Jason Hartman starts the show by talking about inflation and how it’s higher than what we’re told. He shares that inflation is not only seen in goods and products but also in terms of the level of service we receive. Then, a network lender joins investment counselor Adam to discuss the available rates for investors, the cause of slowly rising rates, and whether it’s valuable to pay points on your loan.

Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multimillionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in 1000s of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Announcer 0:52
Well, hello, everybody, welcome to Episode 16 185. I got to tell you, things are getting bad out there. Bad, bad, bad, bad stuff. But I’m saying bad from the perspective of it being bad for most, and really great for others. But I think even though it’s good for me and my own self interest, right, this economy is great for me. But I’m not happy. Why am I not happy? Because I think we are just massively increasing the wealth gap COVID, it has made the rich 54% richer, in a year, in a year 54% richer, and mostly, well, not completely, the poor are getting poorer. Certainly in other countries that is happening in the US, it’s kind of mixed, because these enhanced unemployment benefits have been so high, that people are making more money sitting at home on the couch than they would go into work. I mean, talk to any small business right now. And they will tell you that our stupid government’s plan has simply made it impossible to hire people. They don’t want to come to work, they don’t want to come to work. I mean, why come to work, when you can sit at home, and just do nothing, and earn more money? If someone is in the lower rung of wages, it’s a better deal to stay home. So these incentives have just got to end, they’ve just got to end, we’ll see what happens. But here’s what I mean about the wealth gap. And why I think things are getting ugly out there. comes down to one word, a word I talk about very, very often. What is that word?

Announcer 2:52
You know what that word is? Yes. You know what that word is? It is inflation. And inflation is becoming severe. It is becoming very, very significant. Let’s talk about that. And let’s talk about a little bit about what’s causing it today. part two of this episode will be a mortgage update, where Adam interviews one of our lenders, and talks about what’s going on in the mortgage market. And you know, look, folks, this is why the rich are getting richer, and you know, mixed on the poor and some of the poor are actually getting richer, too. But mostly, it’s just bad, right? Because what they don’t see is that you know, all of these benefits, all of these unemployment benefits, enhanced unemployment, all of these government bailouts, obviously, right away, it seems great. Because, hey, they got extra money, the check is bigger. But then the inflation comes behind it. Oh, I don’t know what to compare it to. Maybe I’d compare it to my youth when I lived in the ocean in the Pacific Ocean, I basically lived there in the water. And I used to boogie board all the time did a little bit of surfing. But Surfing is hard work. Let me tell you, Surfing is a lot tougher than boogie boarding. But you know, I would do mostly boogie boarding right? before there’s a big set of waves, it’s usually pretty calm. And the water draws out a bit. Certainly this is true before a tsunami and the water draws out a bit and then this big set of waves comes right and and that’s what you’re just loving, because the big set of waves is a lot of fun. And, you know, that’s what’s happening with inflation. I mean, we’ve we had sort of the the water draw out, meaning the deflation of the currency as you print more currency, every currency unit in existence already has to decline in value. Because two things right two drivers for the value of anything, as I’ve talked about many times, scarcity and utility. So these are, of course, Zimbabwe. One of my podcast listeners sent these to me years ago, one of these is 50, trillions in Bobby dollars. And here’s a 100 trillion Zimbabwe dollars, and they’re basically worthless, right? scarcity and utility. That’s what creates value. So when you make more currency units, you know, you have a limited amount of goods and services, you’re just going to get inflation. Let’s talk about that, because it is very severe.

So I talked about inflation induced debt destruction. This is a term that I trademark years and years ago. And what it does is it basically tells you how to play the game, how to align your interests with the most powerful forces, the human race has ever known. Governments and central banks, governments and central banks being the most powerful forces the human race has ever known. So what do we do? Right? Well, we use commodity investing, packaged commodity investing, along with debt, long term fixed rate debt, and that is the what I call the double inflation arbitrage. And inflation is looking severe, like very significant, and it will impoverish most people. And it will make some, it will make the few people the small number of people who get it, it will make them much, much richer. And that’s the group I want you to be in. So that’s that’s what I try and help people do, as I’ve been teaching about this for the last 18 years. So take a look at this chart. Consumer spending drives us GDP growth in q1 2021. Everybody is spending money. Now look at this as the opposite of the doom and gloom errs right, all the doom and bloomers predicted the end of the world last year. And what they didn’t realize is that, of course, our rich uncle Jerome Powell, Chairman of the Federal Reserve, would step in and crank up the printing press. And he would just create more currency units out of thin air, more dollars out of thin air. And that would have a hugely stimulative effect on the economy, as it always does. But it can’t last forever, nothing lasts forever. Eventually, someone has got to take the Punchbowl away, and the party ends and it ends with a big, ugly hangover. And that hangover is called inflation. And that’s exactly where we’re going.

So things in some ways, you know, I kind of hesitated there because it’s it’s very uneven, in some ways, look really good. And in some ways, they are just profoundly dangerous warning signals that what we are doing cannot possibly work on in the long run. We cannot kick the can down the road forever. So housing starts are rising, despite the cost to buyers. And these costs, we’ve talked all about lumber prices. And here it says although housing starts are rising, lumber prices have skyrocketed in the past 12 months, causing the average price of a new single family home to increase by $35,872. According to the National Association of homebuilders, the NA HB. Now, that’s lumber, and everybody’s heard about that by now, but but I’ll bet you the next time This report comes out. Okay, it’s it’s monthly, we will see that this has even become more pronounced more extreme. And those lumber prices. Maybe the next time we hear this report, we’ll hear that the nhB is saying that the average new home has now increased by $46,000 or $42,000, or whatever it is. And I talked to one of our clients Bruce, who’s in the lumber business in a multi generational family lumber business here in Florida, selling lumber to home builders. And he’s got the inside track. If anybody’s got the inside track, he does. And he has really just explained that it’s not because of supply demand shock due to COVID shutdowns that has resolved this is real demand. And this demand is causing significant home price inflation. And that looks like it’s going to continue. Now I teach a strategy called packaged commodities investing packaged commodities investing, which means you look at When’s the last time you had cake. Did anybody celebrate a birthday recently? Did you have some cake? Well, the cake is made up of ingredients. Well guess what? So is the house so is the home and it’s made up of ingredients and what are the ingredients? Of course they are steel lumber. petroleum products, copper wire and copper prices are going through the roof. You know, copper is a really important commodity. It’s used as a measuring stick by all the experts in commodities, the commodities brokers. In fact, they respect copper prices so much as an indicator of what is going on. They actually gave it a nickname.

You know what they call it? They call it Dr. Copper. Not to be confused with Dr. Pepper. It’s Dr. Copper. Okay. Dr. Copper is a big indicator. And it’s not just lumber folks. There are shortages in all sorts of things in the supply chain. Copper being one of them, but packaged commodities investing. So you’ve got lumber, concrete, petroleum products, class steel, labor, labor shortages are affecting homebuilders. And there is a shortage of housing, no question about it, here’s what’s going on with copper, it topped $10,000 a metric ton for the first time in 10 years, in 10 years. And look at the chart, the chart just shows a basically a parabolic increase in copper prices. And so that is happening there. All these signs of inflation all around us. If we are not paying attention to this, then we have only ourselves to blame, we have only ourselves to blame. So we’ve got to pay attention to this inflation. Here’s another article framing lumber hits 12 $100 per 1000, board feet, you know that piece of plywood, it’s about 300% more expensive than it was just last year, absolutely staggering what’s going on here and how this affects everything. As of the week ending April 23, the price of framing lumber was up 12 $150 per 1000 board feet, that’s up in an unbelievable 250% seats up more than that now, when lumber prices were roughly just $350 per 1000 board feet, this housing affordability problem is not going to get better anytime soon. And you just intuitively know that no matter what the government tells us, no matter what the Federal Reserve tells us or the other central banks or the other governments around the world tell us. You just know intuitively the truth, don’t you? Yes, you do you know the truth? And what is the truth? the inflation rate in pretty much everything is so much higher than we are being led to believe. Have you been to the grocery store lately? Have you been to a restaurant lately? these prices are through the roof? I just can’t believe it. I mean, when I go to the grocery store, I think how is it that you know like a normal family on a normal income gets by it’s just crazy, these prices are insane. And the inflation is not only reflected in the price, right? It’s also something called shrink inflation.

So if you look at products, make sure you pay attention to this, when you go to the grocery store, it’s just one example. You’re getting less for the same price or more. So the package may be the same size. But if you look at the net weight, there’s less stuff in the package, fewer potato chips, fewer, whatever shrink inflation is occurring all around us. And another thing is service. By the way, I didn’t even talk about the gas lines and the gas prices, and all of this stuff. So if you want to learn more about inflation induced debt destruction, get this free mini book that we have. It’s totally free. No strings attached. There’s no credit card, no, nothing. Just free. Okay, free. Yes. Go to pandemic investing calm and just get this mini book, it talks about inflation and do step destruction, as well as a whole bunch of my other good techniques to just win in this environment we’re in. Okay, so we’ve got shrink inflation. We’ve got inflation where the price just goes up. And you know, many of us see that it’s very apparent. Wait, there’s more. It’s not just that. What about the service level? Let’s go back to restaurants. For a while. I wasn’t eating out very much. You probably weren’t either. And now I’ve been going to some restaurants lately. And the service is awful. Now it’s awful. Mostly because the restaurants can’t get people to come back to work because they’re making too much money with enhanced unemployment benefits sitting at home. So the government has incentivized people To sit at home, that’s bad, that’s malinvestment. That’s just not a good thing. It’s not moral. It’s not good for anybody. But it gets worse. That action by the government, of incentivizing people not to work is actually very inflationary. Think that through think how that works. Okay. So the restaurants, the retailers, all of these businesses, in order to entice people to come to work, they have to make it worth it for them. Naturally, the people think, Well, why should I work when I can sit at home and make more money on enhanced unemployment benefits, right? Or I’ll figure out how to milk some other government program, maybe I’m suddenly disabled, I’ve never seen so many young people who should not be disabled, getting disability benefits from the government, have you that’s been going on for like a decade or more now, you know, like millions of people, young, able bodied people that are getting disability benefits from the government. So everybody figures out a way to game the system and scam the government, right.

And so now the employers all have to pay more to get people to come to work. So what do they have to do? Well, they have to raise their prices, or they have to just go out of business or cut services, restaurants over the weekend, I was in Cape Coral, Florida looking at properties. And I just can’t believe how understaffed these restaurants are. And the hotels, same thing with the hotels. In fact, I was staying at the the Westin Hotel in Sarasota, beautiful property. And I talked to the manager, and she told me, if we could get 20 more people on our staff today, we would hire them instantly. People just don’t respond. They don’t respond to the job postings, the other employees that they have in their Rolodex, figuratively, they won’t come into work, it’s just not worth it for him. So the employers will have to pay people more, or they’ll have to just offer less. The bottom line to all of this, this whole conversation is this, for most people, given what is going on, right now, the standard of living in America. And certainly it’s more, it’s worse than other countries in many other countries much worse than the US. The reason it’s complicated, but the US has the reserve currency of the world. And they can basically print the money with less consequence than other countries can. So the US is pretty lucky in that way. But even in the US, the standard of living is declining. And it is declining more quickly than it has maybe at any other time, in probably anybody’s lifetime. Anybody who’s watching or listening to this now. And that is going to have hugely significant effects. What can you do? What can you do to protect yourself? Well, get my free pandemic investing mini book, okay, just get that it’s totally free. Read it. Listen to all of my podcast episodes, watch all the YouTube videos on my YouTube channel, or the other channels, some of the more controversial videos that can’t go on YouTube, because they will, they will delete them are on other platforms. Watch them, learn about it, learn what you can do use inflation and do step destruction. I was looking at a house that I was emailed today. I couldn’t believe I cannot believe these housing prices. They’re absolutely insane.

Now, that doesn’t mean housing affordability is that bad? Because it’s not. And if you have followed my Hartman comparison index, the HCI, or seen any of my recent presentations, maybe on the YouTube channel, about my comparison of real estate prices and mortgage payments to many other assets. It’s actually not that expensive. But if you only were investing in dollars holding dollars, it does look expensive, right? I got an email of a house today, Sarasota, Florida. I couldn’t believe it. $2.9 million and change. And then I looked at the square footage 2900 square feet $1,000 a square foot in Sarasota, Florida. Are you kidding me? That I mean, these housing prices are just becoming crazy, crazy, crazy. Now I know that if some of you are watching or listening, and you’re not familiar with my work, you may think I’m kind of jumping around and contradicting myself. I’m not you just have to peel back the layers of the onion to really understand that. So please check out prior podcast episodes, YouTube videos, etc. To learn more, read the book, pandemic investing free book, you’ll get it okay or contact one of our investment counselors. We’ll be glad to help you. Alright, so that’s it. There’s our info Jason hartman.com. If you’re in the US one 800 Hartman, you can just pick up the phone and call us and we’re glad to help you. Thank you so much. Happy investing, and let’s go to our mortgage update.

Adam 20:01
Welcome to this episode of the mortgage minutes here on the creating wealth podcast in the Jason Hartman network, we are joined today by one of our favorite lenders. How are you today?

Lender 20:10
Good, Sir, how are you? Adam? Thank you for having me.

Adam 20:12
Absolutely. It’s great to have you, I wanted to have you on because we haven’t talked mortgages in a while. And there’s been a whole lot of change since the last time we talked. But I want to start first with the whole notion of rates increasing. And one thing that I kind of laugh at is people talking about how rates are higher now. But realistically, I look at, you know, where rates are today. And we’ll get into the exact numbers in a second, but they’re really what I was paying, they’re really on the low end of what I was paying for properties, you know, back one to two years ago, where our rates historically speaking, you know, as from your time in the mortgage industry?

Lender 20:46
Oh, gosh, well, I’ve been in business for nearly 20 years. But as a relates to turnkey financing, and investment, property financing, you know, we started to concentrate on that about seven or eight years ago. So if you’re looking at that timeline, you know, historically speaking, within that timeframe, the current market rates are still quite good. As it relates to, you know, your typical investment property, single family home was 20, or 25%. Down. Certainly, at levels, they’re certainly close to pre pre COVID rate levels, I would say, maybe a little bit better, like you said, So historically, still very good. But from what we’ve been used to, for the last 18 months, 12 to 18 months, you know, certainly they’ve popped off what I call those COVID roles. You know, the pandemic, obviously, the global global issue of global phenomenon, has put, you know, put market rates at very low level historically, in fact, all time lows, so we were spoiled a little bit in terms of being able to produce or sell interest rates, at levels that were unheard of, or unseen before. So it does become a little bit of a pay rate shock to folks when they see, you know, especially the last two or three months with some of the changes that have occurred in the industry and with Fannie and Freddie to see rates pop up back to more of a historical level. But again, still quite good. But you know, to give you some answers, or maybe my thoughts on the reasons why we’ve come off those lows. Well, is a lot of the stimulus packages that were were passed, and even the infrastructure bill that’s being floated now, you know, they’re all, you know, really treasury bonds that are financing that are issuing issuing treasury bonds to do. So, there’s a tremendous amount of demand for treasury bonds with the stock market continuing to hit all time highs across all levels of the market, you know, the Dow, the s&p, NASDAQ, you know, all of them are reaching new highs any other week here. So, we’re not seeing an awful lot of demand, or, you know, demand for bonds, which, you know, mortgage backed securities or treasury bonds. So, we’ve seen rates kind of pop a little bit off of just a natural reaction to the market. But also, Fannie and Freddie have instituted or brought out some new guidance as it relates to investment properties and second homes. And they’ve basically mandated that every lender who produces these loans to them, cap their production and 7%. So some of those smaller lenders, smaller volume lenders, will certainly put loan level price adjustments on or artificially add to their interest rates. to slow down that production. Some will, you know, put credit overlays or credit guidelines on top of Fannie and Freddie’s guidelines. You know, to slow down our production, an example of that might be they will only do 25% down, you know, or an example of that might be, they will not allow our to do up to 10 finance properties like the big banks do, you know, so things like that are happening as early as it relates to more recent times, and what Fannie and Freddie have come up with as their new guidance. You know, I think some of that is a knee jerk reaction in relation to the volume that was produced in 2020. With rates as low as they were, you don’t typically see your investment property portfolio refinance, at the rate that it did. Like, for example, we were refinancing some of our turnkey investor clients that have 567, maybe eight or nine properties and refinancing them all at the same time. So that’s unusual, in a normal mark in a normal market for that to occur. I also think that you had, you know, folks that had cabin fever and folks that would normally take a family vacation, for example, and go to Europe or go to Africa or go You know, somewhere with their families and spend some money there had cabin fever, and they couldn’t travel. And they looked at the second home market as a way to kind of break out a little bit. So there was a lot of demand for second homes. And that was a spike over normal volume that you would normally see. So the guidance from Fannie was we’re going to cap to production of second homes and investment properties to 7% of the lenders total production. And I think it’s relatively temporary. I think it’s a 52 week guidance, to see how lenders react to it and see in a year from now, whether that will be reversed or or renewed, you know, so I think what we’re seeing is rates rates are higher as a result of some of that.

Adam 25:40
So with that, if it is a 52 week guidance, and it does go away, and I guess at this point, it’d be something like 44 weeks or 40 weeks or whatever,

Lender 25:49
maybe March or April of next year, what

Adam 25:51
would you expect the impact to be if they did do away with it?

Lender 25:56
Well, I would say, you know, that in addition to that, though, at the end of the year, Fannie also put on a artificial price that onto investment properties for refinances, you know, they added a half a point and as a multi level price adjustment for any refinance. So I think if the production levels are curbed or slowed, that I think by next year, you might see rates come back down a little bit further, particularly if we haven’t emerged fully from from the recession, right, the COVID related recession. I mean, certainly the economy is doing better, certainly vaccines are going to help the vaccination level is going to help in terms of getting industries back to normal, but on the stimulus packages are going to create jobs. However, it may not be for some time before we realize that. So I think if these guidances are reversed, or at least slow, you know, curb the production. With the current rate environment that we’re in, we’re going to revert back to a normal level of production for both second homes and investment properties. So I think what we’ll see is, some of these artificial price add ons to rate will disappear. And you’ll be truly truly and maybe a little bit better of a rate environment. But again, that’s always going to be subject to how the markets reacting and how we evolve out of recession to you know, so. You know, I think that there’s some economic thought out there that the market will continue to stock market will continue to rise. You know, I don’t think there’s really an end in sight to that at the moment. But I guess you never know. As we come out of the COVID, related recession, I think it’ll I think they’re probably right a little bit. I think it’ll probably continue to go but it should stabilize. Yeah.

Adam 27:39
So let’s talk about rates, then. I mean, a lot of times in the past, we’ve talked about, you know, rates for homes in the $100,000 price range. But as I’m sure you’ve seen as the volumes come in, those homes don’t really exist much anymore. So we’re going to talk today about more than $200,000 house. What are we seeing rate wise for a $200,000? property?

Lender 27:59
Yeah, you know, I think that as a relates to price, I think that’s some something to do with inventory as well, obviously, there’s a shortage of inventory. So you’re seeing you’re seeing price increases because of that, and you’re also seeing more new construction in the market. But yeah, $200,000 purchase price with 20% down, you know, today, we’re going to be at like 4.75 with no points. But if you paid like a little over two points, like 2.1 and points, you’d get down to maybe 3.875. Sometimes you’ll get to 3.6 to five, depending on feigl. And depending on loan size. But generally speaking between 3.6 and 3.875, you’re going to see with two points, and 20% down, you can get down to that rate level. Now, compare that to 25% down, and we’re going to be at like four and an eight to four and a quarter for 25% down. So when I look at that I see better value for money for a client who’s putting 20% down and paying two points, like two points being 2% of the loan amount. So on 150,000 on a mortgage, you pay an extra $3,000 in fees or in points to buy the rate down to 3.875. That’s better value for me then putting the extra 5% down on a $200,000 price, because that’s an extra 10 grand, that only gets you down to 4.125 or four and a quarter. So by putting less money down you actually get a better interest rate points then are also tax deductible for our for our clients. So they haven’t changed that tax code yet. So hopefully that stays in place. But the two points are also tax deductible. So what that means is let’s say your income tax bracket is 30%. You can you can get 30% I’d say of the points that you paid when you purchase the home back as an income tax break. Okay, so just reduces your income tax burden a little bit deeper. So I think that’s good value for money and Overall, you’re going to buy array by array down to a level that, you know probably won’t be touched again, or very difficult to get rates back down to that level, again, without another, you know, pandemic or something major happening globally.

Adam 30:13
And without paying another loan origination, another appraisal and all that other fun stuff. We haven’t talked about this in a while, what is your when you’re looking at, you know, kind of what you recommend to your clients and borrowers, when you’re looking at pain points and getting your mortgage payment down, what kind of breakeven timeline Do you generally look for, whenever you’re talking about buying points,

Lender 30:39
I’m looking for a break even, you know, like, if you spend that $3,000, and points to break to buy the rate down, when you compare that to the rate with no points, right, so you got to look at what the payment is at, let’s say 4.75 versus 3.75, let’s say 3.6. to five, see what the savings are on a monthly basis could be 100 of over $110 a month or something. If you can break even on the cost of those points, I would say generally, at the three year break, even mark, maybe a little bit higher, certainly no more than four years breakeven, that’s good value for me, because it’s a long term hold, you know, as a 30 year fixed rate, you’re buying the rate down to a level that will be, you know, anticipate not not maybe touching again, and not refinancing just for through COVID, for the sake of refinancing to a lower is not necessarily taking cash out or anything else. But just to refinance the existing debt on your investment property. I think if you can break even on the cost of those points in three years, give or take, then you’ve got 27 years of those savings. Right? So you know, let’s say you save 100 bucks a month, on your payment. You’ll save 30 a month, yeah, you save up like 32 and a half $1,000 over the life of the loan and interest. And you’ll spend $3,000 upfront to do it. So that’s that’s pretty good ROI on that three grand over the life of the loan. Now, of course, are you going to hold on to it for 30 years? Who knows? But at least if you hold on to it for 15, or 20, you’re still going to come out way ahead? Yeah. So I look at the breakeven, Adam of three to four years as an investment property. You know, if this was your primary residency, where you are refinancing on the overall costs, not just points, but on the overall costs, you want to be breaking even in about 12 months.

Adam 32:36
Great. One of the things that I’ve been curious about is in this environment where we’re seeing so much appreciation all over the country, and especially in the markets that our clients are buying properties in. Are you seeing people going even lower and getting and I don’t even know if y’all have programs at the moment that do this and doing like a 15% down, pay the PMI for a couple of you know, six months and then do another appraisal and see if the appreciation has pulled you up to the 20% mark?

Lender 33:08
Well, the 15% on option has a couple of layers to it right? First of all, you cannot have more than six finance homes. It’s a Freddie Mac product that allows you to do 15% down. So if you’ve got less than six minus ohms, it is an option on these price points that PMI with a good credit score really isn’t a lot every month. So some folks will try and do that. You have to have PMI in place for a period of time before they will just drop it when you show them that you’re you know appraised value is higher. But technically, yes, you can do 15% down, take the PMI for the short term, ask the service or then to do an appraisal on the property, let’s say six or nine or 12 months from the day you bought it. If the property has appreciated to the point where you’re at 78% loan to value, you can then request the servicer to drop that monthly PMI, maybe it’s 3040 bucks a month or something. And that’s just a it’s not a refinance. There’s no cost to it other than the cost of the appraisal. And then all servicers typically will say well, you know, you were supposed to have your PMI for X amount of years. But you know, a lot of our clients who say well, I have the value now I can always simply refinance away from you, and pay the refinance costs and get rid of my PMI. So when that happens, a servicer would generally say, okay, we don’t want this to churn. We don’t want this loan to be originated nine club once ago and then disappear, right because there’s no money in it for them. So they’ll typically just play ball and drop the mortgage insurance, monthly amount because you are technically at 78% or better loan to value but that’s really a conversation or a transaction that you do with the servicer of your loan, once you’re established and once you’ve asked them to do a new appraisal.

Adam 34:54
And so let’s talk about kind of the the mortgage starts and kind of the the level of business that you’re seeing You know, you talked about how when, you know, the COVID lows were there, it was really, you know, you’re getting bombarded, you know, just getting swamped with people wanting to refinance and buy with the rates where they are. Now that were, you know, a couple months into slightly higher rates. But you know, we were still seeing an inventory shortage everywhere, people are still buying homes like crazy, has, have the mortgage starts in your office tailed off at all, Are y’all still at the same levels or kind of give us a hint of what’s going on in the market, mortgage start wise, banks

Lender 35:30
Wait for me to kind of show that and we just start loan volume or closing volume, or application volume. So let’s say November, December, January, when rates were super low, we were taking a lot of refi applications and all of our purchase applications, you know, we were probably taking in about 150 to 160 apps a month, and closing anywhere between 100 and 120 loans per month. So are apt to close ratio is very good. We’re still closing at about 100 loans a month. Some of that is just legacy pipeline. But our application volume has not diminished all that much, we’re still seeing application volume come in at a clip of about 100 to 110 loans per month. So for us, that’s good. And it’s probably a testament to our team and our execution, also a testament to our rates and stuff. But also, I think there’s a large enough company volume wise, where they’re not impacted as much as let’s say some of the smaller bet lenders and competitors that we go up against in terms of how those guys have adapted to curbing the production to stay below that 7% tab rule from Fannie and Freddie. So I think we’re seeing some volume come through or some application volume come through some clients that we may have worked with in the past, but they may have we tried out with another lender, and that lender has got loan level price adjustments or guidelines that are not as favorable as a as ours now. So we kind of win a little bit in the sense that our company’s overall volume to Fannie and Freddie is quite big, but also just our independent individual team here. I think it’s a testament to their execution and their knowledge of the industry. And also our ability to keep rates relatively low by showing the value of paying points to a degree. All right, fantastic.

Adam 37:24
Is there anything I haven’t asked you that you think is important for people to know today?

Lender 37:29
Yeah, I mean, I just think that, you know, appraisals, are a concern, sometimes with inventory levels as low as they are. Because some people are sometimes sometimes prices, you over bid on a home sometimes as a, as a competitive nature to get the property. And then that appraisal, maybe over list or over slightly overpriced, or maybe an aggressively purchased home. And that appraiser may or may not come in at the value. So I would say just kind of be prepared to bridge the gap. If you’re in a competitive environment, and you know, you’re paying a little bit more from the house than, let’s say, the guy that you’re in competitive in competition with because that appraiser might not have the comp that you know, is in the market. 636 months from now, maybe it’s a new construction or something, you know, that compliment will materialize, but it hasn’t quite materialize, even though you’re at a price point where, you know, you’re going to pay a little bit more than what you normally would for the competitive nature of the environment that we’re in,

Adam 38:29
you’re going to become the con.

Lender 38:31
Well, you might make the comp Yeah, but at the same time, you know, cash buyers as well are not really a comp for us. Because every lender needs a lender to be the comp, it needs to be a finance home. cash buyers are a good indicator of a comp, but doesn’t necessarily mean we can hang too much weight on that comp. Because it’s not a finance home. Right. And, you know, obviously lenders will do a little bit more due diligence sometimes on a cash buyer.

Adam 38:57
All right. Well, thank you so much for your time today. I appreciate it. And thanks for all the insight. Of course.

Lender 39:03
Yeah, we’re here. If anybody wants to reach out, give us a call probably know who we are. Yeah, just let us know if you need any assistance at all. Thanks. All right.

Adam 39:11
Have a great day.

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