Real Estate Show Jan 2022 Lender Updates

Full Video Transcript Below

[00:00:00] Alice Lema: Well, good morning, Southern Oregon. And welcome back to the real estate show. I'm Alice Lema. I'll be your host today. I'm a broker at John L. Scott real estate here in beautiful Southern Oregon. And I'm so happy to be hosting the first of 2022, the first real estate radio show of 2022. And boy, I don't know about you guys, but I was happy to see 2021 in the rear view mirror.

[00:00:27] It had its quirks, it had its bumps and bruises. But we all made it through and we're looking forward to a little more stability and hopefully a little more calm in our housing market, at least here in Southern Oregon for the coming year. Now today we're going to have Guy Giles and Mutual Omaha mortgage on.

[00:00:47] He comes on every month. He's the real estate shows in-house lender, and he's going to be talking about predictions for 2022. So you want to hear the entire episode. It's going to be great, lots and lots of changes coming and, and some really good down-home advice for all kinds of buyers. Whether you're downsizing, first-time home buyer, we're going to talk a lot about the millennial generation. We're going to talk a little about tenants. We're going to talk about helping if you're a family member or extended family member for some of those folks doing their first time home buying purchase. We're also going to talk about investing and up-sizing, if you want to take some of your profit from the huge so many homeowners have now in Southern Oregon from just the last 24 months.

[00:01:35] People are taking their 50 to a hundred thousand dollars gain and upsizing or buying rentals or buying vacation properties. So Guy Giles Mutual Omaha mortgage is going to be here. Talk us through and the 20, 22 predictions are going to be fun.

[00:01:51] I always like to hit people with that, you know, just to see they're in the business. We all watch these markets so carefully every day. And I think it's just kind of good to get an idea of what experts think is going to happen coming up. So we're coming out of an unusually busy season. Normally in Southern Oregon is a lot of us know the fall and winter in housing, any way, kind of quiets down a little bit, a little bit of a break, a little bit of a lull, not so much this year. You know, I think a lot of us were really scrambling to grab those lower interest rates and there were a few more houses to choose from a few more properties to choose from and all the prices.

[00:02:32] It was just really nice and refreshing. Thank you, sellers, everybody with their house on the market and the last 90 days. And I gotta tell you, the backlog is sellers. Here we go. We've got lots and lots of people getting their photography done, getting their inspections done. Look for the next 60 days to have a lot more choices. In the meantime, we're going to take a quick break and be back with Guy Giles, Mutual Omaha mortgage, stay tuned. We got a great show for you, be Be right back.

[00:02:58] Well, welcome back Southern Oregon to the real estate show. I'm Alice Lema, broker John L. Scott. And today we have our check-in with Guy Giles Mutual of Omaha mortgage our in-house lender for the real estate show. Welcome back Guy.

[00:03:14] Guy Giles: Thanks. So it's good to be back.

[00:03:17] Alice Lema: Yeah. Well, so first first episode of 2022, why don't you lead us off with how, you know, things went in the mortgage world over the holidays and what it's like now?

[00:03:30] Guy Giles: Well, I, it's kind of crazy to say in the second year of this whole pandemic that I had my best year ever, which was kinda nice.

[00:03:38] Alice Lema: Wow you guys were that busy.

[00:03:40] Guy Giles: Yeah. Yeah, it's been, it's been really good, you know, a little bit you know, the winter slowed down, but I feel like that's over all of a sudden. I, I need to learn to take those little breaks and take them as the blessing that they are, to rest a little bit and, you know, I'm getting better at it, but not perfect, you know?

[00:03:56] But as soon as the first comes around, it just starts going crazy again.

[00:04:00] Alice Lema: So it seemed more busy this, this year than normal.

[00:04:06] Guy Giles: You talking about it during the, during the fall or during January.

[00:04:10] Alice Lema: It's kind of both. I'm just kinda checking in like, cause we normally have a slow down in Southern Oregon. Yeah.

[00:04:17] Guy Giles: Well, I definitely had one. I felt kind of before Christmas between Thanksgiving, you know, a little, probably a week or two before Thanksgiving and Christmas and then on to new year's was, was a little bit slower for me. I had a really good funding month, but that was stuff that I'd put it in the pipeline before, some things with builders and different people. So we had a whole bunch of things closing, but applications were feeling like they were weighed down. And then Tuesday morning, actually, Monday things just started going crazy. I mean, I probably see that just a little bit before you guys. You know, everybody has their new year's resolutions and it's either to lose a couple pounds or get their finances in order.

[00:04:59] I'm seeing a little bit of that. And it's, it's weird timing for that too, because generally we see a little bit of a bump in rates right around the first part of January. Anyway. Yeah. A lot of light trading and you can have, I mean, there are a lot of variables. Obviously we have some inflation fears right now and some things going on.

[00:05:18] A lot of times when trading is light, you can get the small traders that can move markets just on, on what they think rather than, than real true market. You know, things that should be moving the market. So normally you'd have a bunch of the big guys and gals that are moving the thing around and when they're, you know, resting and doing their thing, these, these other people jump in and they panic over things, they shouldn't, and they get, they don't panic over things they should.

[00:05:46] So you get a little bit of a weird deal. So I think that's part of the dynamic, but realistically, the inflation and the Fed getting concerned with inflation is, is what's going on right at the moment, you know? So yeah.

[00:05:58] Alice Lema: Yeah. Well, the inflation is shocking, you know, just in one year, the difference between what we're paying for gas and consumer goods and groceries. I do, do you have any thoughts about how that's gonna affect a buyer's ability to make a monthly mortgage?

[00:06:17] Guy Giles: I hope, you know, I always tend to get political, so I'm just going to it's going to happen. No, I, I think at least on my end, we do see the rates creep up a little bit, but you know, this calmed down a little bit towards the end of the year. That said, when I'm talking about them creeping up, you know, compared to your credit card payments or in all of your other rates, they're still just historically low.

[00:06:41] You know, so, so right now, if I'm quoting a low 3%, you know which a couple of weeks ago I was in the twos, it's still a really, really good rate. And, you know, you're not looking at a huge difference monthly, you know, over an eighth of a point or, you know, so I almost tend to get more hung up on it than other people do, just because I watch it so closely everyday.

[00:07:03] But we've definitely had a little bit of a tick up in rates. I anticipate that to happen for a little while and, but I, I really don't see them going over 4 anytime soon at least long-term.

[00:07:17] Alice Lema: So it was kind of surprising for a lot of us. I'm wondering what your take is on this. When the feds announced they were going to have three increases before March. So what are you first of all, do you believe them that they're really going to do that? And second of all, if they really do that, like, what are the consequences in the housing industry?

[00:07:37] Guy Giles: It's, it's going to slow things down. I mean, I don't think. I don't know what happens to wipe it out here. I think they cause a recession. I mean, that's generally what they do. You know, if again, I'm not going to get into, into politics and things like that.

[00:07:53] Alice Lema: It will slow the economy down significantly. Is that what you mean by recession?

[00:07:57] Guy Giles: And I, I do believe so. Yeah. I also, I also think that we're, we're, you know, thankfully this, this latest This latest virus isn't really affecting people like it was before. So, I mean, I'm also thinking of some other things will open up in the next few months also, which could actually could actually help some things. So it's not all completely, you know, doom and gloom. And I think, especially for our market around here, once, you know, there are people still holed up in San Francisco that are like, I can work remote. I'm never doing another pandemic in San Francisco. And I'm going to move, but I can't go look at houses. So once that opens up a little bit, I feel that areas like this are going to be buffered a little bit from, you know, any recession or thing that's happening. Yeah. Will hurt purchasing power. And unfortunately for the local kids and the local people, you know, getting into the market, it's, it's gonna put more of a problem.

[00:08:54] Alice Lema: That's who it hits. It's the folks that live here already and work here locally.

[00:08:59] Guy Giles: It, it does. And, and. Again, I it's, it's difficult not to get political there. They're making pricing hits on people and it always affects a little guy. You know, the, the, the big guy can, can absorb it or he can just absorb it longer for sure. And, and, and the little guy ends up, you know, dealing with some of the repercussions.

[00:09:22] That's something I just kinda had saved up for a little bit of a different segment, but there are pricing adjustments for every, every little thing. If you have an investment property, for instance, you have a one and a quarter percent pricing hit, just because it is an investment property. And that's, if you have an 800 credit score, or if you have a 600 credit score and then they start adding on, on top of that for, you know, how good your credit or, you know, what's your FICO score is.

[00:09:54] So I. Anyway, I apologize. It's actually 2.15% for an investment property.

[00:10:01] Alice Lema: Really, that seems like a lot.

[00:10:02] Guy Giles: Yeah. And then if you have a, well, it is, and then if you're, if your credit is not perfect. So, so this all has to do with generational wealth and you know how you might be able to build it up. You buy an investment property. If your credit score, isn't great. Say it's a 620 to a 640, which isn't horrible. They have a 3% hit on top of. So you, you could be looking at upwards of five and a quarter or an eighth points just, and when I say points, always take that word, throw it out the window, put the word percent in there. So if you're paying interest like percent.

[00:10:38] Yeah. So if you're paying five points, your fate paying 5% of that loan amount. So that's $15,000 on a $300,000 loan.

[00:10:46] Alice Lema: So you're talking about the investor non-owner occupied.

[00:10:50] Guy Giles: Yes. And, and, and keep in mind, this is with 25% down, you know, just a really good down payment.

[00:10:56] Alice Lema: That's going to be very discouraging to our investment population who is already in Oregon, very discouraged and blue.

[00:11:03] Guy Giles: Well tell them that they need to buy before about March because the FHFA is getting ready to Jack up some, some more. So.

[00:11:12] Alice Lema: And why do you, why do you think they're doing that? Why do you think they're attacking all this on to the investment community? Like what is their goal?

[00:11:19] Guy Giles: Well, it's, it's beyond investment. It's on second homes. And I, the, the, the reason that I really, I mean, historically, it's always been, Hey, there's a little bit more risk. You know, you're going to want a place to live. So if you have a house and you have an investment property, you have to let one of them go. You're generally going to let the investment property go, so the investors, build in a little bit, right there. Just because they're there thinking, Hey, if you're going to walk away, that's, that's the one you're going to keep it.

[00:11:45] Alice Lema: That is such, I'm sorry, but we have so much equity in our housing right now. And probably for how many years, I don't understand why they would be so risk averse. That doesn't make any sense unless they think like, do the big wigs think there's like some kind of downward spiral coming?

[00:12:02] Guy Giles: No, I don't believe that for a second. I think you hit the nail on the head when you said we have a lot of equity. Apparently we don't have enough equity. So I think what this is about in a lot of ways is it's not fair for you to have earned two houses. Everybody should have one house instead of you owning two houses.

[00:12:19] So if they can make this, you know, and I'll probably get JFK'd for all this or something, but I mean the reality. Yeah. That they want equity. They want everybody to have one house or I think ideally they would like everybody to live in an apartment in a big city.

[00:12:37] Alice Lema: I'm sorry. That was just, that was a funny, that was a funny little jab there.

[00:12:43] Guy Giles: Yeah, it's sad, but true. And you know, and I think a lot of this has really to do with that is, is if you, if you make it towards where you know, to where it's less attractive, then less people are gonna be buying them. And, you know, in one way it might be okay if that opens up the market a little bit for, you know, the first time home buyer, but that never those consequences aren't, you know, it never really works out like that. Is all there ended up doing is charging everybody. And if you're paying rent, now you're paying a lot more in rent. So the little guy always ends up getting hurt anyway.

[00:13:15] Alice Lema: Yeah. Yeah, that, that extra money, just like the inflation prices on all the goods and services that has gotten passed on to the consumer. I don't see a lot of businesses being able to absorb those prices. Like look at, you know, we're still talking about the construction industry. And even though a lot of the materials are less then they were six months ago, lower prices and some of the labor is more available than it was 90 days ago. The prices are still really, really high. And I don't know, I just don't know how it's going to continue to get absorbed, especially in little communities like ours.

[00:13:51] Guy Giles: Absolutely. And I'll have to pull, pull Brad in here maybe for a segment or something next month. He's the home builders.

[00:13:57] Alice Lema: Let's do that. He's now what's his last name? Brad Bennington Bennington humble association. Our local rep for that. Yeah, absolutely.

[00:14:07] Guy Giles: He's a guy that just fights for everybody all the time.

[00:14:10] And it's never about him. It's just about somebody building a house. And you know, if you're $80,000 before you ever laid the first brick, just in fees and licenses and DEQ and regulation, how in the world is an entry person supposed to be able to build a house. And, you know, everybody wants to blame the builder, but these guys have been cutting margins for a while.

[00:14:33] And I, I, anyway, I think that would be good.

[00:14:36] Alice Lema: And, you know, having him on in February would be good because all the labor numbers and the material numbers for 2021, the totals will be in and we'll start to have a little bit of our January numbers. So that would be good. Yeah. Well, Brad, if you're listening you're on next month.

[00:14:55] Guy Giles: He's such a good guy and always willing to help. But you know, I don't, I don't want to go all doom and gloom on it. You know, the, the good news about the market is we're still writing good loans. We have been for years now. You know, there, I, I don't see any eminent, you know, massive defaults on this unless, you know what I mean, either? No it's just, it's just, it's a different market than in 2009.

[00:15:20] And if they, you know, We can absorb a lot and we, we already have been. you know, unfortunately yeah things, things are definitely more expensive than they were a little while back. But it's still a really good time to buy a house. And no matter what, especially in light of what I'm talking about with some of these extra hits from the FHFA. Rents could only go up. So it's probably a good time to really think about getting in a house

[00:15:48] Alice Lema: Yes, so hold that thought, because we got to take a quick break. We're talking to guy Giles, Mutual Omaha mortgage. Our in-house a real estate show lender. We'll be right back after a quick word from our sponsor of which Guy is one. So do not touch that dial.

[00:16:05] Well, welcome back folks to the real estate show. We're right in the middle of a great conversation with Guy Giles Mutual of Omaha mortgage. He's our real estate show in-house lender. He comes on every month and we had to stop kind of suddenly cause we had a break here, Guy and you know, we were just getting ready to start.

[00:16:25] Launching the conversation about renters and mortgages and, and all that when we had to take a break. So let's pick that back up because all this chatter about the interest rate increases really scares me ,when it comes to our first time home buyers.

[00:16:43] Guy Giles: Well, well, yeah, I mean, it's, it's, it's tougher as far as you know, the rates might go up a little bit, but if you think about, I think the last, the last number that I heard was rents go up about 6% per year, as far as if you're renting a house. And that's probably pretty accurate just because the source I got it from, but I, I haven't, I haven't followed up to, you know, to confirm that. But if you think about it you're a little bit more buffered owning a house.

[00:17:09] And you would be because you're in, you're in a fixed rate, you know, as long as you're not in an adjustable arm or something like that. You're, you're kind of buffered from that going up. Yeah. Your taxes are going to go up 3%, but if you, you know, if you take that out, you know, over the 12 months, it's really not that much, that much money. But you're just at the mercy of the, of the landlord, which he, or she, you know, it's the cost of money for them has gone up. So, you know, they're gonna, they're going to charge them plus.

[00:17:35] Alice Lema: Well in Oregon, the rules,It's so hard. It's so hard to be a landlord in Oregon.

[00:17:42] Guy Giles: Well, yeah, I mean, are you, I think you're still allowed to raise up rents.

[00:17:47] Alice Lema: You can, yeah. The rent control money part, I think is actually more fair than it was. That's just my personal opinion. So don't send darts my way, but it's the other stuff. It's like the, the guest policy and the, this and the, that, and it's just hard people ,not paying the rent. We still have the COVID moratorium for the tenants.

[00:18:11] Guy Giles: Yeah. I think at some point we need to need to get off that, that lifeline. I mean, I don't know exactly what the, what the answer is, but just, that's just leaving your sofa open for your kid for the rest of your life. At some point, you know, You got it going to have to get 'em out and get them, get a job, at least make them buy their own box games or something.

[00:18:36] Alice Lema: But yeah, a lot of the millennials have just, I know that joke is, is constantly going around of a lot of the millennials are pretty seasoned. They've saved up a lot of money, but they're still renting and they're so vulnerable, like you were talking about.

[00:18:50] And then in the state of Oregon where landlords are not having fun being landlords, their building goes up for sale. They start looking around to buy a house. And you know, if the interest rates go up, then what happens.

[00:19:03] Guy Giles: I'll tell you what. I had one of the, one of the coolest things I got, I got a phone call from a real estate agent that was saying that this guy is selling his duplex. Is there any way that I can get the people that live there, they're best friends, they don't want to move to, to do it. And we, we closed them last week. So just right before Christmas. So it's been two weeks now or three, three weeks. One of the coolest signings I've ever been to. I mean, these guys would literally want to tear the wall down between them. They're such good friends and they're paying less than they were for rent in this place. The guy was able to get out from under his duplex for whatever reason. I think he's just kind of downsizing. What a cool thing for these guys to not have to move there. Literally they, yeah, they had saved a little bit of money. None of them I've ever owned a house before and now they own one together. It's just, I mean, if you, if you can make it happen, it's, it's a really good thing.

[00:19:58] Alice Lema: So. Yeah, but so just for that story where they able to get qualified and buy something.

[00:20:05] Guy Giles: Yeah. That house, they bought the duplex.

[00:20:07] Alice Lema: Oh, that's awesome.

[00:20:10] Guy Giles: I'm not a good storyteller now. They ended up buying that house. That's supposed to be a good story, man.

[00:20:18] Alice Lema: And then did they so were they able to pull that off themselves or did they need help from parents or grandparents?

[00:20:24] Guy Giles: They had no help. They had, they had their emergency fund saved up and with the lower down payments, these days, we were able to get them into the house and literally cheaper than they were paying for rent.

[00:20:34] Yeah. Yeah.

[00:20:35] Alice Lema: Isn't that something. So it's interesting because if, if you qualify a first-time buyer, any buyer actually in that 350 to 400 range in Medford or Central Point, their payments, like what? 15? 1800. Yeah.

[00:20:53] Guy Giles: The down payments is huge. The one thing that's kind of come around in line really nicely over the last few last couple of years is the mortgage insurance, I guess, unless you have really poor credit because you've got poor credit is still expensive, but I I've written mortgage insurance for 30, $32 a month, you know?

[00:21:13] Alice Lema: I think, yeah, because it used to be like, in the beginning it was like a couple hundred.

[00:21:19] Guy Giles: Yeah. Oh, I, I've seen it up upwards of five, $600 for terrible credit with a low down payment. So no, it can get very, very expensive, quick. So now a days it's a little bit more driven towards, you know, Hey, how is your credit?

[00:21:34] You know it's always been driven on, you know, how, how big your down payment is, you know, there's different, different marks at 3%, 5%, 10%, 15, you know, just all the way down. But, but it's, it's definitely worth looking at in the old days, you have less than 20% down. And a lot of people just look right at But that mortgage insurance nowadays is forever.

[00:21:54] And, you know, it's, it's a lot more expensive if you don't have a good credit score.

[00:21:59] Alice Lema: But if, well, and quite frankly, you've got Guy, programs for conventional 5% down and the mortgage insurance goes off when they have 20% equity. Right.

[00:22:10] Guy Giles: Right. We actually thought that much more down payment. Yeah. I mean, if you're, if you're lower income, there's the home ready.

[00:22:16] Or even if you have a higher income, so basically you can, you can do a 3% down conventional loan.

[00:22:23] Alice Lema: 3% down. So that's even smaller down payment than the FHA because isn't FHA 3 1/2%. Yeah.

[00:22:31] Guy Giles: I say to come in as with as much as, as possible. And then I, you know, I really have a talk with people, you know, always how much are you paying for rent?

[00:22:40] Is that comfortable? You know, I, I like to just dig a little bit deeper than, Hey, I have a 3% loan and yes. You know, you can get into the house for that because gosh, if they can get 2% gift from mom or dad, you know, that 5% is going to be better than the 3% down, but that said it is actually a program and we do it a lot.

[00:23:00] Alice Lema: Well, and we just need those first time buyers to get something. You know, and I know everybody wants their dream house and we all watch those TV shows, but I just want to make a plug for, especially the first time home buyers to not be quite so particular. I know you waited a long time, but if you just get an address. Yeah. Under your belt.

[00:23:21] Guy Giles: Yeah. I mean, just, I mean, at least just, you know, if there's parents listening or whatever, have your kids just give Alice a call, she can set them up on a search, you know, they can get an idea of what's out there, you know, kind of the price ranges and things. And, you know, I mean, it's better to just get the more educated, you know, the more educated you can get, the better off you're going to be when the time comes.

[00:23:41] So even if you're not ready right now, it doesn't hurt her to have you on the search and she'll be sending you out the new stuff every day. And just so you can kind of keep an eye on it.

[00:23:50] Alice Lema: Yeah, we do have some families that will buy the house and then put the adult kids in there as the tenants. But they're still not in an ownership position on their own. But that is another strategy. Well, you know, so the parents can call Guy and that's a second home, or that's a non-owner occupied investment.

[00:24:15] Guy Giles: Or, or we can run it. You know, if the, if the kiddo just doesn't have enough income and the parents want to help, the parents can go on as a, as a non-owner occupying co-borrower.

[00:24:26] And so like a partner kind of bolster up the income for the kid. I mean, th th there are a lot of different mechanisms out there right now. Do you know, to at least get you into a house and then, and then you're getting the owner occupied rates at that point and in, you know, to do anything that I'm not supposed to do, but the kids are the owner, you know, and they're occupying the place so you can get the same good rate that you would have you know.

[00:24:52] Alice Lema: Cause interest rates lower if one of the buyers is living in the house.

[00:24:58] Guy Giles: Yeah, a thousand percent, a thousand percent. But yes, we'll have to see where the inflation lands, but no, it's, it's, there are a lot of different options and, you know, and it's, that's just a little different than just straight co-signing for somebody. Cause you, you know, you have ownership in the place too. And if your kids, I mean, what are you going to do it.. No I mean, if it's sitting in a checking account, I'm sure, you know, that would kind of hurt. That's a good point, you know? I mean, gosh, at least it's invested in something and you know, and it it's, it's going to go up. So I've been kind of thinking along those lines.

[00:25:39] Alice Lema: Yeah. Yeah. Well, it's been really interesting some of the first time home buyers that purchased between 2011 and 2000 and even 19, you know, some of them had that instant COVID, Almeda fire pop. 30 to 50,000. And then, you know, if they bought before that, they have something like 60 to $80,000 and they're kids, they're kids, and they have all this equity.

[00:26:08] Guy Giles: It's, it's really interesting and unexpected. Yeah. And I also like what you said about just, you know, getting something, getting in the game. I mean, you haven't, you haven't lived until you decorate the tongue on your house, because that was just part of the single-wide. But, you know, in reality, it was on land when I bought it years ago and I've made money on that one too.

[00:26:29] And that was our, that was our first little place. You know, it's, it's going to do a lot better if it's actually on land. Obviously that's, that's the conversation they'll have to have with you, but there was nothing nice about that place other than it was ours, you know? And we made money on it and were able to buy our first real house, you know, with the money that we made on it.

[00:26:50] So was it a dream house or, you know, super exciting to bring friends over and show it to them? Probably not, but you know, at the same time it was just about being in the game. And I don't know if it's, as long as you're not trying to just do it for six months and make a hundred thousand dollars. I think investing in real estate is always going to be a good thing.

[00:27:12] Alice Lema: Yeah. Yep. And you have a place to live and you're not so vulnerable. You know, being a, being a tenant, you are vulnerable to the life situation of the landlord or the money situation of the landlord. So, oh man. Yeah. Can be kind of scary. So the millennial people that buy houses right now, part of what slowed them down, at least statistically was the debt, the lack of jobs or the lower paying jobs, and then the, the student loans.

[00:27:46] So when, when these folks are coming to you now, 2021, 20 22, are you seeing that they're able to buy a house cause they paid off the debt or did the lending practices kind of flex a little bit to help them. Like what, what changed so that they could come in and start buying houses?

[00:28:04] Guy Giles: I think you kinda hit on that earlier. You know, I it's, it's easy to get down because you have the stereotypical, Hey, I'm sitting in a basement, you know, playing video games all day and I'm not really going out and working. But honestly the ones I see it gives me hope for the future. I mean, very hardworking bunch. Yeah. They've actually managed to save a little bit of money.

[00:28:27] They got their careers going, you know, between them they've, they've got a decent, a decent income way more than I did when I was, when I was their age. No, we haven't really seen them loosen up guidelines other than like student loans. We only have to hit them with maybe a half of a percent of, the whole thing is instead of a full 1%. But generally, you know, it's, it's one of those things I always want to get you pre-qualified worst case scenario, you know? Just, and, and then that actually is, you know, if you look at the actual repayment on these things, it's a whole lot better than the actual guidelines would show.

[00:29:01] Alice Lema: But let's talk about that next. I'm sorry. We have so much to talk about Guy Giles and the Mutual of Omahamortgage. We'll have a quick break. We'll be right back.

[00:29:12] Well, Hey everybody we're back with the real estate show. We're talking to Guy Giles Mutual of Omaha mortgage. He's one of our sponsors. We're very grateful.

[00:29:20] Thank you. And we were just having, gosh, such a great conversation before the break about the millennial generation and how debt heavy they were and how hard it's been for them to get to a place where they could buy houses. And I just wanted you to kind of go over what it's like, you know, financially for one of those folks to qualify.

[00:29:45] Guy Giles: Well I, what I'm finding lately is, is that they're, by the time they come in to see me there, they're a little bit more prepared than, than they were in the past. Believe it or not. So I don't know if they're, if they're learning a little bit off the internet or if people like you're teaching them a little bit better, but I've, I I've seen it all from, a guy that co-sign for somebody else's vacuum cleaner. So he couldn't qualify because that guy decided not to make his vacuum cleaner payments. Literally all the way to a young attorney that she just, she just graduated and got her first job. And before she saved up for her own house, Helped her parents finish paying off theirs, and now she's buying her own.

[00:30:32] And I mean, a lot of these kids, phenomenal. I mean, she's got no debt. She's out of law school. She's 20, I think 28 years old, 26 or 28. That's right in the middle of that millennial range. Yeah. And a lot of them maybe when they were young, they saw their parents go through, you know what everybody went through during this last crash. And now they're just bound and determined not to make those mistakes.

[00:30:59] Alice Lema: You know, I, and they're so smart. Don't you think those, those millennial folks, they just, they learn so much, like you said, off the internet and very practical, practical stuff.

[00:31:09] Guy Giles: Yeah don't get your politics off the internet anymore.

[00:31:13] Alice Lema: I am talking about financially healing yourself. Yeah. We're not a political show.

[00:31:22] Guy Giles: No, no, but, but it's one of those it's just, I'm seeing them come in a whole lot more, more prepared. Or, or they're just the complete opposite of the spectrum. And they've just heard that, that you can buy a house cheaper than rent, and I'm like, not when you're living for free in the basement, you know?

[00:31:41] You know? Yes. If you're, if you're actually out there, out there doing it, you have a little bit of a down payment. It can definitely be.

[00:31:47] Alice Lema: Yeah, because you know, in Medford, a one bedroom, one bath is now 1200 something and the two bedroom, two baths are 16 and people are paying it. Yeah. You know, if you can get a little house of your own and just have a mortgage and a roommate in the 15 to 18, that really pencils. And I think some of the millennial people don't know that it's, it's more doable.

[00:32:13] Guy Giles: Yes, you know, especially for first time home buyers kind of starting out this, this home ready and home possible. You know, you can give me a call and we can talk about income limits on, on those and some different things.

[00:32:27] You know, you can get in with a smaller down payment. Your, we spoke earlier about mortgage insurance, where anytime you have less than 20% down, you pay what's called mortgage insurance, unless you're a veteran or, you know, in some weird, weird program. But, but it's one of those things that it's, it's a lot cheaper than just the standard, even though the standard can be really reasonable.

[00:32:46] Right. And the rates are a little bit lower than the going rates. So there is if you can fit into that bucket, definitely some, you know, some good loans to be had. Parents can jump in and do it. And then that really doesn't mess with the income limit piece, as long as the, as long as the kids are. And again, it might be a good place to park, a little bit of your wealth for now help out a kid.

[00:33:08] And then both of you guys have a dog in the fight, so it's not like you're just doing something for them. And. Yeah. I really thought by now they would loosen up, you know, a little bit more as far as coming out with some more programs. It just, it hasn't really happened, but maybe that's just because the programs that are out there right now really aren't that bad.

[00:33:27] And, you know, and we're, we're kind of getting them done. You know what I mean? Going in back into a hundred percent financing, you know, other than, you know, I, I don't know that that's a, that's a good place to go and probably that'd be the only place.

[00:33:42] Alice Lema: Yes. Yeah. Yeah. I agree with you on that. Yeah. And it's good for people. It's good for people to save up a little bit of money in my opinion. Yeah. And the pride that you have of going through that process and then nobody can take it away from you. Its's your home. That's a big deal.

[00:33:59] Guy Giles: I mean the mild, mild saying the only thing that sucks, worse mow the lawn is mowing someone else's lawn.

[00:34:06] Alice Lema: Well, and you figure, I mean, what is the math on being a tenant for 10 years? If you pay that for 10 years, you're literally buying somebody else a house.

[00:34:18] Guy Giles: Well, when, when I was a kid and you got to figure, this was the late eighties I watched my parents rent a house from the time I was in, I dunno, I guess the fifth grade till right after high school. I know that the people that bought the house did not pay more than 40, $50,000 for this house back then.

[00:34:36] And it was $118,000 in rent that they paid and yeah, I mean, 10 to 15 years. Yeah, I think that was $650 a month or something. It wasn't a nice house, you know, 1200 square feet, no air conditioning, nothing. I mean, it was, but, but 118 grand back then, you know, for that's, that's almost triple what those people probably paid for that house.

[00:35:03] And. Yeah. It's, it's not a bad thing to own your own house and those rents, especially where they are right now will add up fast.

[00:35:10] Alice Lema: Yeah. And since, you know, millennials or any first time buyer does not need, it's not mandatory to have 20% down. I don't know how that idea got out there. So, but I know a lot of those, a lot of those folks think that they have to have 20% down and, you don't.

[00:35:26] Guy Giles: No, no, not, not, not, not anymore. I mean, it's always been the conventional wisdom, you know that, Hey, you have to have 20% down before you, even for, even think about it. And ideally, if you can, can do that, do it all day long, you know, 90% down, if you can. You know what I mean, shoot, call Alice.

[00:35:44] Alice Lema: But you know, I don't know if, if you figure it takes five more years to save up that extra money, then look at the appreciation that they lost in that five years.

[00:35:54] Guy Giles: You know, I think other than having Brad on this next time, I'll get some math together on that. So we can actually go over some numbers. Yeah. Yeah. Pretty, pretty amazing. And you know, even beyond that, you have, you have tax savings because you know.

[00:36:09] Alice Lema: Well, at least for now, oh, I'm sorry. I forgot. It's not a political show. I'm sorry. That's just tongue in cheek because at least in the state of Oregon, they do bring that up in our legislative sessions, to take away the mortgage deduction and the IRS, I guess, federally, they do too talk about that every, every time.

[00:36:33] Guy Giles: Bad idea. I absolutely. Yeah. I mean, if you just want to do something, oh, I don't know. I would say what more could they do right now, but then again, yeah.

[00:36:44] Alice Lema: Don't yeah. So, so if you're listening or you have millennial people in your life, but if you're a millennial or you're listening and you have people in your life, think about giving Guy Giles, Mutual of Omaha mortgage, a call you can also Google him. He'll give his phone number here shortly, but the conversation doesn't cost anything, you know get a little bit educated.

[00:37:06] Guy Giles: No, I'm, I'm, I'm happy to talk to anybody whenever. And I just, I just want to help people. And honestly, if there's something out there that truly I don't have, or somebody else's better, I have a lot of people that will tell you, I'll look, look at you straight in the eye and say, look, you need to talk to this person. So it's a good place to at least start having talk with me at all. Treat you right. One way or the other. Yeah.

[00:37:28] Alice Lema: Why don't you throw out a phone number so people can get ahold of you?

[00:37:31] Guy Giles: 541-944-6987,is my cell phone number.

[00:37:37] Alice Lema: Great Guy, Giles mutual of Omaha mortgage. Thank you for being a sponsor. By the way, this show is brought to you by Guy Giles mutual of Omaha mortgage., John L. Scott, Medford, Ashland, and also our local rogue valley association of realtors. So here we are starting 2022 with the 10 seconds left.

[00:37:57] Do you have any predictions for 2020?

[00:37:59] Guy Giles: Oh, man. I think this pandemic thing is going to let up a lot and I think the rates are going to tick up a little bit and then just kind of even out and maybe tick down a little bit towards the end of the year.

[00:38:12] Alice Lema: Yeah, I'm not sure the feds are going to get away with all those rate increases. And I think they'll chicken out. I agree with you. All right. Well that's all the time we have. Thank you Guy Giles Mutual of Omaha home mortgage. Alice Lema broker, John L. Scott. Guy will be back next month. I'll be back next week. Have a beautiful weekend. Bye now.