and appraisal, then you will only bring $15,000 to close. It'll be reduced so that money doesn't just get lost into the ether, unless you back out of the contract within the option period, and then you give up the option money and the inspection money. Now, the inspection doesn't go on because it's not part of our fees.

 

00:53:23 - Jen Gaudio

Yeah. And sometimes people sometimes are a little bit gun shy, too, because again, this is the most money they're ever going to spend, that they're afraid that once they get past that option period, that they're not going to be able to opt out or pull out of the property. And there are certain things that will allow you to opt out of the property later on. Yes, but not much. But there is certain things that will allow later on yes.

 

00:53:44 - Mike Mills

So now that you have your property under contract and by the way, when.

 

00:53:48 - Jen Gaudio

We yeah, we got a contract that was a whole lot to get a.

 

00:53:51 - Mike Mills

Contract again, why it's important up front. But you got the house under contract. Let's say the inspection went great. Let's say that you're past your option period. Now you're what they call pending in the system. That's the realtor to speak. So now the house is pending. Now your lender who's already been doing stuff behind the scenes, right, we order the appraisal. Now typically every lender does a little different for the most part. We're going to order the appraisal as soon as we can because it's going to take usually about, let's say two weeks. I mean, that's running a little bit quicker now these days because the definitely quicker, but at the height you might have been three weeks. Now we may be down to a week, something like that. But we're going to order it in advance because we want to get you to the finish line as quickly as we can, assuming that's what you want.

 

00:54:40 - Jen Gaudio

That and it also lets you know is the property going to come in at value. But at this point in time, your agent would have already kind of looked at all of the possible scenarios and they would have been like, okay, I think this property is going to be fine. Now, if they would have known up front, if they're listing it for something crazy and you're coming in at asking, the agent probably would have told you at the beginning like, hey, I don't think this property is going to appraise, but we can cross that bridge because you love this house so much. We can cross that bridge when it gets there.

 

00:55:08 - Mike Mills

And that is the agent question. I get that question. Do you think the house is going to appraise? I'm like, I have no idea.

 

00:55:11 - Jen Gaudio

Yeah, we don't know what I do not our professional.

 

00:55:14 - Mike Mills

I don't know. Ask them. I'll call your agent and ask them, what do you think? But we as lenders don't really know. That the answer to that.

 

00:55:21 - Jen Gaudio

Yeah. Now the only time where we don't collect for the appraisal upfront is going to be on your VA loans. So veterans, we collect that at closing or if for some reason the transaction doesn't close, otherwise everybody else pretty much pays for those upfront. Our veterans don't because if we get.

 

00:55:38 - Mike Mills

Your appraisal in and it's short, well, we still had to pay the appraiser to do the appraisal, regardless of if you go through with the contract, we still had to pay them. Now as far as the appraisal is concerned, there are again three scenarios that happen with appraisals. Okay. It either comes in at value, which is pretty typical, as is, as is, or it comes well, I won't even get into the repairs thing yet. Or it comes in above value, which happens.

 

00:56:04 - Jen Gaudio

Yes, rare. Great.

 

00:56:06 - Mike Mills

Not rare, but not often, but it happens, which is awesome.

 

00:56:09 - Jen Gaudio

Yeah. Because you instantly have equity.

 

00:56:11 - Mike Mills

You instantly have equity. Now, it doesn't affect your loan, by the way, just so you know. Just because your house appraised for more doesn't mean you have to have less down payment, doesn't mean you have anything other than congratulations, you have equity as soon as you move into the house. And your agent did a great job getting you that house for that price. Or it comes in low. Okay, well, if it comes in above, great. Nothing we got to do. If it comes in atlas great, nothing we got to do. Assuming it's as is, with no repairs subject to, et cetera. But if it comes in under, okay, what are our options at that point?

 

00:56:38 - Jen Gaudio

So if it comes in under, the first thing we do as lenders is we'll call the agent to let them know, yes, hey, the property looks like the value came in under. If for some reason the agent or the seller really is adamant that they really feel like that something was done incorrectly, they can give us supporting documentation.

 

00:56:57 - Mike Mills

Absolutely.

 

00:56:57 - Jen Gaudio

Maybe sometimes square footage could have been wrong or updated comps. Right. Maybe new homes just sold that closed in the last month that weren't notated. So sometimes they can give us additional documentation that we can try to go back to the appraiser for a reconsideration of value is what they call it. And then let's say the appraiser reviews it and says, okay, yeah, you know what? You're right. I made a mistake. My bad. Here you go. Here's an update. Great, we move on. If there is not, though, we provide supporting documentation and it does not come up, then it's definitely overvalued.

 

00:57:28 - Mike Mills

Which just so you know, that is often most likely the case.

 

00:57:32 - Jen Gaudio

Correct.

 

00:57:33 - Mike Mills

Unless there's a mistake, meaning that the square footage was wrong or something, it had an extra bathroom or whatever that was missed. Unless that happens very rarely just from anecdotal experience do I see we provide additional comps, typically the appraiser, and they'll tell you, they'll come back and say, yeah, I already used that one, or I didn't consider that one for this reason.

 

00:57:53 - Jen Gaudio

Or they work in big sophisticated softwares that plug in literally everything. They try to finagle as much as they can and try to help. They're not out to get the buy or anything. They're just trying to make sure that what you're buying is worth what you're buying.

 

00:58:04 - Mike Mills

So if it comes in low, then it's usually going to stay there.

 

00:58:08 - Jen Gaudio

Yeah. So let's say it doesn't change. Let's say the value reconsideration did not change. At that point we'll call the agent back and say, hey, looks like we tried to do the reconsideration of value. Value didn't change. At that point you have a couple of options. The agent will go back to the seller and the seller's agent for you and try to maybe negotiate that price to come down to that price. Or you could have a meet halfway where you cover the difference and they're going to come down a little bit. Or if the sellers are unwilling to budge, then that is your right to opt out of that property at that time because it did not appraise.

 

00:58:43 - Mike Mills

Right.

 

00:58:43 - Jen Gaudio

And you can get out of the.

 

00:58:46 - Mike Mills

Contract or you can pay more or.

 

00:58:48 - Jen Gaudio

You can pay the full difference, which.

 

00:58:49 - Mike Mills

If you love it, up until, let's just say 2021 and 2020, that's what people were doing. They were paying over. Which is why if you were an FHA or VA buyer, had a hard time doing it because if you were a conventional buyer or cash buyer, you could pay over. A cash buyer doesn't even need an appraisal if you don't want one. But with a conventional loan, if I want to guarantee the purchase price, can, it doesn't mean as an FHA buyer, you couldn't pay over if you chose to, but you didn't have to. And so that was an out for you in the contract. If the house came under, you would back out. Well, if I'm a seller and I've got 15 offers and four of them or five of them are conventional and ten are FHA and VA, well, if these five are going to give me appraisal guarantees that they're going to pay no matter where the appraisal comes in, then I'm going to go that rate.

 

00:59:31 - Jen Gaudio

So we're not seeing a whole lot of that now.

 

00:59:33 - Mike Mills

No, right now that's not really a thing. Sellers are offering money right now to get there.

 

00:59:41 - Jen Gaudio

So at this point, you would have had actually, we've already been working on your file in the background, right. So like appraisal, before the appraisal comes back, you probably would have already gotten an approval. And what that means is if you.

 

00:59:53 - Mike Mills

Did it perfectly, you should have already got a loan approval before you even had a contract.

 

00:59:58 - Jen Gaudio

Yeah. Because we like to take your files and have them fully approved and underwriting. So I like to think of it as how I try to relate this to people who have never bought a home before is I relate it to think of it like a staffing company. You come in, the buyer comes in looking for a job, right. And there's a person at the staffing company that is putting together your resume, if you will, so your loan file, and they are putting it together with a pretty little bow on it, and they're putting all your documents that you put in there and then they are presenting it to the employer. They're trying to get you hired at, which is I e. Our underwriter. So they're putting everything together, putting it to the underwriter, and then the underwriter reviews it. So you probably would have talked to not only your loan officer, but you probably might have even talked to either a loan officer assistant to help collect documentation or your processor. So your processor is the one that's collecting documentation to send it into your underwriting department. The underwriting department, when they get everything, what they're basically trying to do is they're filling in the little holes. Sometimes I hate to say this, and I'm not being mean to any of my doctor friends out there. I'm just saying I feel like sometimes we are held to higher standards than doctors. Sometimes okay, the guidelines. And we just did a loan for a friend of mine who it had been 24 years since she had purchased a house. 24 years. And so she's self employed. So when we went to go get documentation and stuff, she's like, Boy, this is a lot. And I was like, yeah, it's changed quite a bit. So what we're trying to do up front, there'll probably be three points of contact where we're going to ask for documentation so that you're not feeling like you're constantly having to provide additional documentation. You'll provide documentation at the front when you're getting pre qualified and pre approved. Right. Whatever you're putting on the application, I need you to be able to prove if you say you make $50,000 a year, I need you to give me documentation to prove it. Right. If you say you got 50,000 in the bank, I need to see your bank statements to prove it.

 

01:01:55 - Mike Mills

Not that I don't believe you.

 

01:01:56 - Jen Gaudio

Not that I don't believe you, but I have to prove I have to.

 

01:01:58 - Mike Mills

Give it to the underwriter. They don't talk to you. I do, but they don't.

 

01:02:01 - Jen Gaudio

Yeah, I got to prove it. So we would have got it at the very front end. Well, at the very front end, we're only getting enough from you to be able to pre qualify you so that you can start going shopping. Right. And we're getting pre approval from underwriting in a perfect world. Perfect world. So that that way you can go ahead and go shopping. Well, then once your processing team gets your documentation, they're going to look at it, and now they're going to look at kind of the more granular items that they're going to need.

 

01:02:28 - Mike Mills

How many pages it has.

 

01:02:29 - Jen Gaudio

Yeah, if the bank statement has eight pages and I got seven, if you.

 

01:02:32 - Mike Mills

Sent me a picture and it's cut off and I can't see it, or.

 

01:02:34 - Jen Gaudio

It'S fuzzy or hey, you said you lived here, but it looks like your credit report shows here.

 

01:02:40 - Mike Mills

I know you labeled that file W Two 2022, but it's actually the 2021 one again. But I already sent it to you. Well, I know, but it's not you didn't because it's two different yeah, that's right.

 

01:02:50 - Jen Gaudio

So we're getting a little bit more granular and kind of perfecting that file so that when we do get it to underwriting, everything as much as we can is in there. So we get it into underwriting that typically takes 24 hours for us.

 

01:03:03 - Mike Mills

Okay. So on that point, I want to say that if you're a buyer or if you're a realtor and you call the lender because your conversation has gone dark or something, then if you go to sorry, there was a comment that came up. I got distracted for a second. If you call the lender and then the lender says, well, it's in underwriting. Okay, all right, cool. Well, when's it going to come out around? It takes a couple of days. I mean, it could be like a week before it comes out. Okay, well, that's not correct as far as now, it might be in line for underwriting. Possibly. If they're that busy, especially these days, they shouldn't be, but even then it shouldn't take that long. I mean, the most at any bank, it only takes an underwriter a couple of hours to actually underwrite a file. Right. Would you agree with that?

 

01:03:56 - Jen Gaudio

Yeah. Somewhere it can take anywhere between literally 15 minutes to 4 hours.

 

01:03:59 - Mike Mills

Right. It just depends on how complicated it is. But once a physical person gets a hold of your file and goes through it, the timeline is 15. It's less than a day for sure.

 

01:04:08 - Jen Gaudio

Right.

 

01:04:08 - Mike Mills

And then they're going to have questions. They're going to send you conditions on what they're looking at. But if they're telling you it's been an underwriting for four days, then there's.

 

01:04:17 - Jen Gaudio

Something probably there's something going on.

 

01:04:19 - Mike Mills

There's something going on and you need to ask more questions.

 

01:04:21 - Jen Gaudio

Yeah, but a lot of the times, like I said, we try to get you pre approved ahead of time through underwriting so you don't have to question. And also, do you have to get pre approved by underwriting? No, you don't have to. The reason we do it is because in the market that we are in, we're trying to find any advantage for you as a buyer to help when you're putting out on offers. So you don't have to get pre approved. But if you are already pre approved before you have a buyer or before you have a property, it allows your agent to have a little bit more room when they go in to put in an offer. We might be able to close sooner because we can get an appraisal back quicker, and you might be able to compete with other offers that are out there. Right. That's all we're trying to do. Do you have to get no, no.

 

01:05:03 - Mike Mills

Well, and then that's a know coach bugby brought up there, and the buyer doesn't have to be pre approved because they can't discriminate. Okay, but we're not saying you have to be pre approved. You don't have to do any of this stuff. But if you want to get your offer accepted and you want a seller to consider it, in most cases they're going to request that in order to look at your offer and accept it.

 

01:05:24 - Jen Gaudio

It's just anything where we can give an advantage. Yes, you're just giving an advantage. So your file has gone to underwriting, right? That means the processor has packaged your file. We submitted to underwriting right now that's taken pretty much 24 hours. An underwriter will have a decision in 24 hours. Unless it's the last day of the month, like today, and loans came in today, you might not get it by the end of day today. It might be Monday morning. And all that means is the underwriter has looked through it, and they're just basically double checking everything that the processor has submitted, and they're saying, okay, we will give approval to give this person $400,000 if you give me this, this, and this. And they call that approval with conditions, right. So you have an approval, and then there's conditions that we have to meet. So if you hear anybody talking about conditions, the underwriter condition for this, it's.

 

01:06:09 - Mike Mills

Not a bad thing.

 

01:06:09 - Jen Gaudio

It's a very normal all that means is the underwriter has said, cool, you're approved, but I need to have X, ABCDE, okay, and real quick before we go on that.

 

01:06:20 - Mike Mills

So one other thing on this is every lender has we have underwriters physical humans that look at your file, but we also all use automated underwriting that everybody uses. That everybody uses. Every bank that does a mortgage does small little bank that wants to do a okay, maybe not, but I'm saying that's not a FHA, Fanny, HUD, whatever type mortgage loan. But anybody that's doing one of those, we all use an automated underwriting system. And what the automated underwriting system says is that me as a loan officer, when I fill out or you fill out your application or I double check it and we go through it all, make sure it's right. When I submit that to the automated underwriting system with everything that's in there, it's going to give me basically there's a nuance to this, but thumbs up or thumbs down, this is good or no, it's not, right. We won't get into maybes, because there are some maybes there, but it's either going to be and I would say 95% of the time you're good or you're not. So if you're good, it doesn't mean that you're good. It means that the information that was provided in the application along with your credit report, because it doesn't look at your documents. It just looks at it looks at your credit what I put in there or what you put in there and what the credit report is, if all of that is correct, then you're good, right? Your loan is good. If whatever I put in there and it says your loan is bad, it doesn't mean it's bad either.

 

01:07:48 - Jen Gaudio

Not necessarily.

 

01:07:49 - Mike Mills

Not necessarily.

 

01:07:50 - Jen Gaudio

It just might mean it wants something else.

 

01:07:51 - Mike Mills

Yes, it might mean that maybe it wants your assets to be a little bit more. Maybe we didn't include your second job that we can because you've been there for two years, and we were leaving it out originally, but now we're going to put it in. Or maybe it wants you to have a co signer because your credit is not real strong or whatever the case may be. Now, it doesn't tell us that. It doesn't say, hey, no, but if you do these things, we'll say yes. What it does say is, no, I don't like this as it is. So as loan officers and as banks, we have to go, okay, well, how do I solve this puzzle? How do I go in and fix this problem? What do I need to adjust? How do I fix it? And we kind of play with a little bit, but then if you do have the thumbs up, then we have to send it to the physical human that's going to double check all of the documentation.

 

01:08:31 - Jen Gaudio

And a perfect example of that is we provide a pay stub. And when we filled out the application, let's say the buyer didn't put that. They have child support, right? But then we had the pay stub, and now the pay stub shows that there's child support going out. And so the automated system does not recognize it's, just recognizing what we input. So if at the beginning, the buyer says, oh, no, I just get paid hourly, nothing more. But then after, we kind of do a little bit more digging because anything you put on the application, you have to be able to prove, right? I look at it and now we're like, oh, it's actually kind of split up with or I work 40 hours.

 

01:09:09 - Mike Mills

A week and really only work 32.

 

01:09:10 - Jen Gaudio

Yeah, and you're not working a full 40 hours. And now I see child support that's on here. So we have to account for those debts. Now, those things change. Well, now you went from base income that is just your standard base to possibly variable income, and that could change your automated system. So the automated system only runs with the validity of the information that is being entered.

 

01:09:31 - Mike Mills

That's right. Bullshit in, bullshit out. That's how it works. Well, and again, we're going to say this, this is going to be a long one, a little bit longer today. We're a little over time. So I acknowledge that for anybody listening. But going back to the beginning, that's why it's so important up front to get all this stuff done, because these are the things that can come up, and it's not malicious, right? Sometimes I'm sure everybody's been guilty. I've been guilty of this before, early in my career, where you don't ask enough questions, right? You don't dig deep enough. Okay, I'm self employed. Okay, great. How much money do you make? I make 100,000 a year. Well, some people go, okay, cool. 100,000 a year. Move to the next question. No, now, doing this for almost 15 years, I go, okay, well, that's great, but what.

 

01:10:15 - Jen Gaudio

Does your tax return show?

 

01:10:16 - Mike Mills

What are you paying taxes on? Oh, I pay taxes on 100. Okay, maybe you're right. However, let's go ahead and let me see the tax returns, because I don't think that you're lying to me. I just don't think you understand fully what I'm asking. And unless I don't explain it well enough, which maybe I don't sometimes, then I need to see that document before I'm going to be like, yeah, you're good to go. Start looking at homes.

 

01:10:37 - Jen Gaudio

Yeah. Because we don't want to get somebody's hopes up.

 

01:10:39 - Mike Mills

Right. Again. We want you to have a good transaction, good experience. Good experience.

 

01:10:43 - Jen Gaudio

And honestly, almost every buyer that we've ever talked to while they're shopping in the very beginning part of the transaction, we're all so eager.

 

01:10:56 - Mike Mills

Yeah. Everybody's happy.

 

01:10:57 - Jen Gaudio

Let's go ahead. Okay, what else do you need? What else can I do? What else can I go get? Right. It's when it gets later on in the transaction where it's kind of like, man, why haven't we talked about this in the beginning?

 

01:11:07 - Mike Mills

Yes.

 

01:11:09 - Jen Gaudio

Why didn't you ask me this in the beginning? So that's why we kind of go so far in the beginning, because we don't want those hiccups.

 

01:11:16 - Mike Mills

No, we want you to get the house that you want. We want you to close when you want to close. We want you to close early. We want you to get there to the finish line with a big smile on your face because and say the.

 

01:11:27 - Jen Gaudio

Hardest part was finding a house.

 

01:11:28 - Mike Mills

Yes. Well, and this is something that I tell buyers all the time when I talk to them. I pretty much tell everybody because we'll go through how we're compensated. Right. Speaking of compensation, these days, when it comes to real estate, I tell people all the time how we get paid. And just so everybody knows, okay, this is how lenders loan officers get paid. Our compensation is based on the size of your loan. That's it. We don't get any more money for your interest rate. We don't get any more money for your closing costs. We don't get any more money for the type of loan that you do, none of that stuff. We get paid as a loan officer a certain percentage, and it varies depending on companies of your loan size, and that's it. And that's because we really don't have any control over that. There's no incentive for us to be able to charge you more based on giving you a higher rate or more closing costs or whatever. So what I tell buyers is, my incentive in the transaction is that I want this transaction to be amazing, and I want it to go smooth, and I want you to have all your questions answered. I want everything to go exactly how you want it to go, because after you close, I want you to tell your mom, your brother, your cousin, your friends, your coworkers that we did a great job. And if you're ever going to get a home loan or you're ever going to buy a house, use this agent and use this lender.

 

01:12:40 - Jen Gaudio

Yeah, because we do that in everything. Yes, in anything. Like, we live in Mansfield. I use Jen's Heating and air conditioning. You want to know why? Because they're freaking incredible. They're a little family shop, and they take pride in what they do. I refer them to everybody because I have had other companies come to my house and say, no, you need a whole brand new machine. You're going to need to cough out $10,000. They come and they're like, oh, no, the valve was just turned wrong. We're not even going to talk to you today. Right? You want to deal with the professionals, and if you refer out your handyman.

 

01:13:14 - Mike Mills

You'Re putting your reputation on that.

 

01:13:15 - Jen Gaudio

You're going to do the same thing for your lender, your realtor, right? Because it was a pleasant experience for you, and you want that for the next person who you happen to talk to.

 

01:13:22 - Mike Mills

Well, that's the whole point. That is our incentive. Our incentive is to do more loans in the future, not just try to get every nickel out of this one we can. And it's the realtor too. It's the same thing. They don't want to sell you a house, $10,000 more that you don't want, because then you're going to walk away from that transaction pissed off that you paid more than you thought you should have paid, et cetera. They want you to get the house you want at the price that is going to get you the house. So then that way you're like, man, he or she went to bat for me, and I really appreciate that.

 

01:13:52 - Jen Gaudio

And I got equity in my house. Yeah, exactly.

 

01:13:54 - Mike Mills

So I think sometimes from the consumer's point of view, and I understand it because it exists in a lot of worlds and really, prior to, let's say, 2008, right? I mean, on the lending side of things in particular, there was a lot of shady stuff going on. I mean, there were people that get in charge stuff on the backside that they didn't realize.

 

01:14:14 - Jen Gaudio

I've only heard horror stories. I wasn't there.

 

01:14:16 - Mike Mills

Yeah, I mean, I wasn't there either. But the example I heard even today or had brought up was with what's happening, with the Realtors and Nar and what's going on, it's not too dissimilar from what was happening to us or our industry in 2007, 2008, in that there was an issue with did buyers sign their loans? Did they get disclosed all the information on that loan to be told what they were paying and how much? Yes, they absolutely did. Did they understand it? Did they read it? Did the lender explain it to where? Yeah, maybe not. Should they have? Okay. You could say, well, they're grown ass adults. They need to figure it out. Yes, but as a result of how everything worked out, our entire industry changed.

 

01:14:58 - Jen Gaudio

That's right.

 

01:15:00 - Mike Mills

So just agents out there take that as a little bit of now, again, they're different, but they're similar. So you got to be aware that our job as lenders and realtors jobs is to make the transaction as smooth and easy and as beneficial to the buyer and seller as possible, because we want to do more deals in the future. We want to get those referrals, and that's the biggest piece of it. All right. You've gotten conditions submitted? You've gotten conditions.

 

01:15:30 - Jen Gaudio

Yes, we got conditions. Right. Because that's an approval underwriter is like, I'm going to approve you if you give me these conditions.

 

01:15:35 - Mike Mills

Yes.

 

01:15:36 - Jen Gaudio

Some of those conditions, I always tell people, sometimes conditions breed more conditions. Yes. Right. Yes.

 

01:15:41 - Mike Mills

We don't know what we don't know.

 

01:15:43 - Jen Gaudio

I don't know it because now I'm going to go because the underwriters reviewed it. They've looked at and they're like, oh, hey, maybe you missed this on.

 

01:15:48 - Mike Mills

So this is all I need, right? These three things, this is it, and then we're done. This is it. We're done.

 

01:15:51 - Jen Gaudio

Yeah, it just depends on what I get back. Okay, so let's say I get bank statements back, and now you didn't do what we talked about in the beginning. Do's and don'ts, right, don't deposit more than X amount at a time or whatever it is, but let's say there's a big deposit. Well, now I got to figure out where that money came from, which it.

 

01:16:10 - Mike Mills

Could be okay and it could still be fine, but it may require more documentation.

 

01:16:14 - Jen Gaudio

And the only reason why we're asking is because we have to ensure that you didn't take out another loan, that we have to count in your debt to income ratio. That's what all of this is about. Now, also remember, if there is something that pops up, let's say we didn't have to have your tax returns for some reason in the loan file, but in your bank statements, there's a payment to the IRS. We're going to have to question it because at the end of the day, remember, what you put on the application, we have to prove. So if I'm saying this is all the liabilities you have, then this is all the liabilities you have, and I got to prove it. But if there's something else that's telling me that you might be paying the IRS, then now I'm going to have to go dig a little bit deeper and get more documentation to figure out what that is.

 

01:16:50 - Mike Mills

Well, even in the entire process of doing the loan and I explain this to people often, this whole standard thing, there's three things credit, income, and assets, right? Those are the debt to income. Those are the three things that we're ultimately looking I mean, there's others, okay? Yeah. The house, I know, but from just the buyer's point of view on what they can do to buy the house, it's credit their debt to income and their assets. Right. So credit is very black and white in most cases. Yeah, it's right there. It's either good enough or it's not. And if it is good enough, well, then it may not be good enough because there might be a few other things about because if your credit is terrible but you have a low debt to income and a lot of cash, sorry, you're not getting a loan. If your credit is really good but your debt to income doesn't work and you have the assets, you're not getting a loan. If your credit is really good and your debt to income is awesome but you have no money, you're not getting a loan. Okay? So you have to have all three. All right. But credit is pretty cut and dry, right? When someone calls me and says, oh, I got denied because I have a bankruptcy, I'm like, how do they not know you had a bankruptcy? It's on your credit report. Like, it's right there. The one I saw. It's right there. So that's not something that they can come back later and say, oh, they didn't know. No, they knew because they had your credit report from the very beginning. Your assets is something that can get complicated, right, as far as the documentation is concerned. But at the end of the day, if I tell you you need $25,000 to buy this house and you have $25,000 that's from sources that I can document and use, then we're good. It doesn't matter that you have $200,000 because unless you need reserves or something like that, it doesn't make any difference about that extra money. I don't need all of your assets because it's not necessary for the transaction.

 

01:18:34 - Jen Gaudio

That's right.

 

01:18:35 - Mike Mills

So my point of that is the thing that lenders spend the most time and the most effort on figuring out is your income and your debt. And 90% of the work that we do in determining if you can qualify for a loan because we know your credit right away and we have a plan, hopefully, for your assets right away. So now we're trying to figure out, do you make as much income as you say you do, and is it in a way that we can classify it and use it correctly? And then is there any debts out there that aren't on your credit report that I need to know about? And that's what all the reports and all the data aggregators send us stuff to tell us if you have default student loans that are on your credit report.

 

01:19:15 - Jen Gaudio

Listen, if you're getting a government backed loan, which I E is like USDA FHA VA, right? If you're getting a government backed loan, I always tell people, uncle Sam's going to get his money one way or another. If you owe and you're defaulted on federal student loan debt, that is government money and they're going to get their money one way or another. You're not going to be able to get a government backed loan if you currently owe the government money and you're defaulted in it. So at the end of the day, just know Uncle Sam's going to get his money. Yes.

 

01:19:45 - Mike Mills

So when you were explaining about the conditions we have the conditions from the approval because we're trying to just make it all look pretty and get everything.

 

01:19:54 - Jen Gaudio

Sign it up with a bow.

 

01:19:55 - Mike Mills

But the underwriter generally says, hey, this loan is good, but I need a few other pieces because I had a question about this or had a question about that. And as long as those pieces don't generate significantly new questions or significant new documentation, which most of the time they don't, it's just basic stuff because we've done our job ahead of time and we know where we're at. Then at that point, once you submit.

 

01:20:15 - Jen Gaudio

Those back, your processor is going to put it all together and they're going to submit it back to underwriting another.

 

01:20:23 - Mike Mills

24 hours in most cases.

 

01:20:24 - Jen Gaudio

And they're just reviewing the conditions that the underwriter put on there initially and then at that point you'll get a clear to close.

 

01:20:31 - Mike Mills

Yes. Now your loan is clear.

 

01:20:34 - Jen Gaudio

There could have been some stuff in between there.

 

01:20:35 - Mike Mills

Sure. Now let's talk about the closing disclosure briefly because that's a big piece of it. So CD closing disclosure, HUD statement is what they used to call it. It's not called a HUD anymore. I still have people ask me about that. Can I get the HUD? I'm like, there's not a HUD anymore.

 

01:20:49 - Jen Gaudio

There is if it's a cash transaction, I guess.

 

01:20:52 - Mike Mills

Oh yeah. But your closing disclosure is something that you'll get provided up front in the very beginning when you disclose your loan and it has your interest rate, how much cash you need to bring to the table, what your costs are, your loan estimate, your loan estimate. Sorry? Once you have that loan estimate up.

 

01:21:07 - Jen Gaudio

Front, which is not really an estimate anymore, technically it's got to be pretty dialed in.

 

01:21:11 - Mike Mills

Yeah. There can be things that change. Right. But it's usually related to things that we don't have control over, like your taxes or your insurance or stuff that the title company is going to charge you or whatever. But it should be pretty solid and your lender should give you that number up front. You should know what your rate is, what your payment is going to be, and how much money you need. You should know that prior to even writing your contract. That is true, but at minimum you should know within three days of having yes. And then when you go to closing, you'll actually get your final closing excuse me, your preliminary closing disclosure. Because in most cases and every lender is going to be a little different most of the time, once your loan is approved, we can issue the closing disclosure at that point.

 

01:21:51 - Jen Gaudio

Yes. As long as your interest rate is locked, yes, you're approved. And we've pretty much kind of got like your homeowners insurance. Sometimes they're still shopping, but as long as we have a quote or something, we can go by. But the most important parts there is that you're approved, you're locked as far as your interest rate is locked in. Yes. And we have your title stuff, then we can go ahead and get your.

 

01:22:11 - Mike Mills

Closing disclosure out and realize that lenders and realtors aren't the only people in this transaction. There are title companies, there are insurance agencies, there are appraisers on this side. So especially with this closing disclosure, there's a thing just so everybody knows, when the closing disclosure goes out, it has to go out three business days prior to the closing. Okay.

 

01:22:30 - Jen Gaudio

They call it consummation, you hear technical term.

 

01:22:34 - Mike Mills

Okay, all right. So it has to go out three days prior to that. But the one that you get three days prior, we want it to be.

 

01:22:43 - Jen Gaudio

Final majority of the time it is.

 

01:22:44 - Mike Mills

But it's not always. And that usually has to do with either we are changing insurance and I don't mean we. I mean you haven't got us your insurance information yet, or we don't have it yet, or and this happens sometimes where we send it to the title company and they know that we're closing in a few days and maybe we.

 

01:23:02 - Jen Gaudio

Don'T a week and a half from now.

 

01:23:03 - Mike Mills

Yeah, we don't get it back until a few days before closing. But the reason that the numbers can change is because we have to have, especially from the title company, they have to give us their fees so we can balance everything out.

 

01:23:14 - Jen Gaudio

And a lot of the times what we also notice too is that home warranties get flapped on at the end yes. That we don't know about. So what our closers typically do. So now you have a closer in your transaction that is now assigned to your loan and the closer works with the title company who in essence what buyers ask me what is a title company, what is it? Not only is it the place that you're going to go close at and sign your documents, but again, back to the car. I always explain to people all a title company is and the fee that you're paying for title policy insurance, what that is, is that so somebody later on doesn't come knock. Okay. You know, when you sell a car, you have a title, has all the previous owners or clear and then they sign and then you go to the next line. And then they sign and you go to the next line. So it's the same thing with the title company. The reason you're getting lenders title policy and buyer's title policy, owner's title policy, what they are there for is to ensure that everything is filed properly so that later on somebody doesn't come knocking on your door and saying, so and so didn't have the right to sell you this house. This is my house, and I'm suing you for it. That is the importance of the title.

 

01:24:19 - Mike Mills

And that premium is set by the state of Texas.

 

01:24:21 - Jen Gaudio

It is, but that is the importance. But by this time, your agent would have already known pretty much upfront whether or not they can sell this house or not. Okay. Or the seller's agent, why the listing.

 

01:24:33 - Mike Mills

Agent is there, too.

 

01:24:34 - Jen Gaudio

That's right. But they are also the ones who handle all the money. So they get the money, and they pretty much distribute to everybody that's supposed to go get paid.

 

01:24:42 - Mike Mills

Yeah. When we, as a lender, fund your loan, we send the money to the title company, and then the title company takes that money and disperses it amongst your insurance, your agents, your loan. That the seller's loan that they're paying off. They're a third party. They're a third party intermediary. They're there to hold the money and distribute it. And, oh, by the way, they're so highly regulated on that part that they can't have one penny extra in their account. Every penny has to be accounted, accounted for.

 

01:25:11 - Jen Gaudio

So sometimes that changes. So what we do is our closer, now that you're clear to close, or even sometimes when you're approved, what we do is our closers. Go ahead. Our closing date doesn't change. Right. You know when you're closing okay.

 

01:25:23 - Mike Mills

Since you say that whenever you decide or the sellers and the buyers decide at the last minute or a week before, like, oh, we want to move closing up, or, oh, we want to push closing back a couple of days, it's fine, no problem. But that's going to change things and change your numbers. You have to understand that your numbers are going to change based on when you're doing that, which means it's got to go back to the title company, back to the lender. They got to go back and forth. It can't be just like, oh, we're just moving it up a day, no big deal.

 

01:25:49 - Jen Gaudio

Like, no, there's some stuff now we got to rebalance. Yeah. And what rebalancing means is the closer is just getting with the title company and saying, hey, this is our closing date, so I need to balance title.

 

01:25:59 - Mike Mills

Fees with days of interest.

 

01:26:00 - Jen Gaudio

We're calculating days of interest, property taxes, what is our prorations? Right. And we get a lot of questions on especially at this time of year, at the latter part of the year when tax Mills are out, we get a lot of questions from buyers on why am I getting charged this whole big amount? And then we have to point them to the different page. So you're not going to get charged on property taxes for a property you didn't own from January to November 30. Right. But since your credit Mills are out, you'll get charged a full boat. Then you get a credit from the seller from January to November. And so those are things you want to look at. You want to look at your property taxpayer, make sure that those are on there because you're not going to pay for taxes on a property you didn't know. You're looking at your fees, you're looking at your home warranty, things that you opted for, are they on there? And then you're looking for your credits. Is your earnest money that you put down, is that on there? Is your option fee? Is your appraisal there's columns on there that kind of have this little letters paid outside closing. And your appraisal is one of those costs that's a paid outside closing. Now, you're not going to get credit for your home inspection because that was just a separate report, that inspection that you got to protect yourself. But the biggest things you're looking for, are you getting the credits that you were supposed to get on your closing disclosure? And are the fees correct? And is your taxes and insurance set up properly?

 

01:27:18 - Mike Mills

Yes. And then you'll have a bottom line number that you're going to be bringing closing. It'll tell you here and it'll be to the penny.

 

01:27:24 - Jen Gaudio

Again, to the penny.

 

01:27:26 - Mike Mills

Just so you understand, the title company can't hold any extra money. And this happens sometimes because if, let's say things are changing or we went fast or whatever, and we don't have the final final number until like the day before or even the morning sometimes. Because again, this is real estate, stuff happens, right. So if that happens, we will sometimes have buyers say, well, we don't have the final number balanced with title company because we just changed the close date. So we're trying to get it updated. But it's going to be about $26,000 or less. So you can bring $26,000 to closing. And if it's only 25 five, then the title company will literally cut you a check back for $500 and you'll get your money back. So you're not ever in a position where you're going to lose money because you bring too much.

 

01:28:07 - Jen Gaudio

Right.

 

01:28:07 - Mike Mills

However, it's incredibly important. Well, I'll let you because you'll do it better than me. All right, I've got my closing disclosure, I know how much money I need to bring, where do I go get my money?

 

01:28:21 - Jen Gaudio

So this is another place where lenders will come in, right?

 

01:28:25 - Mike Mills

Yes. This is a problem more often than many people would understand. It is.

 

01:28:32 - Jen Gaudio

So I always tell people up front when we are talking about your assets, if they're going to come from a retirement account or a 401K or things like that, I always tell people that's going to take probably ten to 14 days. So we need to start that process sooner rather than later.

 

01:28:47 - Mike Mills

Yes.

 

01:28:48 - Jen Gaudio

Not the day before closing.

 

01:28:49 - Mike Mills

Right.

 

01:28:49 - Jen Gaudio

Because it's going to take you a little bit to get that money from Fidelity or whoever they don't want to.

 

01:28:54 - Mike Mills

Give you the money either.

 

01:28:55 - Jen Gaudio

No. It's going to take them a minute. So make sure we start that process sooner in the process. Now, let's say we get to closing. So at this point, I've already verified all of your information. So I have your checking, I have your savings or wherever it is it's coming from. Listen, I don't really care that it comes from one of those accounts, okay. Because I've already verified you have the money. In most cases, all I care about is that it came from you.

 

01:29:18 - Mike Mills

Yes.

 

01:29:19 - Jen Gaudio

So don't bring a check to closing, a cashier's check to closing from your mom's account right.

 

01:29:25 - Mike Mills

Or some account that you never gave us. Well, with FHA, with all I really don't care.

 

01:29:31 - Jen Gaudio

Yeah, it can come from let's say you had another Wells Fargo account that had more than enough money into and it was easier for you to cut a cashier's check from there. That's fine, as long as it's your account. Right. It can't come from somebody else's account.

 

01:29:45 - Mike Mills

Right.

 

01:29:45 - Jen Gaudio

Please.

 

01:29:46 - Mike Mills

Yes. Because it will be on the check, and it will say it will tell us.

 

01:29:49 - Jen Gaudio

And then now I got to get through gift fund documentation yes.

 

01:29:52 - Mike Mills

In about 45 minutes. Because the money is already there. It's already been sent. Everybody's already signed. And you brought money from mom's account because at the last minute, she was like, you know what? This was going to be a wedding present for you. So we wanted to save it to the end. Happy wedding, happy marriage.

 

01:30:09 - Jen Gaudio

The other thing that I also kind of run across a lot happened to me, by the way, is I tell people that this is to each its own. Sure. I am a little old school in this realm.

 

01:30:21 - Mike Mills

Okay? Are we that old now that we're old?

 

01:30:24 - Jen Gaudio

I mean, I feel like I'm a little old school in this realm. But younger people, they are all about wires and all that stuff.

 

01:30:30 - Mike Mills

Yes.

 

01:30:31 - Jen Gaudio

I just tell people, please be very careful with wires. If you need your wire instructions, please get them directly from the title company because there are so many awful scammers out there, and this has actually happened where a borrower got something in their email and it looked like wire instructions for their closing, and they've sent money to we have no idea where. So I am a little old school in this aspect of I like to go get an actual physical cashier's check, because that is an official form of check.

 

01:31:02 - Mike Mills

Just don't put it on your dashboard and ride with the windows down.

 

01:31:06 - Jen Gaudio

But some people still send wires, and there's nothing wrong with wires. I just tell people, please, if you're going to do a wire, please ensure that you are obtaining the wire instructions directly from the title company. I can give them to you, but I would feel much better if you got them directly from the title company.

 

01:31:23 - Mike Mills

Blockchain solves all that by the way, when we get there, then the wires are relevant. You don't have to pay all the.

 

01:31:29 - Jen Gaudio

Extra fee, but yes. So just make sure because at this point now, we're just kind of finalizing, this is where you're going to go for closing. This is what you need to bring. This is how much you need to bring. This is who you need to make it out to. And it either needs to be in the form of a check or cashier's check or wire. A title company is not going to take a personal check over. Majority of the time it's over like $1,500. I think they're not going to take it because they don't want to be responsible for that amount of money. They need it in an official form. But if you're going to be getting funds from, let's say you do have a donor in a gift, a lot of times we'll just tell them, have your donor write it directly out to the title company. It just makes documentation for you a whole lot easier. Less documentation for us to get. But if you're getting it from a source, that's going to take a while. Let's start that process a little bit ahead of time. Days maybe, probably a couple of weeks.

 

01:32:21 - Mike Mills

Yes.

 

01:32:22 - Jen Gaudio

Get it started at the beginning when.

 

01:32:23 - Mike Mills

You get a property so you have your close date set and your loan is clear to close. You've got your final closing disclosure. You went to the bank and got your physical cashier's check, even though you can wire, but you like to get the physical one.

 

01:32:35 - Jen Gaudio

I like the physical.

 

01:32:36 - Mike Mills

And then now you know when your close date is, you're going to go to the title company to close. In most cases, sometimes you can do a notary that can come to you. So just because you're going out of town, although it seems everybody goes out of town when they close, the day after they or the morning their flight leaves 30 minutes after their appointment at the title company. That's like a thing. But gosh, I swear to you, so many people, why does everybody want to leave town as soon as they buy their house or the sellers? A lot of times will do it too. So you'll go to the title company or do I have a notary come to you? You will sign usually prior to closing, prior to going, the lender will send you some electronic documents to sign ahead of time. Everybody's a little different on this these days because of what's allowed and what's not. But you'll have like our company, the majority of the documents that you sign will be in most cases will be before you get to closing. You just do electronic signatures and then when you show up to closing, you're actually going to sign your final closing disclosure, your final application, your deed of trust, the note. Those are the most important documents that you're going to. Sign at closing and those require a notary with a physical signature as it currently stands. Again, I think that'll change in the near future, but that's what it is at this particular point in time. And now your loan is closed. Okay. Or I should say you as the buyer have closed. All right. You have to wait for the seller to close as well. They can close before you or after you, it doesn't really matter. There are a couple of documents in most cases that have to be signed from the seller. Well, for both of you?

 

01:34:09 - Jen Gaudio

Yes.

 

01:34:09 - Mike Mills

On the same document. So sometimes the seller is out of town and you're here locally. That deed of trust, you got to kind of get two signatures on that one. So it can push things or delay things a little bit if that's the case.

 

01:34:22 - Jen Gaudio

But we would have already prepared for that.

 

01:34:23 - Mike Mills

Well, hopefully, yes, but if we find out but sellers the day before like, hey, we're going out of town, okay, we get to find this stuff out. The listing agent is like, oh yeah, they told me. Do we go, okay, shared that with us if you've got everything signed and now once the lender gets all of those documents back, okay, we require like.

 

01:34:47 - Jen Gaudio

Five or six things.

 

01:34:47 - Mike Mills

Yes. Once we get those documents back, then we review and we take a fax. By the way, they don't have to be like couriered over. They do get sent over to us eventually, but we're taking the fax. We're looking at those five documents that have been signed and now we've already sent the money to the title company. Morning, by the way. They got our wire. They just don't have the secret code to open the wire. And then once we have all the documentation, secret code is released. And now your loan is funded.

 

01:35:16 - Jen Gaudio

And then you can get your keys.

 

01:35:18 - Mike Mills

And then you can get your keys. And hopefully we kind of touch on this, but usually the day before or the morning of with your realtor, you're going to do a walk through just to make sure that the property hasn't flooded.

 

01:35:31 - Jen Gaudio

There's no random person yeah, there's that you're trying to kick out.

 

01:35:36 - Mike Mills

You want to do the walk through. It's very important to make sure that everything is exactly what you were buying ahead of time.

 

01:35:40 - Jen Gaudio

Steal all the cabinets and light fixtures.

 

01:35:42 - Mike Mills

Yes, that happened. It has.

 

01:35:46 - Jen Gaudio

And not only we're going to do that, but we're also going to verify again that you're still working.

 

01:35:50 - Mike Mills

Yes. So if you decided you were going to be slick and not tell us and quit your job the week before closing ain't going to work.

 

01:35:57 - Jen Gaudio

Listen, everybody in the mortgage industry, we are supposed to be level ten stalkers, okay? That's what we're supposed to be.

 

01:36:04 - Mike Mills

That's our job.

 

01:36:05 - Jen Gaudio

That's our job is to be really good stalkers. And so part of that is, okay, we have validated that you work. If you happen to quit your job and start a new one, that's not a problem. But just tell us so that we know and we can attack it ahead of time. Because what's going to happen is a couple of days before closing, we're going to call and verify you still work at where you said you work. And if they said no and he's no longer here now, he or she that they're no longer there, I'm now going to have to have a phone call with you and say, where do you work now? And now we're going to have to go back into underwriting and update all of your stuff.

 

01:36:41 - Mike Mills

But I'm getting paid the same.

 

01:36:42 - Jen Gaudio

Yeah, that's great, but I have to make sure you're still employed and I have to go verify all that information.

 

01:36:47 - Mike Mills

And the bottom line on all this is that you have to understand that banks and realtors and we've been doing this a long time and we've done lots and lots of loans. Okay? So when a buyer calls me and was like, well, how about if I give my daughter a job and then she comes to work for me and then she gets a salary, it's like, no, we've gone through not a problem.

 

01:37:09 - Jen Gaudio

I need two years of tax returns. Right. There are solutions to every route. It's like one of those, what are those tables that's like if yes, then go here. If no, then go here. Like one of those massive ones.

 

01:37:19 - Mike Mills

That's what well, there are solutions to every route, but the solution might be you don't get a loan.

 

01:37:25 - Jen Gaudio

The solution might be you're going to get a loan but it's only going to be $50,000 X amount of dollars.

 

01:37:31 - Mike Mills

You can't buy a house for that or whatever. Yeah, I mean, there are solutions, it's just not always the way you want them to be. So that's why, again, going back to the very beginning, we have to do all this stuff up front. You got to get as much stuff done as you can up front and you got to pick good professionals that are there to represent you because this isn't something that you do every day.

 

01:37:49 - Jen Gaudio

Yeah. And if you just want to recap, we spent majority of our podcast today talking about everything up front.

 

01:37:54 - Mike Mills

This is the longest one I've done in a long time and I don't know why I thought this was going to go faster.

 

01:37:59 - Jen Gaudio

Because the most important part is everything up front. Because if we do everything up front, then literally the easiest part was the financing side of it from the appraisal. Sometimes the financing side is the easiest part. The hardest part is for you to go find a property now that's going to fit your needs of what you're looking for. Because everything after that it's literally just an underwriter looks at it, tells you we need a couple of conditions, then we go to closing then we're finalizing. But everything else you've already done up front. You already know what the fees are pretty much going to look at, look like outside of property taxes, insurance, you already know what your monthly payment is going to look at from a rough standpoint. And we've already verified all of your documents. So that's all in the very front.

 

01:38:39 - Mike Mills

Yes. And now you have a house. Congratulations, you're a homeowner. So exciting. Now you get to go have lunch with your mom and tell her how great it was. And again, this goes back to what our job is as lenders and what agents job is that we want you to walk away from the closing table thrilled with how everything went. All your expectations were met. Is everything always perfect? No. There's always going to be little hiccups and bumps along the way. But as long as your agent communicates with you and as long as your lender communicates with you and tells you everything that's happening so you don't get surprises at the end, then you should walk away from that transaction feeling pretty good about what you just did.

 

01:39:15 - Jen Gaudio

And like many experts now you're like mini expert. You've been educated through the process.

 

01:39:21 - Mike Mills

What about mini experts? Are they rolling around here now?

 

01:39:24 - Jen Gaudio

You became a little mini expert. You've been educated through the process. You know what to expect. And if somebody else talks to you about it, you're like, oh, well, this is kind of what happened because people are going to ask you how did it go for you? Because you hear horror stories of people's process was not great. But now you can kind of say, well, this is kind of what happened. I was educated, I was communicated throughout the process. I knew what was going on, I knew what to expect. I wasn't surprised.

 

01:39:50 - Mike Mills

And then be sure to the best way that you can thank your loan officer and your realtor is by telling the world. And what I mean by that is reviews are so important to us for many, many reasons. Even bad ones? Even bad ones.

 

01:40:04 - Jen Gaudio

Do you go eat anywhere? Do you go eat anywhere?

 

01:40:07 - Mike Mills

Yes.

 

01:40:07 - Jen Gaudio

Where you have not looked at the review?

 

01:40:09 - Mike Mills

No, I always look at the okay, so well, not always. I mean, if I go to burger.

 

01:40:12 - Jen Gaudio

Okay, well, if you're a foodie, if I ever go eat somewhere that is not your normal chain. I'm always going to look at Yelp and I'm always going to look at the reviews.

 

01:40:22 - Mike Mills

You know, the kids go to TikTok now.

 

01:40:25 - Jen Gaudio

Oh, yeah.

 

01:40:25 - Mike Mills

They don't even know what Yelp is.

 

01:40:27 - Jen Gaudio

Dallas must finds they don't even know what Yelp is. Yeah, but I always go to look at the reviews. When you pull it up on Google maps, it's the first thing, is it a three and a half star? Is it a four star? It's really important. Same thing for us.

 

01:40:38 - Mike Mills

Yeah. So, man, this was an hour and 40 minutes today.

 

01:40:43 - Jen Gaudio

We talk a lot. When Mills and I get together, we talk a lot.

 

01:40:45 - Mike Mills

It's rough. So if you're hearing this, I always do these live for anybody that's stuck around all the way. The end here. I always do these live on Thursdays and this will publish to Spotify and Apple on Fridays. And a lot of the listeners come on those platforms that listen on the podcasting platforms. And most of my podcasts are about an hour long. I try to keep them an hour and even that's a lot because even the ones that I listen to are 30 minutes. There's a couple I listen to, they're like 3 hours. But if you stuck around through all of this, there's a ton of information, information in here and there's segments of here that you can point to as a realtor to your clients and say hey in this section. And it'll be broken out inside the podcast. It'll tell you what sections we talk about, what you can go to that section and listen to that piece and answer that question for your clients. And if you have questions, obviously reach out to me. I'm happy to help anytime. Jen, same thing too. Her contact information is on the website, so you can get in touch with her if you'd like. But all of this is happening right now. I want to do this primarily because I believe not everybody agrees with me, maybe, but I believe that things are going to change quite a bit in the world of real estate over the next several years. And it may not be something that happens immediately. It might be a slow burn, it might take some time, but all this is going, there's going to be things that start to change. And how we do our job as lenders and realtors is going to change. And your primary job as a real estate agent is to set the expectations with your clients as to what's coming, what's happening, why are you compensated the way you are? What is the process that you go through and how much is involved in all of this? Because the average consumer just doesn't understand. Because again, they don't do it every day and there's so many intricacies. That's why this took an hour and 40 minutes and we still we could keep going, oh God, we could have a five hour conversation on this because there's so many things we didn't even get into. Well, what if this happens? And what if this happens and what if this happens? Because there's no going back to why. It's important sometimes to have somebody that's gone through a lot of transactions is you don't know this stuff unless you've done hundreds of transactions and seen all this and understands the importance of it because there's so many, oh, they're not the same. And so this isn't just something that average Jen could just walk on the street and do and this isn't something that if Zillow decides to come out tomorrow and represent buyers for 200, they're not going to do a good job. They're not going to do a good job. So you have to understand as a consumer, that having seasoned professionals on your side to walk you through one of the biggest transactions of your life is necessary because there's so many things that can go sideways on it and that can cost you a lot of money. And as a listing agent, same thing. There's so many pieces of this when it comes to negotiating, which contracts to accept and what you need to disclose, and what's on the seller's disclosure and covering yourself and all that kind of stuff. And if it's a farming ranch versus residential, I mean, again, hours and hours. And, um so that's just this was something I asked Jen to do because I wanted to go through this entire process. I don't know why. In my head, I'm like, yeah, we can do that an hour. No, obviously that's not the case. Jen, anything you want to say before we finally get off this?

 

01:43:56 - Jen Gaudio

I appreciate it. Education is key. I feel like we're buyers at the end of the day, when you're buying a home, the unknown is what makes people so stressed out and so worried and apprehensive, and they're, like, patiently waiting by the phone, waiting to see if anybody's going to call. So I just kind of feel like education and over communicating is always extremely helpful, and there's no dumb questions. This is the first time you're buying a home, or even if you've bought a home before, things have changed drastically. Ask any question because and they will continue to change.

 

01:44:28 - Mike Mills

Yes.

 

01:44:28 - Jen Gaudio

So ask the questions, because if we can better explain it, the easier it will be and the more you understand the process of it. So that that way you're not caught off guard or you feel like it's invading privacy or things like that, we're more than happy to explain it. And we could even show you. I mean, a lot of it is public information, too. We're bound by agencies. And a lot of it is you can go find it.

 

01:44:51 - Mike Mills

We don't make up these rules.

 

01:44:52 - Jen Gaudio

We don't make them up.

 

01:44:53 - Mike Mills

They're there.

 

01:44:54 - Jen Gaudio

I wish I could sometimes, but hard.

 

01:44:55 - Mike Mills

To interpret sometimes, but certainly there. All right, well, we're going to wrap it up, and I appreciate anybody that stuck around all the way to the end. I will have my market update out on Tuesday where we'll do some basic market news, like always, but I will go into the homes.com a little bit more. That one I will keep at 20 minutes most of the time. Most of the time, because I do talk a lot and everybody have a great weekend. Try to stay dry if you're in North Texas, because it's raining like crazy right now. We're hearing thunder in this place, and we will be back next week. Thanks guys.

 

01:45:24 - Jen Gaudio

Thanks, guys.

 

01:45:25 - Mike Mills

Have a good week. Bye.