Between a global pandemic, the elections, and a bizarre winter storm that none of us Texans saw coming, it's safe to say we've all been through a lot this year and so has the home industry.  Why is the current market so competitive, what's with all the price increases and why are interest rates fluctuating so much???  These are all hot topics we cover on today's episode with Brittany Shoemaker, Loan Advisor with Trinity Oaks Mortgage. She breaks it all down for us and provides some great tips for those looking to sell or buy in today's market.

S2 Ep13_Purchasing a Home Past the Pandemic (Brittany Shoemaker).mp3

Intro: [00:00:03] Welcome Home, a podcast brought to you by John Houston Homes. Join hosts, Chelsi Frazier and Whitney Pryor, as they walk you through the exciting adventure of your home buying and building journey.

Whitney Pryor: [00:00:18] Hey listeners, thank you for joining in today! We've got a special guest today. With the real estate market, we wanted to touch base on some things that happened during the mortgage process and how that's affected. Chelsi, thank you for joining us today. Can you let us know who we've got on the show today?

Chelsi Frazier: [00:00:38] Yes, today we're talking with Brittany Shoemaker. She's a loan adviser for Trinity Oaks Mortgage. She's been with Trinity Oaks for several years now and is a wealth of knowledge. We've had her on the show before and she's going to talk to us today about what is going on currently with the mortgage industry rates. What are people doing? Why is it so crazy? We previously talked with Knob and Key on the real estate side. We all work very closely together, homebuilders, mortgage and real estate agents. We're just going to pick her brain on what's going on right now and also some kind of new things coming up. Welcome to the show, Brittany!

Brittany Shoemaker: [00:01:16] Thank yall, I'm excited to be here!

Chelsi Frazier: [00:01:18] Welcome back.

Brittany Shoemaker: [00:01:19] Thank you.

Whitney Pryor: [00:01:20] I know, you're becoming an expert now.

Chelsi Frazier: [00:01:22] Brittany recently got married. Congratulations, you got married this year, very exciting!

Whitney Pryor: [00:01:30] We've had a couple of things ,right? We've had COVID go on that messed up the market. Then in February, we had this crazy, snow apocalypse that happened. How does all of that affect the loan industry?

Brittany Shoemaker: [00:01:45] In February, well, we'll start with COVID. That's when everything kind of just took a turn and everything started getting super, super crazy. With COVID, initially, we saw a spike in rates and then they just plummeted. Interest rates were in the mid 2's. I mean, they were between 2.25%, as low as 2.25% at some points. We didn't see rates above 3% for almost an entire year. Then the Winter storm hit. There were a lot of changes going on already in the market and in the economy. We had the elections, all of that good stuff that were already playing into effect nobody really knew about, but we knew about it. When the Winter storm hit, rates increased in some scenarios, almost a full percentage in 48 hours. We were all kind of scrambling. Some of us didn't even know what to do. We were just doing the best that we could, trying to call people and inform people. Luckily for us, not luckily because some people were still negatively affected by that, especially the people that were closing in that time frame. However, it didn't last long before rates started leveling out again. That's kind of where we are now and that's kind of where we have been, I would say, the past few months.

Whitney Pryor: [00:03:04] What kind of range are rates in right now?

Brittany Shoemaker: [00:03:07] It really just depends. That's always a loaded question because it depends on what type of loan you're going to be doing, how much you're going to be putting down and credit scores. I would say right now, if you have good credit, doesn't even have to be really good. If you have good credit, even if you're doing the minimum down, you're probably going to be looking at an interest rate around 3% to 3.125%,so still really good.

Whitney Pryor: [00:03:30] It's crazy because my grandparents, they bought a house way back when, and I think their interest rate was like 12%.

Brittany Shoemaker: [00:03:38] I hear stories about that and I cannot imagine!

Whitney Pryor: [00:03:42] I mean, I know the House didn't cost as much, but 12% interest rate, I couldn't even imagine.

Brittany Shoemaker: [00:03:48] No.

Chelsi Frazier: [00:03:50] No way.

Brittany Shoemaker: [00:03:50] When we were doing the refinance, because we did a lot of refinances also during this time, there were still some people with 8%, 9% and 10% interest rates.

Whitney Pryor: [00:03:59] Oh my gosh!

Brittany Shoemaker: [00:04:01] After all these years they still did it.

Chelsi Frazier: [00:04:04] Even four or five years ago, rates went down. That was a great time to refinance. We did that in 2016d and then also refinanced again this year. It's not fun, it's not like, "oh I can't wait to refinance again", but when you see the rates do so well, you want to jump in and do that.

Brittany Shoemaker: [00:04:22] It's worth it.

Whitney Pryor: [00:04:24] For all of the listeners out there and I don't know this either, why would a Winter storm or an election affect interest rates so crazy?

Brittany Shoemaker: [00:04:34] Elections always are going to have an effect on the economy. Historically speaking, election periods, interest rates are going to increase. They have for as long as I've been in the business. Again, luckily for us, they usually level back out. With the Winter storm and rates, obviously, there were tons of shortages when the Winter storm hit and tons of delays. People weren't able to get materials to builders, so that had a huge effect. We saw lumber increases, as everyone knows, probably about that, so all of those things kind of played into the into the market and interest rates.

Whitney Pryor: [00:05:13] We know that with COVID, that was a much longer, lasting impact. We weren't sure a year or two years ago, what was going to happen with the market. Now that we're kind of coming out of the end of it, we've seen lumber shortages and things like that, that have affected different building time frames. On the real estate side, we've talked with Michelle and Alan about the impact that has on real estate. There's not a lot of inventory on the market, so it's driving up prices and people are seeing multiple offer situations. We've seen how it affects the real estate side, but can you tell us about the mortgage lending side? What are some best tips or practices that people should use going into selling their home? If they wanted to put their house on the market tomorrow, what advice would you give them in this market?

Brittany Shoemaker: [00:06:10] I would definitely agree with you. There's definitely more buyers than there are sellers. I think a really important thing going into purchasing a home is going to be that you want to be prequalified, you want to have that prequalification or even a preapproval letter that you can show a seller. They want to see that. The chances of you getting your offer accepted, having that already, is probably going to be way higher than somebody who's not able to present that to a seller. Another tip that I have, I know it's really, really hard to not worry about interest rates and what rates are doing. In the past few months, they've been kind of crazy and up and down , so it's hard to not worry. I get asked the question a lot. Well, my offer didn't get accepted. What are rates going to do? What I tell people is right now, it's still a really, really good time to buy, so keep putting your offers and keep making your offers. The likelihood of interest rates drastically changing right now is super low. I always tell people, don't worry about that. We'll get you the best rate.

Whitney Pryor: [00:07:15] That's great to know. Can you tell us what the difference is between a pre-qualification and a pre-approval?

Brittany Shoemaker: [00:07:23] Yes, pre-qualification, that's going to be what we call stated income or stated assets. You're going to go in, fill out an application and you basically tell us what your income and your assets are. That's great for pre-qualification, for when you want to put an offer in. What's even better, in my opinion, if you can say, "hey, I've already gone through underwriting, I've provided my pay stubs, I've provided my bank statements and I've already been approved." In all honesty, once you're approved at that point, you can close a lot quicker vs. someone who hasn't been through that process yet. I know in this market, sellers, when they go on contract, they're looking at everything. If you can get closed in two weeks because you've already gone through underwriting, I think that's a positive from a sellers standpoint.

Whitney Pryor: [00:08:08] Definitely an attractive point when looking at who they're going to consider.

Chelsi Frazier: [00:08:13] Yeah and you guys still offer the extended rate lock program to, right? Can you explain that a little bit and how that offers a little bit of peace of mind with the rates.

Brittany Shoemaker: [00:08:21] The extended rate lock program, that's a really good point to bring that up, it's going to be more so for people building. When you're in the market building and in all honesty, if you're not building with the market that we're in and offers not getting accepted, we have an extended rate lock program. You can lock in a rate for six months. It's going to offer you protection if you are worried about interest rates increasing. Once your 30 days prior to closing or you finally do find your home, you get your offer accepted, we can always look at floating your rate down. You do get a free float down with the extended rate lock program.

Whitney Pryor: [00:08:56] If you are like, wow, the market's at 3%, that's a great rate. I want to go ahead and lock in, then somehow, miraculously, it goes lower and it's 2.75%, you can float that rate down once for free?

Brittany Shoemaker: [00:09:10] That's exactly right. That's just with the extended rate lock program If you don't do an extended rate lock program, those don't come with float downs.

Whitney Pryor: [00:09:18] That's a really great tool for someone that's worried about mortgage rates and what they're going to do when they're just trying to find a home or if they're building a home.

Brittany Shoemaker: [00:09:27] It's honestly one of my favorite things that we do at Trinity Oaks Mortgage. It's a great program, not everybody offers it. People ask me all the time, "well, what's the catch? It sounds too good to be true." It really does, but it is a great program. We only offer it for their protection.

Whitney Pryor: [00:09:45] What does that program cost?

Brittany Shoemaker: [00:09:48] The program cost a $1,000, but it's just a deposit and so it's fully refundable. You get the full $1,000 back at closing. It's just credited towards your closing costs.

Whitney Pryor: [00:09:57] Wow, so it's essentially free?

Brittany Shoemaker: [00:09:59] Yeah.

Whitney Pryor: [00:10:00] Wow, that's awesome!

Chelsi Frazier: [00:10:02] We're always hearing so many things in the news and especially with the market. What market projections are you hearing for 2022 or are you hearing those yet? How accurate do you believe those are?

Brittany Shoemaker: [00:10:16] That is always a very fun question.

Whitney Pryor: [00:10:20] Break out the crystal ball.

Brittany Shoemaker: [00:10:22] Exactly!

Chelsi Frazier: [00:10:22] Tell us what's going to happen.

Brittany Shoemaker: [00:10:23] Yeah, projections for the rest of this year and through 2022 are that rates are going to stay where they are. They're going to be pretty evenly spread across the next year and a half. As with any projections and accuracy, I would say nobody is going to be able to answer that question. We go off of the reports that we get in the news that we hear and we have some very good sources. I would say for the most part, I think that they're probably pretty accurate. I think the market's going to continue to be strong. I think interest rates are going to continue to be good through next year and maybe even after that.

Whitney Pryor: [00:11:04] That's always good to hear. but of course, we never know what's going to happen tomorrow. We talked about how the market has been in the past and how we hope it will be in the future. We know that right now in the real estate market, people are having to put in multiple offers. They are getting rejected left and right. It's so stressful not knowing what home you're going to end up in. Some people just buy it sight unseen. They don't even know what the home looks like. I mean, it's just craziness, but I think the best advice from the homebuilding side, from John Houston Homes, is build a home. If you have the time, build a home from scratch. What that offers you, is not only are you not having to deal with the multiple offers on a completed inventory home, but you also get to build your dream home. You get to go to the design studio and put in that backsplash and that countertops that you've always wanted. It's just a great process, but from the mortgage side, what what would you say? Is it a wait and see what happens or should people jump now and take advantage of the rates?

Brittany Shoemaker: [00:12:13] That's a really good point. I get asked quite a bit as well. For my customers, if they call me and they're struggling with just worrying about what the market's going to do, what interest rates are going to do, should they wait or should they buy? I will, 100% of the time, tell them you don't want to wait because we don't know what's going to happen. We do know what's happening right now and we do know our projections right now, so right now is still a really good time to buy. Again, if the interest rates are something that you're worried about, we do have the extended rate lock program, which does offer you peace of mind protection against anything increasing, and then it offers you the float down as long as rates are lower.

Whitney Pryor: [00:12:53] Yeah, that sounds like a win win to me. If you've got that time again to build a home, you don't have to deal with multiple offers and you get to build what you want vs. buying something sight unseen. If you're worried about interest rates and that's your concern about the time frame for building, with the extended rate lock, then it's just a win win.

Brittany Shoemaker: [00:13:14] I agree.

Chelsi Frazier: [00:13:15] Okay, one more quick question before we close it out for the day. Tell us about e- closings because that's something new I'm hearing about. We're starting to talk about how we can inform our customers and homebuilders about it, so will you give us the rundown?

Brittany Shoemaker: [00:13:29] Yes, this is actually something that we're very, very excited to be doing and being able to offer this service to our customers. With John Houston Homes, Trinity Oaks Mortgage and Precise Title, we are able to do what we're calling an e-closing, which is basically just an electronic signature going on your closing documents. We actually just had our very first e-note closing. A Lot of people don't know what that means, but when you buy a home, you're going to have a note. In the past, those had to be physically signed. We're working on all loan programs so that it can be electronically signed. Instead of taking an hour for closing at the title company right now, you're looking at 10 to 15 minutes max in the future. We're hoping to get that down to 5 to 10 minutes. so that's a big deal.

Whitney Pryor: [00:14:20] I brought my seven year old daughter to my closing and that was the wrong thing to do because that girl was bored out of her mind. She was like flipping out of her chair and crawling all over the table. I'm like, "I'm so sorry." I didn't realize I was going to be an hour, but that is awesome to hear that e-closing cuts that down to like 15 minutes.

Brittany Shoemaker: [00:14:38] It is amazing.

Whitney Pryor: [00:14:39] Yeah, that's awesome! Thank you so much for joining us today, Brittany. We really appreciate you coming out. You're such a wealth of knowledge on the loan side and it's great to just find out what's going on in the market right now.

Chelsi Frazier: [00:14:52] I think our listeners are probably excited to have you back. I was just looking at numbers and you still hold the record for the second highest downloaded podcast of.

Brittany Shoemaker: [00:15:02] Look at that. That's exciting!

Chelsi Frazier: [00:15:05] Yes.

Whitney Pryor: [00:15:06] We like to hear from Brittany.

Chelsi Frazier: [00:15:08] Yes, yes!

Whitney Pryor: [00:15:10] Thank you listeners for joining us today. We hope that you will look up more information with us or ask us questions about today's podcast. If you want to reach out to us, you can call us at 866.298.1416. If you have questions specifically for Trinity Oaks Mortgage or for Brittany, you can reach them at trinityoaksmortgage.com We will have a link in the show notes to more information on how to reach them. You can also reach out to us at info@jhoustonhomes.com. Thank you again for listening to today's Welcome Home podcast.

Chelsi Frazier and Whitney Pryor: [00:15:51] Welcome Home.