Navigating the Mortgage Maze: Pro Tips for First-Time Homebuyers with Jen Gaudio

Mike Mills (00:00:02) - All right, we're live. Boom. There's no intro, there's no nothing. Like we just went from zero to here we are in two seconds. Because you know why, Jen? We don't

Jen Gaudio (00:00:11) - Need an introduction. . We don't need an introduction

Mike Mills (00:00:13) - Because we're really half-assing things today. That's why, because I have, uh, my whole, my whole week in the last two weeks have been nuts. We've been really busy. So that's really good, right? I mean, you're, you're over there on your phone right now dealing with an issue, probably handling something. And I've been on the phone. We've been locking loans and closing loans, and it's been awesome. But it just makes for all the extra stuff that we try to do, uh, gets a little bit pushed to the backside. So that's kind of, uh, why we're, um, half-assing it today. So no intros I didn't get already, but you don't need it because, uh, that's fine. We're getting into nuts and bolts on this stuff anyway. Yeah. Um, alright. Hello everybody. Mike Mills, uh, with Verity Mortgage. And this is, uh, Jen Gadio joining me today also with Verity Mortgage.

Mike Mills (00:00:55) - Uh, we are, this is the 42nd episode of the Texas Real Estate and Finance Podcast. My gosh. And yes, 42. I did 42 of these suckers. I know, it's crazy, right? Um, you know, and I've, I think I've had like five people watch, so it's been awesome. No, I'm kidding. I actually have on my YouTube channel, I have over a thousand subscribers now. Do you really? I do indeed. Yes. So, um, so anyway, uh, today we are going to get into some nuts and bolts on mortgage stuff. Um, we're actually gonna talk about, uh, a lot of special loan programs that are available out there. Um, I say that with a wink cuz I got a little side note on that. Uh, we're also going to get into specific loans, um, and talk a little bit about qualifications for like f h a loans and what's required for appraisals and what conventional loans look for self-employment, just anything, um, that is kind of a Gotcha.

Mike Mills (00:01:43) - You know, gets you, uh, one of the things that we always work to is we we're trying to solve problems every day on loans. And there's a lot of problems that come up. They're not unsolvable problems. There's just, every single loan has something that pops up that you have to deal with, right? Yep. And, um, a lot of things can be avoided if you handle things right before you get to that point. And then, um, a lot of things you just have to handle in the moment, but you still gotta be nimble and be able to close stuff quickly, because at the end of the day, regardless of the problems, what's our number one job, Jen? Close loans. Close loans and close loans. There's an extra add on time too. On time. There you go. That's the idea. close loans on time. So as we're going through this, um, we'll start in a couple places, but if anybody has any questions, if y'all have specific scenarios that you wanna ask about, just type 'em in the comments. Um, we will make those a priority. So if a question comes up, we'll certainly answer that in the home

Jen Gaudio (00:02:32) - Buying process

Mike Mills (00:02:33) - As we go. Anything in the home buying process? Any agents out there that have questions about deals that you're working on already? Um, my favorite one is I'll get calls from agents from time to time that say, um, you know, are, I talked to the loan officer on this li deal that we're dealing, they're about the listing agent or something. And they said it's been in underwriting for like five days. And, you know, they just, they're waiting on the underwriter to come out. And I'll say, well, it doesn't take five days to underwrite alone. No. So , if you're, if it's been five days, there's probably a,

Jen Gaudio (00:03:02) - There's probably something else going on. There's

Mike Mills (00:03:03) - Something going on that you're not hearing about. And, um, and so it's just little stuff like that, that if you don't do what we do every single day, um, you don't know about this stuff. There is a little bit of decoding. So hopefully we can answer some of those questions. But yeah. How are you today, Jen?

Jen Gaudio (00:03:16) - Yes, I'm good. I'm ready. Excited, busy.

Mike Mills (00:03:19) - Okay, good. I had to pull her away from this. I'm sure our boss man will see this and be real happy about it. But Sorry Steve, this is just how it's gonna be. She's helping me right now. . Right. So Jen is not an underwriter, but do you have one certification? Did I have, am I crazy? You just don't have your de or am I? No, de

Jen Gaudio (00:03:36) - No Sarr. Okay. Um, I can underwrite conventional loans. There

Mike Mills (00:03:39) - You go. That's what I was thinking. You can underwrite conventional loans, uhhuh, but you do have to have a certain license to underwrite FHA loans, which she hasn't gotten. But, um, to say that she knows a lot about how to do that would be an understatement. She knows a ton about this , um, and spends most of her entire day checking guidelines, finding creative ways to be able to get loans done like that is, uh, that is basically her job is solving all of our problems every day. So thank

Jen Gaudio (00:04:03) - You for that. Yeah. I'm the walking guideline. That's right.

Mike Mills (00:04:04) - Yeah. All right. So first thing I wanna start with, um, is special loan programs. So one of the questions that I get every single day, just about when I talk to somebody is a what kind of, uh, the, be the, the most prevalent one is what type of first time home buyer programs are out there, number one. Number two is, um, what kind of special incentives are there out, out there for me as a teacher, doctor, you know, uh, you know, anybody that's in the service world, uh, or I should say like what they would call a hero maybe. Um, and then, um, the third one is, uh, you know, I don't have the best situation in this part or this part, you know, but I have a lot of money. Let's say like, I got a lot of cash, so my credit's not great, but I got a lot of cash. Like, so surely there's something I can figure out, right? So everybody's looking for that special thing that's just there just for them. And there's one in particular we'll talk about called, uh, cra I'll let you explain what that is. Um, that's especially right now, very, very prevalent. You see these everywhere. Every loan or every mortgage bank on the, in the country is splattering all over social media about their zero down low interest rate, no mortgage insurance. You know, like, why isn't everybody in the country doing these loans?

Jen Gaudio (00:05:20) - Why isn't everybody doing it? Why

Mike Mills (00:05:21) - Isn't everybody doing it? So, so let's start there. Let's start with the C R a tell, tell us, tell everybody what that is.

Jen Gaudio (00:05:26) - So, in essence, in layman terms, what the CRA is, is it's basically the government saying you have these big banks and they're like, Hey, you have an allotted amount of money, right. In these high minority saturated areas.

Mike Mills (00:05:41) - And when you say big banks, it is depository banks. So banks that actually have checking accounts and savings accounts. We're a mortgage bank, by the way. So we don't have checking savings. We don't do car loans, we just do mortgages. Okay. Yep. So, and there's actually, I would say the vast majority of mortgage loans in the country are done by banks like us. Yes. Would you agree? Yes. Is that, is that accurate?

Jen Gaudio (00:06:00) - Well, that do them well, yeah.

Mike Mills (00:06:01) - Well, yeah. certainly that, but I do think, I think the market share is, I think it's almost 70% or something like that of independent mortgage banks is what we're call ibs. Okay. So these companies that offer these c r a credit or, uh, community reinvestment act loans mm-hmm. are depository banks. They have to be. Yes.

Jen Gaudio (00:06:18) - Okay. And the government basically comes in and says, we're trying to help, we have all this money that's allotted Right. In an annual budget. Correct. And we have to spend all this money to help areas, communities, um, that are highly saturated in a, in minorities, um, to try to build that area and try to give home ownership. Yeah. Um, like a goal.

Mike Mills (00:06:38) - Yeah. They're trying to make a affordable and

Jen Gaudio (00:06:40) - They have to spend this money. That's correct. They have to or they get penalized. Right. And they gotta spend this money. Yeah. So that's what the CRA a program is right now. Basically, if you're in a certain area. Um,

Mike Mills (00:06:51) - And how do those areas defined usually? Uh, like, and that's, I'm I'm asking it as a vague question because I think it is kind of vague. It, they get to determine it's

Jen Gaudio (00:06:59) - Based off of the census, right? So the census will come out, I think, again next year, right?

Mike Mills (00:07:03) - Yes. Uh, I don't know, ,

Jen Gaudio (00:07:06) - I think it's next year.

Mike Mills (00:07:06) - If I had somebody with a internet real quick, I'd have to look it up, but

Jen Gaudio (00:07:09) - I don't know. I, I think it's next year. Okay. Um, but when the census comes out again, then they'll reassess all of these different census tracks again. Right. Which is these old pot, your city is in a census track. Right. And so what they do is they go into the census track,

Mike Mills (00:07:23) - See what the demographics are, Uhhuh .

Jen Gaudio (00:07:24) - Yep. And if it's, hi, if it's over, it's gotta be highly saturated in a minority, um, in minorities. Right. In order to even qualify for this type of,

Mike Mills (00:07:34) - Is it all, is it just minority or is it low income to areas?

Jen Gaudio (00:07:39) - From the majority that I've heard, it's pretty much mostly minority.

Mike Mills (00:07:43) - Okay. So if you have a minority saturated area, that's the ones that mm-hmm. get the most,

Jen Gaudio (00:07:46) - That's the biggest thing. Gotcha. Okay. Um, and so there is that type of program Yeah. That, if you will, that, so what they're trying to do is they're trying to help these communities. That's right. That's what they're trying to do now.

Mike Mills (00:07:58) - Yeah. They're trying to get people to get home ownership. There, there's,

Jen Gaudio (00:08:00) - There's always caveats to it. Yes. Okay. It's never a like

Mike Mills (00:08:03) - Free

Jen Gaudio (00:08:03) - Lunch.

Mike Mills (00:08:04) - No.

Jen Gaudio (00:08:04) - Yes. There's for, so for the c r program, you gotta be in a particular census track. It's particular city area, whatever it is. Um, and within that census track, which sometimes is kind of crazy cuz you might find a census track where you're like, now I know part of that city is definitely not highly saturated. Right. Um, but

Mike Mills (00:08:22) - The houses, the address actually has to qualify for it. Yes. Is a big part of it, right? Mm-hmm. mm-hmm. . So you can't just buy any house anywhere. You have to buy a house in that area,

Jen Gaudio (00:08:31) - In that census track. Right. Every address is follows inside a census tract. Correct. Per county basically. Correct. So, um, so yes. That, that is a very popular program right now we have it too. Yes. We just have it in obviously certain areas. Yes. Um, the Houston area is huge right now. Mm-hmm. , it's pretty much almost every, almost every census track in the Harris County, um, Waller. Yep. Every area in Houston down there. Lots of areas in Louisiana, Mississippi, Florida. Yes. Um, but yeah, not anything here locally.

Mike Mills (00:09:02) - Well, there's not very many areas in the DFW area that would, that would fall into that category. Correct. Because it is, I mean, it's a good mix of people everywhere and there isn't any one particular area that's overly concentrated with any minority group for the most part. Yeah. I'm sure there's exceptions to that, but, um, for the most part you don't see that as much up here. And, but the thing is, is, is why these programs are so widely, um, touted, let's say, is because it's very much become a marketing ploy to some extent Uhhuh. . Right. And what I see often is, I see, and it's all over social media. You'll see it on Facebook, you'll see it on Instagram, you know, TikTok, whatever. There'll be a mortgage bank like us, very similar that'll say, Hey, we've got this zero down payment, which it is low rate compared to market average. Mm-hmm. , which it is No mortgage insurance, no

Jen Gaudio (00:09:50) - Mortgage insurance that you're thrown away every year.

Mike Mills (00:09:51) - Everybody there isn't. Right? Mm-hmm. , these are all great things. Like these are fantastic, but you gotta understand that there is a catch. And the catch is that it has to be a house in a particular area.

Jen Gaudio (00:10:01) - Yeah. Or, but not just, so like for us Yes. That particular program, the majority of the caveats is really like, you know, the followed returns that you're filing Yes. The area that you're in. But like there is this a similar program that has been advertised all over the place by a very big bank.

Mike Mills (00:10:19) - Okay. Yeah. You were telling me about

Jen Gaudio (00:10:20) - In America, right?

Mike Mills (00:10:22) - . So it's a big bank located in America. America, okay. Um, so it's an American bank. Yeah, yeah, yeah, yeah, yeah. So you could say it's bank, uh, some sort of a bank. Okay. Gotcha. I gotcha.

Jen Gaudio (00:10:33) - I got, um, and they have the same program except that program. And I've actually called to try to just, I wanted to find out more about it. Sure. Cause I'm like, man, it, it can't be this simple cuz you see it all over the place. Yeah. So we ha I called to the Well then you find out there's like months of home buyer courses you have to do and then you have to fit into like this little tiny box. Yes. And if you don't fit into this little tiny box, can't get it. You can't get it. Right. But then what happened?

Mike Mills (00:11:02) - You already came under contract with a house and

Jen Gaudio (00:11:04) - You're there with this big bank that's here in America. Yes. Who's not known for closing loans on time. Right. But you're already so invested with them. You

Mike Mills (00:11:13) - Have a contract, you've put a furnace money Yes. Got

Jen Gaudio (00:11:15) - Inspections. Cause you tried to fit into this program with them. Yes. Um, and it does work out for some people. Yes. I'm not saying that it doesn't work out. Absolutely. It does work out for some people and it's probably the best thing for them. And you know, it might have been trials and whatever. Yeah. But I'm not saying that it's not gonna work for everybody. No. But majority of the time, if you don't fit into this little box and your stuff hasn't expired by then Yeah. Um, then you're already stuck there. And now you have the other Power five programs that you can Right. Do well,

Mike Mills (00:11:41) - And then the issue that you have is that at that point, because then this is where realtors get into, uh, really having an issue accepting certain types of loans or certain types of pre-approvals even from certain banks. Because why is that? Well, the reason is, you know, or well, you know, the reason, but it, it's, it's whenever you, whenever you get into those situations, there is no accountability to anybody. Right. So if it's a big bank located somewhere in America, or if, if it's a bank that likes to chase cars around the corner and mm-hmm. and if you like quick banks, you know, those type of banks, the, the, this is fun. You play this game all day. . But the thing about that is, is that once you're into that ecosystem and you've got your pre-approval and your, your pot committed essentially is my favorite term, then there's no way, I mean, you can get out, but you're, you're running into issues. You may lose your contract because the selling agent's like, I'm not gonna extend another two weeks.

Jen Gaudio (00:12:37) - No, you're gonna lose your money. You're gonna

Mike Mills (00:12:39) - Lose earnest money. Yeah. You're gonna lose your inspection money, you're gonna lose the money you paid for an appraisal. All that kind of stuff. And it's not, I always, you know, tell people it's not, you know, agents get frustrated cause they're like, well, they keep calling Chase or whatever. I'm like, look, or the base that the bank that chases you. But I keep saying it's just what people know, right? Yes. They don't know any better. Yes. It's not, they're not trying to be malicious or irresponsible or whatever. They just don't know. Yeah. Because unless someone's holding their hand and guiding 'em through the process, they just don't understand that there's another way to do it. Yeah. You know, and now

Jen Gaudio (00:13:10) - There, but there are other programs like there, there are your other programs that almost everybody Okay. Can offer good. But a lot of people don't know about 'em. Like, you have your good neighbor. Yes. Okay. You have your good neighbor one that's for our, um, law enforcement, nurses,

Mike Mills (00:13:27) - Teachers, things like that. But what's

Jen Gaudio (00:13:29) - Their caveats? You have to be servicing in the area. Correct. In that locality. Yes. So there's always rules. Yes. Always rules. Okay. So like a, for majority of these programs that are out there, that it's, if it sounds too good to be true, where you only gotta put a hundred dollars down on a house and you buy a house for a hundred bucks, it Yes, it is. That program does exist. Yes. Um, but Uncle Sam's gonna get his money. Yes. One way or another. Yes. If you're gonna ask, so let's talk about the power five real fast. Okay. I call him the power five. My daughter plays softball. So we talk about Power five, right? So pull that mic a little closer. Oh. Um, so I talk about Power five and I consider, so you have the five, which is va mm-hmm. , right? You can get a VA loan that's for our veterans. You can get an FHA loan backed by hud. Yep. Right. Um, U S D A are rural development mm-hmm. . And then you have Fanny and Freddie. Right. Which is conventional loans. Yes. Conventional loans. Yep. But they're two different agencies, so we separate them out. Yeah. So that's our Power five. So some, a lot of these programs fall underneath one of those five of the power fives.

Mike Mills (00:14:30) - Where's the first time home buyer loan

Jen Gaudio (00:14:33) - ? There isn't one. What? There's not really a first time. What people ask me this all the time, what do you mean? What's the first time home buyer loan? What, what are you talking about? I'm so confused. There's not a true first time home buyer loan. I know. Sorry. There are programs that hey, petty, there, there are programs that might require you to be

Mike Mills (00:14:50) - Not have owned a home in the last three years, not

Jen Gaudio (00:14:51) - Have owned a home in the last three years, but not technically a first time home buyer program. They're really

Mike Mills (00:14:55) - A conventional, Fanny and Freddy have an option where you can put down 3% Yes. Instead of 5%. Yes. If you've not owned a home in the last three years. That's right. That's perfectly loud. But you do have to take a first time home buyer course. Yes. Which is like, what are they, like 75 bucks now days?

Jen Gaudio (00:15:08) - Um, yes. Some of 'em are,

Mike Mills (00:15:09) - I mean, that's not that big deal. Like small little thing that you have to do. And I think they're pretty quick. They take like 20 minutes or something. They, they're not very hard. But that is a technically a first time home buyer loan, but it's a conventional loan that still has all the conventional rules. All

Jen Gaudio (00:15:21) - The conventional rules. There's

Mike Mills (00:15:22) - No incentives involved in it whatsoever. , you just put down a little less money because they're trying to be like, okay,

Jen Gaudio (00:15:27) - That's all it is. And then so like, let's talk about your, um, F F H A. So you're hud remember this is the government? Yes. So it's backed by hud. Okay.

Mike Mills (00:15:36) - But let me clarify something on that too, because this happens more with va, which we'll get to in a second. But people will say, well, F H A says this, or VA says, okay, no loan goes to F H A or to VA in the process of doing the loan . Okay. The loan is with the bank, with the underwriters and the staff that is doing the loan to F H A guidelines. Yes. Okay. The government, the VA and the F H A are not issuing loans. Okay. They do not issue loans. They, they're the governing

Jen Gaudio (00:16:05) - Guarantee them or they, they creates

Mike Mills (00:16:07) - The rules to guarantee that loan. So if it defaults, then the bank has coverage essentially.

Jen Gaudio (00:16:11) - Correct. Correct. Sorry. There are instances in VA where you do have to submit to them, but we'll talk about that in a minute. Right. So let's talk about hud, F h a government loan. Okay. Backed by the government. So I always tell people, if you were default defaulted on some student loan mm-hmm. that was government backed, don't go ask for a government backed mortgage loan. Right. Because Uncle Sam's gonna get his money. Right. , he, if you already owe the government money, they're not gonna go give you another government backed loan. Correct. Okay. Um, but there are programs, they're not programs per se, they're just different subsections, if you will. Yeah. Of the master f h a loan. Yes. So there's options within the FHA loan. Yes. But that's all it is. It's just add-ons. If you wanna think of it like a menu. They're just a la cartt sides that you can add Yes. To the main loan. That's all it is.

Mike Mills (00:17:03) - The other special programs that get brought up and it does fall into the category. This is one of these, um, three, or excuse me, um, uh, uh, first time home buyer loan that gets put into that category often, but it's down payment assistance. Okay. Oh yeah. Yes. And, and that is a program. So talk a little bit about down payment assistance.

Jen Gaudio (00:17:20) - Again, you will get money Yes. But it will come at a cost. Correct. So, um, down payment assistance, it is great. Remember as originators like yourself, you put the programs in front of somebody who's gonna be the best option for them. Right. So somebody who might not have a lot of capital and really wants to own a home and they really don't care about the interest rate, they just wanna own a home Yeah. For them and their family. Great programs down payment assistance might be the route to go. You get the cash, but you're gonna have caveats. A lot of down payment assistance programs require you to live in the home anywhere between three to 10 years. Yes. Otherwise you gotta pay back every penny that they give you. Yes. And nine times outta 10, you're gonna have a much higher rate. Correct. Um, than what your standard is.

Jen Gaudio (00:18:02) - Yes. Because again, they're gonna give you the money, but it's gonna come at a cost and they're gonna get it in one way or another, whether it be in the interest rate that they're gonna charge you because we, us nobody dictates that rate, but them for down payment assistance. Um, so it's not like, you know, we could play with it or anything like that. There's nothing I can do. You can't even buy it down. A lot of times. Um, now outside of our in-house, we have an in-house, um, down payment assistance program, if you will. Yeah. But majority of these other, um, down payment assistance programs, they have caveats. What they do is they slap a second. Okay. So all that means is on your home, when you own it, they'll put something on title, similar to car title, let's say if you have a loan. So on a house they'll slap a little soft second lien on the side. Yep. Um, that basically says if you try to go do something within the timeframe that's you're allotted, that you're required to live in that home, um, you have to pay back every, every bit of that. Yes. Every bit. Right.

Mike Mills (00:18:56) - There's no proration. It's, it's, if you, if you refinance it or sell it, you're paying it back.

Jen Gaudio (00:19:01) - And each down payment assistance program has different rules. Yes. So, and we have to follow each of those rules. Now they all start again, one of the power fives, it's either gonna be a conventional loan or an FHA loan, or a VA loan or a U S D A loan. One of those four, it will be one of those four. So you still have to follow those rules. And then you have to add on the down payment assistance rules on top of that.

Mike Mills (00:19:23) - And most of them have credit requirements. So you have to have a minimum credit score to qualify. Most of them have income limits, which means that you can't make too much money to qualify for this. They don't want somebody who makes half a million dollars a year, you know, able to go in there and get this money from the government or from the lo localities. Mostly municipals, I say government, but it's, it's state and local governments, state and local. It's not the federal government. It's getting this money. Um, and uh, and like you said, it's not free money. It comes with a much higher rate . But what I always tell people is like, look, as long as you understand what you're getting into. Yeah. Right. If you understand that you're paying a higher rate to get money so that you don't have to keep renting, so you can start the path of home ownership and you understand it and it's a benefit to you, then great. Yes. They're great programs. Where I get frustrated as a, as a loan officer in the business, is that there's this idea in our industry, and I don't even fault it's not borrowers, it's it's people that do our jobs that use these tools as advertising mechanisms to get people to make the phone ring.

Jen Gaudio (00:20:24) - Oh yeah. You know, because then they get in and then you're like, okay, you don't qualify for that.

Mike Mills (00:20:27) - Right. And it's, and it's sold as this magic pill that's going to make you be able to buy a house with no money. Mm-hmm. with no catches. And then you call, I, I always use the joke, and I told you this a minute ago, but I always used the joke of, you know, back when I was a kid watching, you know, afternoon cartoons or whatever, after school was over with, there'd be those advertisements that would come up for like the local used car dealership on like channel 21, K T X A, you know, in between full house or whatever. And it would pop up and the guy be like, Hey, I'm Bobby Joe down here and Don Davis, blah, blah, blah. You come down here tomorrow, we got, today we got this car for $5,000. No msrp, no taxes, just get here today. And then you're like, oh shit, I need a car, let's go. So you run down there and you're like, Hey Bill, I saw your commercial. You know, can I buy that car? You're like, oh man, sorry, we just sold it.

Jen Gaudio (00:21:11) - Just sold it. But, but I got this one over here. Yeah.

Mike Mills (00:21:14) - I've got these other three. And, and again, you know, unfortunately, like I, I probably would do better if I did more of that. I just can't bring myself to do it because I just wanna be upfront with people. I wanna be like, look, these things exist and they are helpful. And sometimes, like with the CRA programs, we have some in certain areas, Houston, Louisiana. Yeah. We don't have any locally here in DFW right now

Jen Gaudio (00:21:36) - Until maybe after the census. So

Mike Mills (00:21:37) - Maybe after the census happens. Um, but those type of things, they all come with catches and there's no such thing as free money. There's no such thing as this, you know, perfect program with you. If you have poor credit and you have no assets and that you're gonna be able to get into a loan. Yeah. It, they all, if you don't fit in the box Right, yeah. The little box, then it's either gonna be very expensive. Yeah. You're gonna have a really high rate, require a lot of cash, or you're not gonna be able to get the loan. Yeah. And that's usually how it goes. So it's, you know, I I I, I always tell people I'm kind of like the, I take the air outta people's sales because, you know, they're like, well, I heard about all these first time. I'm like, look, I, you know,

Jen Gaudio (00:22:12) - There's not a first time home buyer. There's

Mike Mills (00:22:13) - Not,

Jen Gaudio (00:22:13) - It's not there. There's not, it's not there. There are different programs that have different requirements Yes. Um, for it, but there's not really a first time home buyer loan. No.

Mike Mills (00:22:22) - No. . But, uh, so, and you know, the one that gets for whatever reason has carried on forever and is barely in existence anymore. But it's still, there is like the Homes for Heroes. One where if you buy a house in a particular area, you can get it for like half price. Remember that one where you, that's the,

Jen Gaudio (00:22:38) - That's the good neighbor. Right.

Mike Mills (00:22:39) - But you have to, like you said, it has to be in that area. And there has to be houses available for that program.

Jen Gaudio (00:22:44) - Not only does there have to be houses available mm-hmm. . So there has to be houses available. Right. You have to, it has to be your primary residence, obviously. Right. Two, you have to serve in that city. Right. So let's think about that. The homes that are gonna be on the market in this area might not be an area you wanna be in. Maybe, but maybe not. Right. But it all, but it's an area that you are serving. So if you're a law enforcement agent, um, officer, you have to be serving that locality Yeah. In order to even buy there. Right.

Mike Mills (00:23:14) - Or a nurse working in the hospital in that area. In

Jen Gaudio (00:23:16) - That area. Yes. And for you to even to, and then you have to submits

Mike Mills (00:23:20) - Teaching in that school district.

Jen Gaudio (00:23:21) - Yes. Then you have to submit to them to get approval of what your discounted price will be. Right. So it's not necessarily a flat 50%. It's not like, okay, purchase price is a hundred thousand dollars. Um, I'm gonna get, I'm I'm gonna get 50% off of it. I'm just gonna buy it for 50, $50,000. That's not how that works. You still, you have to get it approved in order to see what your discounted price will be. Right. Depending, I mean, yeah.

Mike Mills (00:23:44) - Well the other, the other part of that is that, that is an incredibly effective loan program when there's a lot of inventory. Yes. Okay. But when there's no inventory, which we haven't had any inventory for five years. Yeah. Something like that. If you go,

Jen Gaudio (00:24:02) - Look, there's not a whole lot of houses on the hud. No. Um,

Mike Mills (00:24:04) - No there's not. There's just, there's just not there. So, so it's, but if you get lucky, yes, there are some, again, it happens for sure. Yeah. But it's just not something that happens all the time. Because if it did, you would hear everybody getting zero down loans, the, you know, good neighbor loan. Like it would be all over the place. Yes. But it's not. And it's not because there's always these catches and stuff. And again, this all comes down to the, what we started with in that these programs exist. They can be very helpful for a lot of people, but they're not for most people. Most, I would say most people don't qualify for them. And as long as you understand what the program is, what the costs are, essentially mm-hmm. , and I mean costs as far as your time, your money, any

Jen Gaudio (00:24:44) - Consequences. Your consequences, you follow

Mike Mills (00:24:45) - It. Correct. All that stuff. As long as you understand that, then those are great options for you. Yeah. But this idea that it's just this magic bullet is just not correct. Yeah. And that's, that, that's really the the point I was trying to drive home more than anything. Yeah. Um, and we have all of those options, by the way. We do

Jen Gaudio (00:25:01) - Every single, all

Mike Mills (00:25:01) - Of them. Seth, td, H C A, Tisha, the CR Loans, T Shaq A, any of those programs, we have 'em available. There's, they're are loans.

Jen Gaudio (00:25:09) - We have our own down payment assistance program in house. Yes. Yep. That's

Mike Mills (00:25:12) - Right. Mm-hmm. . Um, so we have 'em all, they're just, um, you know, as long as you understand what they're made of and what the ins and outs are, then they can be good deals. Yeah. Um, alright. So let's get back into FHA for a second. Okay. Oh, there's Shelton. What's up Shelton?

Jen Gaudio (00:25:25) - Hey. Hey buddy.

Mike Mills (00:25:28) - Um,

Jen Gaudio (00:25:29) - Ms. Shelton.

Mike Mills (00:25:30) - So let's get into fha. So F HHA loans. Um, these are the ones, if there is the closest thing to a first time a home buyer loan, this is probably it. Yeah. Right. Doesn't have any requirements for that, but low down payment. Um, it's very,

Jen Gaudio (00:25:43) - Well, I mean, conventional can be low down payment too. Sure. That's true. That's true. Because that's like, and we'll talk about conventional in a minute, cuz I feel like the biggest myth Okay, we'll get there in a minute. Sorry. Sorry, sorry, sorry.

Mike Mills (00:25:51) - So low down, relatively low down payment. Uhhuh. . Okay. Um, very, uh, forgiving when it comes to credit and, uh, issues that you've had with bankruptcies mm-hmm. and foreclosures mm-hmm. . Mm-hmm. much more forgiving than conventional loans. Mm-hmm. , um,

Jen Gaudio (00:26:03) - Forgiving on debt to income ratio.

Mike Mills (00:26:05) - Yes. The greatest thing that I, when I explain to buyers the difference between FHA and conventional is it's really comes down to your credit score in most cases. Mm-hmm. . Because if your credit scores on the lower end of the scale, FHA is typically gonna be a better loan for you for two reasons. Number one is your, your rate is gonna be typically much better. Mm-hmm. Much better if you have a lower credit score with FHA versus conventional. Mm-hmm. . But really it's the, it's the mortgage insurance. So with mortgage insurance, mortgage insurance for FHA is determined by the fact that you're doing an FHA loan. That's it. Mm-hmm. . So if you're doing a, I don't know the exact number, but let's say if you're doing a $300,000 purchase price, your, your mortgage insurance on FHA loan might be around 200 bucks, 2 21 78 something, somewhere in that neighborhood somewhere Forever. Forever, right? Yes. Forever. Forever. As long as you have that loan.

Jen Gaudio (00:26:52) - Yes. Yes. Yes.

Mike Mills (00:26:53) - If you, if you refinance, you can get rid of it. You know, that kind of thing. Yes. But it doesn't go away on its own. Especially if you put down the minimum, if you put down 10%, you only have to have it for 11 years though. So there's that. Oh, just 11 years. Only 11 years. It's fine. So, um, but if you do

Jen Gaudio (00:27:07) - A and there's an upfront

Mike Mills (00:27:09) - Yes. There's an additional charge.

Jen Gaudio (00:27:10) - Again, government's gonna get their money, they're gonna get paid.

Mike Mills (00:27:12) - He's,

Jen Gaudio (00:27:12) - He's gotta get paid.

Mike Mills (00:27:13) - Then if you do a conventional loan, the mortgage insurance is, um, much more expensive. If you have a high debt ratio, if you have a low credit score, if you, um, have, um, uh, what was the other, uh, going blank, there's three things. Credit score debt. Oh, your, your down payment adjusts the amount of it too. Uhhuh. So you put less down, you have more, you put more down, you have less mm-hmm. . So your conventional mortgage insurance premium is based off of several factors related specifically to you. Yes. Whereas your F HHA mortgage insurance premium is based on just the fact that you're doing an FHA loan and nothing else. Yep. So if you have poor credit or you, or let's say lower end of the spectrum credit mm-hmm. , you have a high debt ratio, FHA is gonna be much more affordable for you Yes. To do than conventional. Yes. And that's the biggest difference between those

Jen Gaudio (00:28:01) - Two. Yes. It is a whole lot more forgiving. FHA is gonna be more forgiving on your debt to income ratio. Which is exactly what that sounds like. I get a lot of questions of what debt to income is. Well what that means is how much do you make and how much is all of your debts, including the mortgage on monthly basis. On monthly basis. On a monthly basis. Right. All of your, your mortgage payment and all of your debts that's on your credit report into how much you make a month. Correct?

Mike Mills (00:28:24) - Correct. And there's a front end ratio and a backend Yes. Ratio front end and both of them matter. They

Jen Gaudio (00:28:29) - Do. Yes, they do. And f HHA right now does not like higher front end ratios. What's

Mike Mills (00:28:35) - A front end ratio?

Jen Gaudio (00:28:36) - Which is just your housing. Yes. Your housing compared to your monthly income. Right. Of what you make gross. Okay. Um, so yes, f h a, it's exactly what you said. It's much more forgiving on credit, um, debt to income ratio, things like that. Yes.

Mike Mills (00:28:51) - Now it has a lot more flexibility for you to be able to get a loan if you're in a situation where you've had some issues. Yes. It's really what it boil down to.

Jen Gaudio (00:28:57) - But comes down to mortgage insurance for the forever. Correct. The life of the

Mike Mills (00:29:01) - Loan. There's always an expense until

Jen Gaudio (00:29:02) - You get out of it.

Mike Mills (00:29:03) - It's always a cost. Yes.

Jen Gaudio (00:29:04) - Always is.

Mike Mills (00:29:05) - It's no free lunch.

Jen Gaudio (00:29:06) - Um, but like I get, I get a lot of agents that call me. It's actually funny cuz you had a, um, an agent called me the other day and was like, Hey, can, can we get an updated pre-approval for your loan officer that doesn't have fha? And I was like, why? Well, you know, we're just really afraid about the appraisal. Why? Yes. Why the IT value is not determined by program. No. Okay. Your program has nothing to do with value of the home. Right. Your value is gonna come in at value depending on the comps in your area. You could line the whole house with gold. I really don't care. But if your house next door who looks exactly the same to yours was in foreclosure and it sold for way less, well that's gonna be part of your cops.

Mike Mills (00:29:47) - Well, and I don't know if, I mean, I think most agents maybe realize this, but maybe not everybody, so I'll just say it, but when, when you do a purchase, it's different than a refinance. But when you do a purchase on a home, we have to provide the purchase contract to the appraiser. Mm-hmm. it's required. Mm-hmm. we have to get, they won't even go out there until they have the purchase contract. Mm-hmm . Okay. So what that means is that, and,

Jen Gaudio (00:30:06) - And you have to have a case number too for fha. Yes. The reason being is just piracy and peop some people don't, don't know that. And that's because what's to stop Joe Schmoe from going out and ordering a case number, which is just an identifier number for hud. Right. Right. For that property. Because they wanna be able to keep track of every property that's gonna be insured by them. And so what's to stop Josh Schmoe from going out there and ordering case numbers on 50 million properties? So they have, we have requirements. You have to make sure that you have a application on that property and a contract before you get an identifier number for that property. And then you have to have an approved appraiser for FHA to go appraise the property.

Mike Mills (00:30:44) - That's right. And when the appraiser goes out, he has a copy of the contract. So the good thing about that is they have a target. Yeah. They have a number that they're shooting for. Yeah. And what I tell every agent is, look, if it comes in at value, cuz you get that a lot, it's like, well this house is supposed to be this much or worth that much. I'm like, what did you sell it for? Yeah. . Well I sold it for 300. Okay, well then it came in at 300. Yeah. So we're good. We're like, well it's probably worth three 10. The app, there's no incentive whatsoever for an appraiser to give you over what the value of the home is. Mm-hmm. . Okay. There is zero incentive for them. Right. But that means if you actually get an appraisal where it is more than what you're purchasing the home for, it's probably worth quite a bit more than that. Uh, yeah. And you could probably sell it for more because again, there's no incentive for the appraiser to give you more value. That's right. They have zero incentive. So they're not going to, there is incentive for them to give you lower value because they don't wanna get in trouble for overvaluing and mis misu properties cuz they do get graded on this type of stuff. Can you turn your blink, your, your clinks off or whatever you got going on over there. Like can you mute?

Jen Gaudio (00:31:48) - Did I clink something? Well,

Mike Mills (00:31:49) - No, no. Your your like, oh yes, your,

Jen Gaudio (00:31:52) - Sorry.

Mike Mills (00:31:52) - Your teams keeps popping up, Lord. Um, . Sorry, technical thing there. . But, but when you look at, um, what appraisers are incentivized to do, they're not incentivized to give you higher value. They're incentivized to give you a lower value because they don't wanna get into trouble. Now it isn't something that they're going to, because trust me, if the value comes in low, I know we do, I can't speak for everybody, but we are gonna fight that value tooth and nail. Yeah. With every way that we can Yeah. To get it to where we can qualify. We're gonna get comps from the realtors. We're gonna get, um, we're gonna run newer

Jen Gaudio (00:32:22) - Listings if we need to. Yes. Yeah.

Mike Mills (00:32:24) - We're gonna get, uh, something called collateral underwriter that's gonna run the property to see what it values it at, which is just basically like a, I don't wanna call it AI cause it's not really ai, but it's like an algorithmic program that evaluates other houses that have sold in the area and creates its own version of an appraisal mm-hmm. . Um, which are pretty accurate these days. So appraisers watch out. Um, but we use all of those methods to try to make sure we get to the value. And again, if you wanna look at incentives, the appraiser, you know, Mr. Joe Appraiser who's just doing his job, going out there every day, he doesn't want Jen Gadio and Mike Mil. Well I, I can't call him, but he doesn't want the appraisal desk for Verity mortgage blowing up his phone for five days trying to get

Jen Gaudio (00:33:01) - You, he shorted me $5,000. Right. He doesn't want that. He's gonna do, appraisers will do everything that they can that would do

Mike Mills (00:33:07) - The best job they can do

Jen Gaudio (00:33:08) - And look in the area to try to hit that target that they can't. If it's vastly off, there's a reason why.

Mike Mills (00:33:13) - So speaking of the appraisals with F H A, what is it? Why? I mean, I'm asking you questions you know the answer to, but what are,

Jen Gaudio (00:33:20) - There are some weird things about F hha. Okay. Okay. Like, um, peeled paint.

Mike Mills (00:33:26) - Yes.

Jen Gaudio (00:33:27) - If the, if it's, let's say you gotta shed out back and there's some, the paint's old and it's cracking and it's peeled. F h a doesn't like it. It's a

Mike Mills (00:33:34) - Safety thing.

Jen Gaudio (00:33:34) - It's a safety thing. They don't like it. They don't want, they want you to peel, they want you contaminating your water, whatever. Yeah. They want you sand it down, repaint it. Okay. Yes. It's something that they just want a faia. Yep. Fascia replacements, like these are just minor exposed

Mike Mills (00:33:45) - Wires.

Jen Gaudio (00:33:46) - Yeah. Exposed wire like fascia, soffits, like those things they want it replaced Safety issues. Yes. Those are safety things for them. Yes. Um, so they're a little bit harder on those things. Surplus land is a big one. Yeah. Um, excess land is what they consider it. Okay. Um, so that's a big one with F H a, um,

Mike Mills (00:34:00) - Where, explain what that means

Jen Gaudio (00:34:02) - Depending. So it has to, it there's a lot that goes into the surplus land. Yes. Uh, calculation. But for f h a, basically if there's, if you're buying a home that's on 40 acres, right.

Mike Mills (00:34:14) - Mobile home.

Jen Gaudio (00:34:15) - Sure. A mobile home on 40 acres,

Mike Mills (00:34:17) - Excuse me. Manufactured housing.

Jen Gaudio (00:34:18) - Yes. Manufactured home. Sorry. Um, that is a lot of excess land. Correct. So there's

Mike Mills (00:34:25) - A lot of value in the land. There's

Jen Gaudio (00:34:27) - A val, a lot of value in the land and so not

Mike Mills (00:34:29) - Necessarily a ton of value in the house, in the

Jen Gaudio (00:34:31) - Home. Right. And so what FHA does is they basically make you look at the surplus land is what they call it. The appraiser has to address it. What is the highest and best use of that land? Is it not commercial? Is it residential? Is it being used in the highest and best use? And then if it is kind of pretty much, and it's not common to the area Right. Too, let's say, um, then they might have to count that out of the value. Right. Um, so yeah, there is a little bit more rules to that. And then there's other rules like, um, that are for F H A, not just, I mean I guess it could fall into the appraisals too, but about flipping. So there are flipping rules and all these rules, by the way, are really there at the end of the day, protect the buyer to protect the buyer. Yeah. That's what all these rules are there for. Yeah. They're to protect the buyer to make sure they're not getting screwed up. Yeah. And out of a bad deal or something like that. Right. So

Mike Mills (00:35:22) - You brought up flipping, which is a good one. So especially related to F fha. Um, talk a little bit about that because there used to be, and this is cuz this thing moves all over the place all the time. There many, many, many, many years ago there was the flipping rule and it was 90 days or less. Wasn't that basically what it was? I know that there's rules for different types, but then it switched or it moved or maybe it was six months and then it switched to, you couldn't do it period for less than 90 days. And then it became, well now you can do it in less than 90 days, but there's these stipulations and then it switched back to you can't do it at all less than 90 days and if it's less than six months, you have to do A, B, and C. Yeah.

Jen Gaudio (00:36:02) - And it used, and then it used to also be like data. It didn't u it used to be date off of date of recording. Right. For your time clock to start. So the newest and latest Okay. Is, um, sub 90 days is not good. Now,

Mike Mills (00:36:18) - By the way, hang on real quick before you go down this hole. So this is something I'm wanted to mention earlier. So right now Jen has her laptop out and Jen is typing this in and trying to figure out exactly because she's terrified that she's gonna give the wrong information.

Jen Gaudio (00:36:31) - Well, it changes all the time.

Mike Mills (00:36:33) - No, no, no. This is a good thing. This is a good thing.

Jen Gaudio (00:36:35) - Like it's gonna change again in a month, right? Yeah. FHAs a handbook, it's gonna change again in a month.

Mike Mills (00:36:40) - So my point of this is that when you, the reason I love Jen and I always go to Jen for these questions is because you and I are very similar and that I don't wanna be

Jen Gaudio (00:36:49) - Wrong ,

Mike Mills (00:36:49) - Right? Well, absolutely. Like, I don't wanna be wrong, but I always hedge my bets. I always say, here's what I think, here's what I'm pretty sure it is, but let me double check. Like I, because man, we just get shit wrong all the time. I don't mean like, that sounds like we don't get shit wrong all the time. We, we think

Jen Gaudio (00:37:06) - It's be it's because it's ever changing. Correct.

Mike Mills (00:37:08) - It always

Jen Gaudio (00:37:08) - Moves and sometimes we don't get, like we, so like if you're subscribed to your power fives, you'll get some of their updated stuff that they come out, but sometimes they like sneak some shit in there and you're like, I had no idea.

Mike Mills (00:37:22) - Yes. Well, it happened to us like last week. Yes. So, so the other day, like last week, I got a call from a client and he was trying, he had an investment property that they were repairing and fixing and he called me and said, Hey Mike, um, you know, we're about done with this, but um, we're wanna look and see what our options are for refinancing this and we wanna take equity back out. So basically, let's just say they bought it for a hundred thousand dollars. They put 50 grand into it, it's now worth 300. And they want to get the excess equity because they wanna do it again. They want to go buy more properties with the cash that they, you know, picked up from the equity. It's a cash out loan. So, um, he says to me, uh, and I'm like, yeah, that's no problem.

Mike Mills (00:38:01) - You know, as long as you've owned it for six months, then you're good to go. You know, and there was, there's stuff with appraisals and, and showing the cost or whatever mm-hmm. mm-hmm. . But, but um, so he texts me back and he's like, Hey, you know, my son was talking to another loan officer and they said that Fannie or he said that conventional loans, um, are switching on April the first to where you have to own the property for a year before you can do the loan. And I said, well, there used to be a rule mm-hmm. where you had to own it for 12 months to do a cash out. Because at first we actually, we were talking about rate and terms is what we were talking about. Mm-hmm. , . And I said, that's a cash out rule, but it's actually six months, it's not 12 months, you just have to have it for six. And um, he's like, oh, okay, cool. Yeah. And I was like, and I even was like, you know, sometimes people don't, they're being, the banks have their own rules and like I was, I wasn't like talking trash about the guy that gave that information, but I was just like, ah, not everybody can do everything Oh. Time, but we're pretty good. Yeah. Right. So, so then I call you Yeah.

Jen Gaudio (00:38:57) - And I, and I, and one of 'em had changed Yes. Of the conventional Yes. But the other one hadn't followed too, right?

Mike Mills (00:39:02) - Yeah. So I called, well no, the first time I called you I was like, Hey, have you heard this? And you're like, oh yeah, wait,

Jen Gaudio (00:39:08) - What?

Mike Mills (00:39:08) - Yeah. You're like, no, what, it's six months. It's always been six months. And I'm like, yeah, that's what I thought. Like we were both just like, yeah, yeah, we're right. Yeah, we're both right. Yeah. Right. So then I, I text the guy back and I'm like, Hey, you're good. You know, I double checked, like, we're fine. Yeah. Six months, whatever. Then he texts me back, I don't know, an hour later and he is like, Hey, I just wanna make sure Yeah. Because this, we are hearing you

Jen Gaudio (00:39:27) - And then we get notification. Yes. That

Mike Mills (00:39:30) - Freddy. So it's funny because then I call Brian and I'm like, Hey Brian, you know, I talked to Jen, she said this, this is what's going on. I said, you know, he is like, oh yeah, well hang on. He, he did a little digg in and he's like, oh yeah, sure enough, man, Fanny, Fanny did change theirs. It's in here. It came out, it was like, I don't know, three or four weeks before that. Yeah. And he's like, we just missed it. And I was like, it'll be nice for us to,

Jen Gaudio (00:39:50) - But, but Freddy hadn't updated yet.

Mike Mills (00:39:52) - Correct. And he said, but Freddy, you can still do less. Yes. Or you can still do six months. And I'm like, sweet. Okay. So I text the guy back again and I'm like, Hey Fanny, that guy was right. Absolutely. But Freddy we're good. And then

Jen Gaudio (00:40:04) - Freddy followed suit

Mike Mills (00:40:05) - That day. That day, that day

Jen Gaudio (00:40:07) - They followed suit that day. And now I was like, no, can't do 12. Okay. Back to property flipping.

Mike Mills (00:40:12) - Sorry, I had to, I had to just That's just an example. It

Jen Gaudio (00:40:15) - Changes all the time guys. Yes. Yes. Um, okay, so property flipping. Yes. So f h a basically again, they wanna protect the buyer. So in the property flip sub 90 days. So basically what that means, and it's based off of the acquisition date. So if I bought a property, the funding

Mike Mills (00:40:28) - Date, basically

Jen Gaudio (00:40:30) - The day that I sold it, right. The day I signed. Okay. Um, from that date to 90 days, I can't execute a contract f h a to a new buyer. Right. Okay. Day 91 I can correct. But there are rules. Yes. So if you're between 91 and 180 days, I have to prove one of two things. I either have to get a second appraisal to justify the value that you're selling at mm-hmm. or I have to prove that the seller is not selling it for more than a hundred percent than what they bought it for their

Mike Mills (00:40:56) - Acquisition cost.

Jen Gaudio (00:40:56) - Yep. Yep. One or the other. So there's still rules. And so you can still do it within the 90 to 191 to 180 days, but there's just rules inside.

Mike Mills (00:41:04) - Well, and it's a good thing to, for agents to understand when you're listing a house that is from an investor that has flipped it. Okay. You everything in our job's about expectations. Yes. So when you're listing your property, if, if there's an opportunity for you to accept an F HHA offer. Yes. If that becomes a possibility, then you have to let your seller know, Hey look, you bought this house, you know, we're gonna sell it on this day. We can accept FHA offers on the 91st day. But if we can, if you're okay with us providing to the bank your acquisition cost, because we don't like when we get that from the seller, we're not giving it to everybody. Like it's just so we can show mm-hmm. underwriting and HUD that they didn't, if they bought the house for a hundred thousand dollars, they're not selling it for 200.

Jen Gaudio (00:41:45) - Well I know like Susan, she, when she had listed ours, she put on the description eligible for f h a financing on this date. Right. Right. So we didn't have a bunch of offers coming in that were stuff that weren't eligible .

Mike Mills (00:41:57) - Well, because sellers don't get upset if you, especially with an investor. Yeah. I mean, I've had it happen where, you know, I asked the agent, Hey, I need to get their acquisition cost, can you send me the HUD and or you know, the closing disclosure? And they'll say, oh yeah, no problem. And then they reach out to their seller and then the seller co. What? That's under your business. What I da da da da. Mm-hmm. , it's like, I, I understand, but you chose to accept an f h a offer mm-hmm. . And when you do, there are certain rules that come along with it if you're selling it in less than six months. Yep. You know, and, and they end up being fine with it. But it's just again, creating the expectation as a listing agent to make sure that your seller understands what could come if you're doing an F HHA loan. Yep. Right. Um, one of the thing, and this this'll kind of be, this will be conventional and f hha, but I want you to talk about our favorite thing, which, um, is the bane of everyone's existence in the mortgage world. And that's assets. Cuz assets are so fun

Jen Gaudio (00:42:47) - And there's so many different, um, there's so many different way, not ways to get around, but there's just so many different options. Yes. Okay. Yes. I think that's the best way to put it. Correct. Because each of the power fives have their own requirement on assets. And

Mike Mills (00:43:05) - Real quick before we go there, so when we're doing a mortgage loan, we're looking for three basic things. Okay. Credit your income. Okay. Your debt to income and your assets. Those are ba I mean, you got, you got the property, you got collaboration.

Jen Gaudio (00:43:18) - Yeah. I need to have some salt in the game. Right.

Mike Mills (00:43:20) - So your credit is very much black and white. Either your credit qualifies or it doesn't. Mm-hmm. . Now if it barely qualifies, then there are extra hoops. There's certain you have to have stronger, um, you know, stronger assets, stronger debt to income ratio. You've gotta have, of those three, you better have two pretty strong ones in order for one of them to be weak. Yeah. Right. Yeah. So, um, so credit is, but it's still either, it's there or it's not right. Yep. Debt to income is probably where we spend 80% of our time. Yep. Right. Figuring out how much income somebody makes, how

Jen Gaudio (00:43:52) - Much house you can buy. Correct. That's, that's, that's the whole basis behind the debt to income. How much house can you really buy? Right.

Mike Mills (00:43:57) - And we have to verify your employment. We have to verify your tax returns, tax transcripts, you know, calculate your income based on commissions and overtime and averages mm-hmm. And all this stuff. Right. And look for all the debt. You got your credit report, but then do you have any court ordered debt? You have divorces, do you have tax lie? Do you have any of these things? Do

Jen Gaudio (00:44:12) - You have debts popping up on your bank statements?

Mike Mills (00:44:13) - Did you not pay your student loans?

Jen Gaudio (00:44:14) - Just didn't tell me .

Mike Mills (00:44:15) - Right. So, so all that goes into play with debt income. That's where we spend most of our time as far as doing the detective work, right?

Jen Gaudio (00:44:22) - Yes. Yes.

Mike Mills (00:44:23) - But the part that is either the easiest or the hardest

Jen Gaudio (00:44:28) - Or the hardest is the assets, is the money.

Mike Mills (00:44:30) - Because all you have to have, in most cases, not in every case, cuz there are reserves and things of that nature, but for the most part, you just have to have enough to get the house. Uhhuh. . Right. Just enough Uhhuh. If you need $20,000 for your down payment, your closing costs, you just need 21 20,000.

Jen Gaudio (00:44:45) - Majority of the time

Mike Mills (00:44:45) - You don't need 21. You don't need 25, you need 20. Okay. The tricky part comes into where is it coming from?

Jen Gaudio (00:44:52) - Where's it coming from? What's going out it

Mike Mills (00:44:54) - Places? Has it been before it got,

Jen Gaudio (00:44:56) - Yeah. Where's it going out? Um, so if you are in the home buying process, it just makes it a lot easier if you just have one account that just has all your savings that's already in there. Yes. Now each of the power fives have their own rules of what, because I have to, we have to analyze your bank statements. Right? Right. If you're gonna give me bank statements, I have to look at it and ensure that there are no other possible debts. That there's no, um, that you're paying out for somebody else or co-signed on another loan or, because remember, I'm trying to make sure your debt to income ratio is in line and that I have calculated all of your debts based off what you make. So if your bank statement shows a payment to the I r s and I don't have your tax returns in here.

Jen Gaudio (00:45:36) - Well now I'm gonna have to ask you about it. So we analyze everything that's on your bank statements to ensure there's no other debts that you're paying out. Right. And then I gotta make sure I also have to analyze your deposits that you have putting in Well, a lot of people and totally understandable, but a lot of people save a lot in cash. It's more common than not. Mm-hmm. , which is totally fine. Yeah. You wanna keep it in your safe, whatever. Right. But the problem comes to be when you go to buy a home, you gotta prove

Mike Mills (00:46:02) - It

Jen Gaudio (00:46:02) - Because now I don't know where you got all that money from. Right.

Mike Mills (00:46:05) - And why and ex can you, to the best of your understanding, can you give an explanation as to why we can't accept cash? What, what, what's the, what's the justification for Fannie, Freddie HUD to say why they're not just okay with some, because if I got the money, I got the money, bro. Right. Well,

Jen Gaudio (00:46:19) - I don't know where it came from exactly,

Mike Mills (00:46:20) - But why do we need to know where it came from? Was it

Jen Gaudio (00:46:22) - Loan Right.

Mike Mills (00:46:23) - ? Was it, was it loan or

Jen Gaudio (00:46:24) - Was it loan? I don't

Mike Mills (00:46:25) - Understand. Or did you give for Jimmy the loan shark down there that you were gonna own a bunch of money to? Yeah. Did you get it? You know, it, they, they couched it initially when they really got onto it is about they didn't want, I wanna say foreign money, maybe drug money, whatever you wanna call it, laundered money from, we don't

Jen Gaudio (00:46:38) - Know where it came from.

Mike Mills (00:46:38) - We don't know where it came from. So,

Jen Gaudio (00:46:39) - You know, if you're, if you're going to, if you know you're gonna be buying a home in the year, just go put it in your same as account. Yeah. Like go put it in. If you got some cash, go put it in. Yep. Um, because large deposits we have to analyze and each of the power fives have their own rule. Mm-hmm. . So it's kind of weird. Like, and it's, I I don't understand the rhyme or reason behind the different rulings of it. We just have to follow what that particular, you don't write the rules agency. I don't write the rules. I have to follow them. Okay. Yes. Mm-hmm. . So like for example, um, for your conventional loans, it's any single deposit over 50% of your qualifying income. So if I'm only using $5,000 a month to qualify, even though you make $10,000 a month with commission and all that, but I'm only using the 5,000 for income, well then any deposit over $2,500 a single deposit I have to source.

Jen Gaudio (00:47:26) - Right. And I have to document where you got it from. But if it's under, then I don't care. Doesn't it? So it, it's kinda weird how each of the agencies have their own interpretation. For fha it's 1%. Anything more than 1% of the sales price I have to go source for va there is no rule for va it, they just look at the veteran's assets as a whole. Yeah. Okay. For U S D A, every deposit has to be analyzed, whether it's $50, $10, that's non payroll. And the reason for that is because U S D A is income based. Right. It's they have income limits and so they wanna make sure the money that you're getting is not coming from an additional income source that we don't know about. Right. Right. So yes. Assets is, um, it's tough because people don't understand, uh, sometimes why I I it almost feels like you're getting really personal and real and diving really

Mike Mills (00:48:15) - Deep. Well, we are. I mean, it's your bank statement.

Jen Gaudio (00:48:16) - I know. And you're, and you almost feel like sometimes you're like, man, I know this feels like we're almost interrogating you. I'm sorry. Um, but this is just the rule I have to go by because I I see the same charge going out every two weeks to the same person. Yeah. What is this? Right? Um, and I have to document it because we have to make sure that you qualify for your loan Yeah. And that you're gonna be comfortable making your payment. Right. Right. And, and if this is truly your debt, you might not want to have this much of a house buying power. Right. You know? Um, and we have to cover the rules too. So. Yes, yes. Um, there's that, uh, as far as assets. So my suggestion, and then also, um, you know, I, I've, I saw this TikTok, um, the other day that if, if your lender asks you for two months bank statements, the general rule is two months. Correct. Okay. Now, when it comes down to it, are

Mike Mills (00:49:06) - There, conventional loans are one Right? 30

Jen Gaudio (00:49:08) - Days. Uh, only Freddy. Only

Mike Mills (00:49:10) - Freddy otherwise, right.

Jen Gaudio (00:49:11) - , there's different rules. So Freddie conventional is one month, refinances is one month for both Fannie and Freddy. F H A V A is one month. As long as the statement, the the statement has the previous endings balance from the previous month. Right. And then U S D A is two months. So everybody has their own rules. So the reason that we always ask for two months upfront is because we don't know at that point in time while we're qualifying you to try to figure out what is the best loan program for you. Right. Of the power of five. Yes. So let's go ahead and cover all of our bases and let's just figure out which one we get the two months we can figure out which one you're gonna fit into. Um, but we might only need the one.

Mike Mills (00:49:45) - Well, that's where, um, I get a, we get a lot of complaints from borrowers sometimes, and maybe even agents to some extent. I say, I don't wanna say we, I, I just as an industry, um, where people will say, well, they ask me for this, and then they ask me for this, and then they ask me for this, and then they ask me for this. And that gets frustrating because from a borrower's point of view, they're like, I just wanna give you everything. But what loan officers get, get scared about or don't want to do is they avoid, they want everything to be easy as possible. Like, I don't wanna ask you for too much cause I don't want you to call somebody else and do the loan

Jen Gaudio (00:50:16) - Because they're gonna ask you for less. Right. But then they're gonna ask you for more later. Right.

Mike Mills (00:50:19) - . And it's like, well, if you just, the, the thing, if you're a loan officer in, listen to this, like in the beginning, the people are the most excited about buying a house. Yes. They've got the most energy, they're ready to go, whatever. So they can give you whatever you want. Ask you ask them for everything you might need. Yeah. Even if you don't need it. And the reason being is because A, they get frustrated as you keep asking them for more things and more things, more things. If the loan program changes or you have some adjustments that you have to make or you have to make, and b you know, your your, their expectation of how the process is supposed to go from the very beginning of what you're asking for is that it's gonna be Okay, well here's all my stuff. Right? Yeah.

Mike Mills (00:50:55) - And if you don't explain to them, Hey, I'm gonna ask you for everything, but, but I'm the, I always tell people like, I'm the attorney, I'm not the judge. Right. My job is to help put together the best possible loan situation for you with the least amount of headache and paperwork and everything else to, so I can move forward. But in order for me to do that, I need to get all the information. Yeah. Because then that tells me, well, I can't go this route because if I go this route Yep. Then I'm gonna have to give 'em another tax return and that could cause a problem. So I'm gonna stay here in this lane because this is the best lane for you to get the loan. Yep. We're following the rules, we're doing exactly what's required of it. So we're just trying to find the most efficient way for you to do it. Yeah. So if I get as much information from you as I can up front, then I can make a proper diagnosis. Mm-hmm. like a doctor and put you in the best loan. Yeah. But if I try to nickel and dime me to death with, oh, I need this bank statement, I need this tax.

Jen Gaudio (00:51:44) - Okay, well this one didn't work. Okay, we're gonna have to go this route. Lemme go back. Yeah. So then

Mike Mills (00:51:47) - People go nuts and, and realtors get frustrated. Buyers get frustrated, you know? Yeah. Our goal with our company is we wanna ask 'em for stuff twice really. Twice. Yeah. two times we wanna ask you upfront everything to send us. And then once the loan's approved, once we have what we have, then we wanna ask you a second time for stuff to clear. Yep. Yep. Because there's always extra stuff that happens. I mean, it's just Yep. I don't, there's not a whole lot of loans that go through. There's some, it happens. But if people have really simple situations, but there's not a ton of loans that go through that the first time you submitted is closed and good. Right? Yeah. It happens for sure. You know, if you're W2 to have all your money saved up, all that kind of stuff. Yep.

Jen Gaudio (00:52:22) - Self-employment is great. Yes. Okay. Well, okay. Back to assets. So you have gifts.

Mike Mills (00:52:25) - Yes. That's the other part I wanted to ask you about. Gifts. Those

Jen Gaudio (00:52:28) - Are different rules too. Yes. Because who can give, right?

Mike Mills (00:52:31) - So gift funds, by the way, are money that you can get from someone else. Okay. Primarily, I mean, is there, there's very few circumstances where it's not a family member. Right?

Jen Gaudio (00:52:42) - Well, f h a allows for employers.

Mike Mills (00:52:43) - Okay. Okay. But what I'm saying is, is you can't get it from your neighbor

Jen Gaudio (00:52:48) - Unless it's an f h a loan. And that neighbor has a vested interest. Right. In your home purchasing, it's a close friend. Right. Like there is so many rules on top of that. Yeah. Right.

Mike Mills (00:52:59) - On average though, it has to be pretty much a family member. You can prove other things, but you better be really

Jen Gaudio (00:53:03) - Documented family member. Yes. Yeah. Yeah. Mm-hmm. . Yeah. But your friend's not gonna work. Correct. Unless there's a vested interest. Like it just goes on. Yes. Um, so yes, gifts are, and there's again, with the power fives, there are different rules Yep. Of, um, documentation of gifts conventional, because it's not government backed. There are things that conventional loans are a little bit more forgiving on than your government loans. Right. Um, so on your conventional loans, I don't really have to source, I don't have to go call your donor, whoever's giving you the money. Let's

Mike Mills (00:53:35) - Say it's dad,

Jen Gaudio (00:53:36) - I don't have to call dad and say, dad, give me a copy of your bank statement. No, I don't have to do that. Dad can just cut a check straight to the title company if you wanted to. And a copy of the gift letter stating that this is a gift and be done.

Mike Mills (00:53:47) - But on the gift letter, just so you know, there are questions. What's your name? What's your address? Mm-hmm. , what's your phone number? Uh, phone number. Where's coming and what's the account number? Uhhuh. . Okay. I've run into issues before where mom and dad, even on the gift letter, have a much less, given a bank statement, which you gotta, well, f hha you can explain that one. Um, but mom and dad have an issue even just given the account number cuz they think the Internet's gonna steal their information, which I, I understand. Uh, but you know, these days if they want it, they can get it. Yeah. But, um, but that's the thing too. The gift letter does have a little bit of information on it, but if you just have a gift letter signed by the donor and you have a copy of the transaction, whether it be a wire or you know, whatever it is that matches certified funds. Right. Certified funds that matches the account number and the name, then you're golden. Yeah. You don't need,

Jen Gaudio (00:54:35) - You don't have to get anything else. Right. Government loans, however are different. Very different. Um, well, I have to have a bank statement

Mike Mills (00:54:40) - Actually back up on the conventional loans. What about if I wanna give money to my daughter, but I wanna put it directly into her bank account instead of, so

Jen Gaudio (00:54:49) - On conventional loans, it's still okay. Okay. I don't have to have, again, none of the scenarios for conventional loans for gifts. Okay. Um, and that is not allowed for investment properties, by the way. Right. But, um, none of the situations for gifts on conventional loans do I require do or do we require, or agency requires a bank statement from the donor. Okay. If they decided they wanted to put it directly into daughter's bank account, then I have to have a copy of the withdrawal slip and a copy of the deposit slip along with the gift letter. Okay. That's all. It's Right. Um, so it's much simpler, um, was conventional, unconventional. Yes. Yeah. When you get into government, it's a little bit different. Okay. So you have to provide bank statements Yes. From the donor. And we get a lot of pushback on that. Um, none

Mike Mills (00:55:29) - Of your damn business. And

Jen Gaudio (00:55:31) - It sucks because we don't make the rules. Like it sucks. I don't make the rules. I'm sorry. It clearly says right here, I have to provide a bank statement for the person who's giving you the money. And what really sucks is that on government loans, um, if they had a large deposit that's in there, that's totally fine. Like, if mommy and daddy went and got a four oh loan to help their daughter buy a house, there's not a problem with that. We don't care where the donor got the money except when it's cash. Yes. So if the donor had a large deposit that was cash that I can't like take it out, back it out, um, then I'm gonna have a problem. Yeah. But if they got a f $10,000 loan that they're the one that's, you know, the obligates on, I don't care. Yeah. Mom and dad can go get a loan. They're not the one that you know, for to give their's paying for the house. That's fine. Yeah. Um, but yes, we do have to have a bank statement on government loans.

Mike Mills (00:56:20) - If I had a nickel for every time I had

Jen Gaudio (00:56:22) - Except for U S D A, because remember U S D A is a conventional loan that just happens to be backed by the government.

Mike Mills (00:56:27) - I didn't know that actually. Okay. See look at this. Just, yeah.

Jen Gaudio (00:56:30) - U S D A

Mike Mills (00:56:31) - Dropping nuggets and knowledge over

Jen Gaudio (00:56:33) - U S D A. You actually don't have to have a donor bake statement.

Mike Mills (00:56:35) - So U S D A is a conventional loan. It's

Jen Gaudio (00:56:37) - Basically a conventional loan. Oh. Cause the

Mike Mills (00:56:39) - Rules are similar by conventional is what you're saying?

Jen Gaudio (00:56:40) - Well, actually no, some of the rules are actually more in line with fha. Okay. But it's technically a conventional loan just backed by the government. Huh, interesting. But they follow a lot of FHA guidelines. Okay.

Mike Mills (00:56:49) - Okay. Where, where, all right. Uh, I was gonna say, if I, if I had a nickel for every single time I had, uh, an angry, uh, grandpa or dad, uh, oh man, call me and like literally cuss me out over the phone because how is it any of my damn business? What were they like?

Jen Gaudio (00:57:05) - And they used to, and the guidelines back before the 4,000 1 41 55, we used to be able to just get verification letters. Yeah. Like from the bank. Like Mike Mills has been a, a bank, a member of ours for 25 years and has had more than enough money to give his daughter Yeah. Blah, blah, blah, blah, blah. Yeah. Can't even use those anymore. They spent, they changed those. They updated it to make sure it says yes. Gotta get it.

Mike Mills (00:57:29) - Yeah. It's, you know, the, the, we're, we're running outta time a little bit and I know we didn't get to I'm sorry. Everything. No, no, no. This is great. We're, this means we gotta do it again. I think, I think this, you know, once every couple of months we'll do a little, you know, mortgage update. I think

Jen Gaudio (00:57:41) - You could spend like a whole thing on self-employment.

Mike Mills (00:57:43) - Yes. It takes, it takes forever. Maybe we'll do one just on self-employment. Yeah. I think that'd be good. But, um, the thing about all this is to kind of put a little bow on some of this stuff is that if you look at what's happening right now in the economy, okay, we are going through all kinds of stuff right now, and it's different today. Like the, the whole recession, uh, or or banking crisis really is what's going on right now. Um, has nothing to do with real estate. Mm-hmm. , not like it did, there was another banking crisis that happened in 2008 that had everything to do with real estate mm-hmm. . Mm-hmm. , this particular one has very little to nothing to do with real estate. It still impacts it in a number of ways, but it has nothing to do with it. So, so the rules on getting a loan, these these days are so inc. I don't wanna say they're,

Jen Gaudio (00:58:28) - They're not harder, it's just, I think the situations No, no two loans are the same. No, none. No. But I think that what we are finding is that there are so many new situations Yes. That we've never actually really came across before. Couple that with agency changes based on this particular market Right. That they have updated their Yep. The agencies have updated their rules that now we're trying to find a little bit more creative ways to fit these borrowers into those Power five loans. Right. Because they have updated based on the market as well.

Mike Mills (00:59:00) - Yes. And that's, that's where the, and I, I made a video this morning about how it's weird because the banking crisis that's occurring and today it's not going great cuz the stock, they, the bail, the government's saying they're gonna bail out credit sissy, I think is what it's called, and all these other, so that's a whole other thing. But, but if that continues, if we continue to have more and more banks running into problems with their deposits because they've ba made bad investments, then you'll see mo people start taking their money outta the stock market, which will cause the stock market to crash. Yeah. And then if the treasury yields keep falling, like they have, people are gonna take their money out of that and they're gonna put it into bonds along with the people that are pulling their money outta the stock market. Well, this is great for mortgage rates.

Mike Mills (00:59:39) - Like it really is. Oh yeah, yeah, yeah. Yeah. Um, and, and it's like a perfect storm of situations that in six or eight months from now, we could have really low mortgage rates and the Fed had nothing to do with it. Yeah. Like it could happen Now it's not good for the rest of the economy, Yeah. It's bad for people losing their jobs. It's bad for small businesses. There's a lot of negative things that are gonna come from this if it keeps heading in the direction and it seems to be heading right now mm-hmm. . But the safest place for investors looking right now is to put their money is into mortgage backed securities that are, uh, uh, that, that have been there for a while because these r these rules and restrictions and guidelines have been so, you know, they've

Jen Gaudio (01:00:17) - Been tweaked a lot. They've

Mike Mills (01:00:18) - Been tweaked a lot that, that,

Jen Gaudio (01:00:20) - I mean, update our foreclosure

Mike Mills (01:00:21) - Rates next to zero.

Jen Gaudio (01:00:22) - Yeah. The, they have been tweaked a lot. Like if you qualify for a mortgage now you qualify for a mortgage, now it's still forgiving. Yes. There are still programs that are still very forgiving. Sure. And I'm telling you what, sometimes I look it loan and I'm like, wow, I can't believe we're actually doing this. Yes. Um, but, and the borrowers on the other end are absolutely incredibly grateful and Yeah. You know, that's what makes it all worth it. Yes. But you kind of look at it from a overall and you're like, oh, wow. That's a, you know, credit's not looking great. Yeah. Money is slim to none. Yep. Um, income's barely sketching by Yeah. So, I mean, we're gonna make it work one way or another, but at the end of the day, all these power fives, so not only do we have to follow these rule books. Right. And they're legit books.

Mike Mills (01:01:02) - Yes.

Jen Gaudio (01:01:02) - Legit

Mike Mills (01:01:03) - Websites. Now you

Jen Gaudio (01:01:04) - Yeah. Now you can control that. It's not like a

Mike Mills (01:01:06) - Big, you know,

Jen Gaudio (01:01:07) - Now you can control that. Well, they still sell mri. Oh yeah, yeah, yeah, yeah. Um, but so it, it's, they're just massive thousand page books of rules. That's all. It's so not only do we have to follow these rules, we then have to enter all of this into a magical automated underwriting software that every agency requires. Everybody out there runs it and it's gots its own, it has its own little quirks, little

Mike Mills (01:01:29) - Fun little quirks. Yes.

Jen Gaudio (01:01:31) - Like, and so it to me, oh, we're like, okay, well we fit every rule. Yes, we fit every rule here, but then I run it to this magical underwriting system and there's something about it it doesn't like. And so at the end of the day, you still have to have that approval as well.

Mike Mills (01:01:45) - Well, and that's where, um, I try as much as I can when I deal with agents and, and I think we do a great job as a company doing this to where you have to have a, a very knowledgeable loan officer that knows what they're doing. Because this whole concept of where we started, which was, you know, uh, uh, the loan's been an underwriting, I'm waiting for the underwriter to tell me what we can do. It's complete bullshit. Because the truth is, is that if you know the rules and you know what you can do, we run the automated underwriting system before the loan ever even touches the underwriter.

Jen Gaudio (01:02:16) - Yeah. And education is key. Yes. This is the most expensive thing somebody's gonna buy. Correct. Ever in their life. Yes. So I think that the unknown is what makes buyers apprehensive. Right. If you're dealing with a ginormous bank in America, that's awesome. You, you know, that's totally great. You don't have to call Mike Mills. That's fine. What

Mike Mills (01:02:36) - Are you talking about? Call Mike.

Jen Gaudio (01:02:37) - But, but are they spending the time to educate you through the most expensive purchase that you're gonna make in your entire life? Right. Do you feel uneasy about what's going on? Yes. Do you know what's going on? Yes. Do you know why you have to do this? Do you know why we're asking you? Or, you know, so again, it kind of feels like interrogation, but I feel like buyers are so much more easy, um, to not only provide stuff, but they feel a whole lot better about the loan process because we educate them. Yeah. You know what I mean? Yeah.

Mike Mills (01:03:07) - Well, I mean, you just wanna feel comfortable. You, this is a big thing. It's a big purchase. It's huge. You gotta be

Jen Gaudio (01:03:11) - Comfortable. Listen, I just turned 36 yesterday, but like,

Mike Mills (01:03:14) - Happy birthday by the way. Thanks.

Jen Gaudio (01:03:16) - But I feel like the average home buyers now, like the, I feel like the millennial age of home buyers, they're waiting to buy. I feel like. Yeah. And so now if you're like in your early thirties, I feel like that's when they're actually buying now. Yes.

Mike Mills (01:03:29) - No, they are, they're, I read something the other day. The average home buyer now is around 34 or 35 years

Jen Gaudio (01:03:34) - Old. Yeah. See, and so at this point, well hell, they're in their mid thirties about to buy their first home. Yeah. And it's a huge purchase, which means they've been stacking paper for a minute. Yeah. Trying to prepare. And they wanna know every process where you're not gonna get that from, you're not gonna have a loan officer, a big

Mike Mills (01:03:51) - Bank in America.

Jen Gaudio (01:03:52) - No , you're not. You need somebody like Mike Mills. Um, you need somebody, like if you're in Louisiana, you need somebody like our, our loan officers here. Yeah. Because we're gonna sit down and we're gonna educate you on what it is. Yeah. That's the biggest thing. Yes. These rules are different because the power fives govern us. We have to follow the rules where you fit within those programs. Um, you know, there might be, there might be somebody that says, okay, we're gonna put you into an F HJ loan, blah, blah, blah, blah. It's gonna be a great rate cuz you're so rate conscious. But that, that might not be the best program for you, my dear. It might not

Mike Mills (01:04:20) - Be the lowest payment because if you have really good credit and yeah, you have a low mortgage insurance premium because your credit's great and your debt to income's low, then why the hell would you do an F HJ loan? Yes. Exactly.

Jen Gaudio (01:04:29) - Like that might not be the best program for you. You sit down and get educated, talk to somebody who's gonna educate you through the process. Yeah.

Mike Mills (01:04:35) - And that, and that's the thing. It's just, it's just one of those, it's one of those things that when you do this loan, because it is such a, such a huge transaction, it's such a big responsibility that you want, you gotta feel comfortable in the process. You gotta know that the person that's, you know, presenting your, your attorney Right. That's presenting your loan to the judge knows what they're doing mm-hmm. . Because if they don't, then you could be in a situation where you don't get your home approved. And most things, I mean, and there's always exceptions and Jen and I, if you ever talk to us, we will always put caveats on. I don't know, I think, but I don't know, you know, uh, I'm pretty sure that this is the answer, but let

Jen Gaudio (01:05:10) - Me just go call the agency myself. Let me

Mike Mills (01:05:11) - Check. Um, but but you have to know that the person that's handling that knows what they're doing. Yes. And knows because there's very, very few circumstances it happens. But very few circumstances where the loan that gets denied wasn't probably denied before it even touched the underwriter's desk. Mm-hmm. . Right.

Jen Gaudio (01:05:31) - It's funny, your analogy that you use about attorneys I've always used because I'm on the operation side. Yeah. Right. I've always used think of it like, uh, my analogy has always been like a staffing company. Okay. The buyer is somebody who needs a job. Mm-hmm. , they come to the staffing company. Yeah. Which is us. Yeah. Or you. Okay. The staffing company and your processor, typically there's a loan officer assistant and a processor. Okay. So, um, you'll have these people at the staffing company who are putting together the best resume that they could possibly can and after they put the resume, um, together, then they go present it to the job where they're trying to get you hired full-time, which is the underwriter. Right. So they're trying to put the best, best resume together possible. Yes. So the more we get upfront, the more answers we get upfront. Yes. Um, and I mean, I feel like we're going off on a whole nother tangent, but as far as qualifying for a loan, just tell, I feel like sometimes buyers get hesitant on saying certain things or telling certain things. Oh, right.

Mike Mills (01:06:30) - Well that's why my attorney, it's attorney-client privilege baby tell me everything. Yes.

Jen Gaudio (01:06:33) - Yes. Because like if you tell me what's going on, if you tell us what's going on, there's always gonna be a solution. Yeah. But if I find out after the fact, it's gonna be way harder. Yes. Let me, let's head it, let's head it on upfront. Be honest with us upfront and tell us everything that's going on so that we can figure out how to fix it so that the pr, like just like you say all the time so that I can head any problems that are gonna happen upfront before, later on when you're very invested into this Yes. And in love with your home and

Mike Mills (01:06:58) - Well, it's a common thing. Buyers get, get nervous about filling out an application. I wish we didn't ha I wish that wasn't the word. Yeah, I wish it wasn't an application. I wish I could come up with a better word because it makes it sound like, like I'm putting It's like you're applying for a job.

Jen Gaudio (01:07:14) - Yeah. Like I'm putting it in and oh my gosh, if I did it wrong,

Mike Mills (01:07:16) - If I did this wrong then I'm not, I'm gonna get denied like in five seconds. It's like you try like look no, no, no, no. It's not what it is. Yeah. We're just gathering your information Yeah. Through this form that you need to put it in to fill it out like a, call it a Google doc or whatever. Right. Just need to fill it out so I can get the information. Then once I have the information, then I can make my diagnosis and then I can say, okay, here's what we need to do, here's where we need to go. Here's the documents I need, here's all that kind of stuff. Because again, I wanna do this loan just as bad as you do. Yeah. Okay. I wanna do it too because this is my job. This is your job. Yeah. This is, this is how we pay our company. Like we wanna do the loan but we gotta figure out the best route to do it so we can make it easy for you. Make it easy on your agents, make it easy on your family. Yeah. So this,

Jen Gaudio (01:07:57) - Tell me where your money's coming from. Yeah. It's okay if it's gonna come from your wife's account. Okay, no problem. Yeah, we'll

Mike Mills (01:08:03) - Figure it out.

Jen Gaudio (01:08:04) - That just might have to be a gift if your wife's not on the loan. Right. Like it, I just need, we just need to know so that we can tell you what documents we're gonna need up front. If the money's gonna come from some massive grant that I have seen been seeing a whole, whole lot lately, um, from VA for some reason. Um, yeah. People are getting like grants, like

Mike Mills (01:08:20) - Two veterans.

Jen Gaudio (01:08:21) - Yeah. I don't, I mean it's crazy. I don't know all the dets, but I mean this is, this is like the third or fourth um, situation now where they're getting like pretty big substantial, I don't know what they're for, but we have to be able to document it. So like just tell me where it's gonna come from. If it's gonna come from a retirement account. Are you, um, is it yours or is it in the care of somebody else? Right. Or is it from a trust? Right. Or all it is is I always tell people whatever you put on the application, just be prepared to prove. Okay. Whatever you put on the application, be prepared to prove it cuz we're gonna ask you questions about it and we have to document it based off of agency guidelines. Right,

Mike Mills (01:08:58) - Right. All right, well, um, we just started quick and we're gonna end quick because it's an hour and 10 minutes in and you've got a lot of work to do and I've got a lot of work to do, . So I really appreciate you taking time out. Um, I'm sure you'll get stuff from Steve later cause he'll be Yeah. Real thrilled that you spend an hour talking about loans with me. But this is marketing and advertising and you're helping out one of your branches, so I really appreciate

Jen Gaudio (01:09:19) - It. It's, it's great. I think it's good knowledge for people to

Mike Mills (01:09:21) - Have. That's right. So, um, thank you everybody that stuck around and watch for a little bit. If y'all do have questions after you watch this later, put 'em in the comments and we'll probably do this again because I love talking to Jenin. She's one of my favorite people. It goes

Jen Gaudio (01:09:32) - By so fast, it goes by so fast and you're like one of the smartest people ever.

Mike Mills (01:09:35) - Thank you for saying that. But uh, we all know that that's not true. . So . All right guys. Y'all have a good weekend. Stay dry. We'll see you next time