JENMAX: Hey everybody, this is JenMax at Remax. I'm here today with Brad Brown from Nexa Mortgage
One of the most important aspects of buying a home let's face it is you need to have the funding to do so and Brad is a mortgage broker here in the area and I wanted to have him come on and talk with me a little bit about what the mortgage process is for folks that are looking to buy a home welcome Brad.
BRAD: Thanks Jen. Thanks for having me
BRAD: I look forward to sharing some wonderful insight.
JENMAX: There's a lot of insight going on lately. So tell me a little bit about Nexa Mortgage.
BRAD: Well great question. Nexa Mortgage is a mortgage broker based in Chandler, Arizona. We've been around for a little over a year and the reason I joined the mortgage broker side of the business I came from the mortgage banking side is because there are a number of advantages to being a mortgage broker and some of those would be our flexibility of programs, interest rates, lender fees…so really when we're talking about a mortgage broker, we're a wholesaler, we're wholesaling the rates versus going to a normal bank. You would be receiving retail rates. So as you know, wholesale is cheaper than retail.
JENMAX: So does it necessarily mean that going to a mortgage broker you can expect a little bit more latitude with regards to costs and rates and things like that.
BRAD: Absolutely! I mean, we have a number of investors we have at least a dozen if not more go-to lenders. Once I review the credit report and review the profile of that client I can determine which box which lender this program fits the borrower best. So for instance you go to a mortgage bank, they have one set of underwriting guidelines I go to twelve to fifteen different lenders and I may have five or six different underwriting criteria and really the biggest point that I would make here is credit score right? Credit scores. We have flexibility to reduce that credit score and still be able to close a loan.
JENMAX: Okay. So what is the loan process for instance? Let's just say I came to you and said I need I want to buy this house: what is the process for me?
BRAD: The process goes like this: Jen has somebody that's interested in a loan. I can either you or you notify me, then I reach out to them or they can reach out to me and it's interesting-- people ask me: When do you work? Well when my phone is on right? I mean it's on just about all the time
So I'm reachable nearly every hour of the day and every day of the week.
BRAD: Exactly right so that process then it's very informal conversation. I want this to be a conversation and also provide education to the
JENMAX: So what things are you asking people for in the loan process?
BRAD: We're gonna ask them social security information, right? So we need to verify what their credit score is and and with those item. It's gonna be your full legal name a to your work history a to your residence history and a few other declarations, so it's not a so very cumbersome and the process can be a 15-minute phone call or a lot of people like to do it on their own time, and they can complete the application online.
Okay. So application process not too hard. I think it's fairly easy and it's requires documentation my guess so time frame from application to close
JENMAX: What are we talking about for someone who sees the house of their dreams, but the seller wants a quick close?
BRAD: That's a great question. Let's talk about the pre-qualification process before we get to them under contract, correct? So I'm gonna pull their credit, we're gonna collect some documents, pay stubs, w-2s, tax returns. Are they putting money down? We need to verify those funds. So this process the pre-approval process for somebody that's really organized and could get me those documents very quick within that same day.
Now somebody that says they I have some documents and storage, they're less technical technological savvy, it may take a little bit longer for me to collect those documents because my number one job is to make sure when you call me with a person if they want to go buy a house. My job is to ensure that they can qualify to buy the house, so I tend to if I need to take a little bit longer through that process
But once they are approved they go out they make the offer. We easily closed loans within 30 days.
JENMAX: What's the fastest you've ever closed alone?
BRAD: 18 days.
JENMAX: 18 days –Wow!
BRAD: So realize we're including that are not just business days, right? I mean weekend's count as two days of peace to my so you know that so there you go newsflash. Right, right So just keep that in mind. Oftentimes what happened is the loan gets twisted up with another lender and I have to come in and review the documents and you know, we can push a file through once they're actually into their inspection period as well too, so you know being a mortgage broker, we're very flexible and my team is fantastic and geared for the that exact scenario
JENMAX: So on the Arizona Pre-qualification form for those of you that don't know there is an Arizona Pre-qualification form that is filled out by the lender and there's a bunch of check boxes at the bottom That newer agents usually don't catch if those check boxes say no to all of that documentation. For an agent like myself as experience. That's a massive red flag. That means no documents in the Pre-qualification process have been supplied to the lender, which means this is an iffy if at best Qualified buyer. So working with someone like Brad who's gonna get that documentation ahead of time would probably be a smart move, right?
BRAD: No question. Yeah, I mean here's here's the troubling part for our business. What do people like to go and do they want to look at houses? So what they typically do is well, we're looking for some houses, well, they're gonna find a house Jen. If they're looking they're gonna find a house and so if we can shave a few days off, on the front end of that and remove that stress and to educate the borrower
About what the process is because it still it still baffles me some time people are getting into the mortgage realm of wanting to buy a home and they don't understand the process or if they’ve spoken with another lender and I start probing asking questions and I'm not hearing the answers from them that I should be hearing if they're truly pre-qualified with another Lender.
JENMAX: Sure sure, and as someone who works with both buyers and sellers if I represent a buyer
I want my buyer to be prepared like a Girl Scout “always prepared” and that pre-qualification form having supplied the documents is a way to be prepared, it means your offer on the house is going to be taken seriously. If you're a seller and you get a pre-qualification form where the buyer has not supplied any documentation to the lender – “Hello, red flag.” Not sure I'd want to put that in front of my seller
So give that give that a thought for those of you that are interested. I do have a home buyers guide which goes through all of the processes for not only looking at a home selecting a home about purchasing a home in the mortgage process. So email me firstname.lastname@example.org and I'll send you a copy for free.
But onward and forward: what are rates looking like? Things have gone up in terms of rates?
BRAD: Correct over the last couple of years and back to the education piece right back to the education piece in the last few years Interest rates have gone up. Interest rates in the most simple terms
Interest rates follow the stock market. When the stock market goes up, Interest rates also increase and there's so much good information going on in the economy that interest rates just cannot, they cannot be where they were two years ago. So oftentimes the first conversation I have with somebody as well where our rates and when I say they're in the the mid-fours to high fours. They immediately step back and say “well that seems really high.” Yes It's historically they’re still very low.
JENMAX: So historical averages, what are they?
BRAD: We’re still well below historical which are what six percent six seven percent.
JENMAX: Anything below that stop complaining!
BRAD: Correct, correct, and so it's all relative to and so it's important to educate them because they're still as a glut of Information available online and part of my education process is that yes, you might be able to find the right online for X, okay Well, let's go through the fine print. Let's go through the fine print of exactly what that qualification looks like your credit scores maybe have to be way higher than the average you may have to put more money down than 20%. I mean there's a number of things that go into pricing interest rates and obviously the two most important things are of course how much money are you putting down, and then thirdly is what type of loan you are doing as well.
JENMAX: So if you so rates going up -- to me -- I actually counseled a number of buyers to consider Buying down their rate if the mortgage payment was going to be too much for them they felt overtime. So what that's a cost associated with getting a loan?
BRAD: Yes it is and there are a few different ways to drive down the interest rate other than having them increase their credit score or Put more money down we have on the broker world. We do have some flexibility that some mortgage banks don't have so that's a Conversation on a higher level and more education when we're talking to people if interest rate is a problem if the payments a problem We have flexibility to look into options how to reduce that monthly payment, right?
JENMAX: talk to me a little bit about the role that credit score plays. I know you referenced it earlier, but you know if somebody has I don't know…I don't want to say bad credit -- what is considered bad credit nowadays?
BRAD: The average credit score they say in the United States is about 680. So most of your banks are gonna have a higher credit score requirement Okay? The advantage of the broker is that we literally can do loans into a 500 credit score and you pay for that in terms of interest rate you make obviously right I mean Interest rate is a key indicator of risk right the risk of the loan.
JENMAX: The risk is passed along to the client by interest rate, right and your credit score reflects that credit score?
BRAD: That's exactly right. So credit score is a snapshot in time of somebody's history of how they've used their credit Right? Somebody that has very good credit. Typically, they're gonna continue to have good credit I mean, we understand that, you know people go through one-off experiences and medical issues and things like that. But generally a credit score today is about what somebody's credit score has been in the past. So there's credit score playing a role.
JENMAX: That's fine, but also the amount that you want to borrow must play a role in the interest rate I mean, there's things called jumbo mortgages so tell me a little bit about what those limitations are.
BRAD: Well a great question, right? And so in the East Valley, we're lucky and to have home prices increasing in value So there are Fannie Mae loan limits If any may loan limit is the difference between a conventional loan And a jumbo loan and that's four hundred fifty three thousand one hundred dollars. So once you go above that threshold their criteria for approving the loan Varies a little bit. Okay do the processes processes take longer if you have a bigger loan. No, ma'am No, same process collect all the same information. They do have some requirements right? They may require more money down they may have Credit score requirements. You may need to meet you know into the better-than-average threshold for for a jumbo loan But typical turnaround times are exactly the same well as an experienced officer experienced loan officer.
JENMAX: What’s some advice that you'd give to home buyers? Um Let's say for first-time homebuyers? What advice would you give first-time homebuyer is?
BRAD: Surround yourself with people that are gonna educate you about the process. Jen obviously she's been doing this a long time. I've been doing this a long time, and something people need to realize too is that we work for free, right? I mean, so it behooves us to do a really good job of educating and walking people through the process because you know Ultimately, we're in this business to make money and we don't make money until we close Right, so it behooves us is that hey I'm gonna do a really good job with this person on the front end make sure that that you know We do the proper things prepare yourself for success, right and I tell everybody that surrender surround yourself with wise counsel There's information on the internet too. Obviously, I mean almost at times too much information So it may be you go online and read about an FHA loan and a particular program Well, there may be a foreign language, right? So obviously free consultations from Brad from Jen mean more than happy to sit down and explain the process and and try to interpret some of the things that you found online and where you may have heard from other lenders it's still shocking some of the stories I hear out there when somebody speaks with a lender and then I have to sound bad, but set the record straight Yeah, or at least the way I do this right.
JENMAX: You know one final thing though: It occurred to me that money for down payment is a huge issue for many many people and and in the old days you didn't buy a house unless you had 20% down right?
JENMAX: When I was a kid, there was no way you got a house unless you had that that's changed. So what are we talking about for down payments for people?
BRAD: Really good question again, right so so I'll start with credit score, right? You don't need to have great credit to buy a house, right? There's things that I can help fix. I can help fix credit scores. I can help fix Sources of down payment where can we access funds for the down payment if you don't have any there are some down payment assistance? programs you can use 401k funds you can use retirement funds you can have a gift as well - a gift from a family member So just because you don't have money for a down payment that doesn't disqualify you for Purchasing a home and if I could add to that is that you don't have to have great credit You don't have to have stellar credit and you don't have to have 20% down, you know 3% 5% 10% So I mean the lending world has loosened up since The downfall, you know 10 years ago. We need to prove your credit. You know, we need to see your credit We need to prove your income. We're flexibility on the down payment So, I mean that the lending world is as good as it's been in a long time in regards to flexibility.
JENMAX: Right, right! So for those of you that are looking for to buy a home get on the phone Ask the questions -- don't sit there and think “I can't. I can't there's no way I'll qualify.” Talk to someone, call me AT602-753-6629, and talk to somebody like Brad get on the phone ask the questions, email me -- however you want to contact that professional. Let us know your questions because you'd be surprised at the number of people after is a quick conversation with me realized “Wow! I probably can buy a home” went out and got a home, and I've got a couple of success stories to share with you on my next edition. So anyway, I want to thank Brad Brown for joining me today and clarifying some of the mortgage things out there. And definitely this is JenMax at Remax. I'll see you again soon. Thanks. Brad
BRAD: Thank You, Jen