Real Estate Show Lender Updates October 2022
Real Estate Show Lender Updates October 2022
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Real Estate Show October Updates
Alice Lema: [00:00:00] Well, good morning Southern Oregon and welcome back to The Real Estate Show. Gosh, I'm glad you could join us today. I'm Alice Lema. I am a broker here in beautiful southern Oregon with John Scott Real Estate and your host of the show, and today we're so happy to welcome back Churchill Mortgage. Guy is our local in-house lender sponsor of the show, and he comes on once a month and talks to us about what happened the month before. And boy, what a 30 days we've had. I mean, it's got exhausting to look back and see all the changes we've had and all the inflation and the interest rates and world events. But here we are we're in October, we made it. And Guy Giles will bring us up to speed and give us some technical explanations.
And, you know, since the end of the year is coming up, why don't ask him, if he's willing to start making predictions for 2023, that'll be fun. So we have Guy Giles, Churchill Mortgage today, our in-house lender gonna talk to us about how to get through these [00:01:00] tumultuous times. And also we're gonna hit him up for some predictions.
In the meantime, wanted to just briefly mention that they are doing a lot of studies on real estate buying and selling and timing and such. Did you know that the end of September and the first few weeks of October are statistically the best few weeks of the year to purchase a home? Now I subscribe to the idea that in southern Oregon at least, it's never a bad time to purchase a home, but when they run these national numbers, it sure looks like the end of September and 1st of October are the best times for a buyer to purchase a home, in part because any seller who's still on the market, they might be concerned about winter, even if they're not in a cold climate. They just might be antsy if they've been on the been on the market a while. There's also sometimes, Inventory left over, there's houses left over.
So you still have some good choices and maybe not as many buyers to compete with. [00:02:00] So all in all, it's, it's kind of interesting. I still say it's never a bad time to buy a house in southern Oregon, but statistically nationwide, the, end of September and the first two weeks of October are the best times. So there you go. There's your little tidbit for the weekend. We're gonna bring Guy Giles or Churchill Mortgage on here pretty quick. So please stay tuned. We're gonna have a quick break from our sponsors. We wanna say thank you so much to John L. Scott, Ashland, and Medford. Also thank you to our local Rogue Valley Association of Realtors, also known as RVAR. And of course, Guy Giles of Churchill Mortgage. Always appreciate him and he will be back on shortly to give us an update on what's happened in the last month of financing and housing. So stay tuned. We will be right back after a quick word. Don't go.
Well, welcome back to the Real Estate Show folks. Thanks for joining us again. I'm Alice Lema. I'm your host of this show. I'm a broker here in beautiful [00:03:00] southern Oregon with John Scott Real Estate and today is the first Saturday of the month, and we are so lucky to welcome Guy Giles of Churchill Mortgage back, our in-house lender. Welcome back.
Guy Giles: Hey, thank you. I'm glad to be here. Gosh, it still feels like summer. Yeah, almost . It's been, it's been crazy. I kinda lost you on my video here. That was, that was my fault. So anyway, I'm. I'm ready to talk about mortgages or what, wherever you wanna go with this thing.
Alice Lema: Well, gosh, it's been another like crazy month in the last 30 days, just so we think we can't even imagine anymore volatility. So why don't you bring us up to speed? What's happened in the last 30 days and, and kind of what you're seeing now?
Guy Giles: Well, volatility just doesn't even really, doesn't even start to describe it. We've had swings during the day of up to 140 basis points on the mortgage backed [00:04:00] securities. And if you, you remember, what they do is they'll take the mortgages and they'll kind of bundle them up and they'll say, Hey, these ones are all this FICO score, and, you know, this is what we'll sell, you know, kind of the, the servicing or these loans for, And it's been, it's been a ride.
I mean, it was 140 basis points. If you figure about 23 to 25 basis points are about an eighth in in fee, that that adds up really quick. I mean, it could, it could cost a $500,000 buyer in an extra couple thousand dollars in just one day as far as as the swings. And what I'm talking about is kind of the cost to actually have that loan.
So say you're getting. Six and a half percent not paying anything for that, that rate. Now, all of a sudden, in one afternoon, if you don't lock in the morning, I'm telling you now, you now it's gonna cost you $2,500 for that same exact rate. And it's, [00:05:00] it, it's, it's been trending a little bit in our favor this week, but last week was, one of the ugliest weeks I've, I can ever remember in my career.
Alice Lema: So I, Is that because of the, the big Fed hike? Again?
Guy Giles: You know, generally those sorts of things are baked in. This is just having to do with inflation numbers still coming in. Still coming in kind of high. So generally what happens after we get a fed hike is our rates, at least recently, they drop a little bit because we we're already anticipating that these guys are looking out, you know, 15, 30 years on, on these things.
Because when, when you get into a loan, even though most people don't have 'em that long, that is what you're signing yourself up for to, for that rate of return. And with inflation happening right now, obviously that eats away in the long run if you're getting like, you know, the good old days a year and a half ago at 2.6% on, on a rate the good old days.[00:06:00]
Yeah, I I, it's amazing. I was telling everybody at work for the last four years, I'm like, this is the good old days. You know, right now is, and you know, I, I only lived through one other one when I first got into business in 2005. And I didn't, I didn't even understand how how much business was actually going on until it was over.
And this last time, I've been hustling for years and three years now. And finally I have a little bit of a break to go hunting with my daughter this morning before this thing. And so I'm, I'm taking advantage of, of the little break that I do have.
Alice Lema: Gotcha. Gotcha. So one of the things we were talking about before we went on the air was there were some hope for the buyers that are out there. You and I, you were just beginning to talk about some of the opportunities that are out there that would voice of hopeful would be super welcome right now, .
Guy Giles: Well, I do think even though, even though rates are high and that is discouraging a lot of [00:07:00] people, it's, it's helping in one way. You know, obviously we don't have houses that are gonna go up double digits, you know, in this next 12 months, so, a little bit of a reprieve. You finally have you know, you have the, the sellers a little bit nervous, you know, thinking that they're not gonna sell their house in one afternoon with six offers. So I, I'm seeing buyers be able to come in and offer just a reasonable amount, and there's not the, the trepidation that, that, oh my gosh, you know, this house is just gonna sell and if I don't offer $40,000 over the asking price, I'm never gonna get it.
Oh absolutely. You know, we're seeing builders now at this point, giving out incentives for, for people to buy. So some of this stuff, as bad as the rest of it is, it needed to happen in the housing market. I mean, it's pretty much the biggest buy that you're gonna do, probably in your lifetime, at least one transaction wise.
And, and, and it's just been going crazy for so long that it's just been [00:08:00] an unsustainable. So I don't like inflation, you know, high rates aren't, aren't my favorite thing, but to, to get a housing prices a little bit back in line and maybe, maybe, things kind of catch up with it as fast as it's been inflating over the last few years, it's probably not a bad thing.
And these buyers, I'm starting to see some more offers going out there. They're able to ask the sellers for some closing costs. You know, we're looking to kind of buy down the rates with those a little bit. One thing that's been kind of the talk of the town lately for at least for the last few weeks, is this, Is this two one buy down where
Alice Lema: Yeah. What is that? What? What are you talking about?
Guy Giles: Well, basically the seller comes in and I always try to explain, when I say the word points, you could take the word points, just throw it out, put it with percent in there. So if you're paying one point, you're paying 1% and that's, that will buy down your rate.
So say we're at that six and a half percent without paying any cost, [00:09:00] if you pay that 1%, you know, you might take it down a quarter of a point in rate and now you're at six and a quarter. So talking about if, if the sellers do this, this two, one buy down, they pay two percentage points to the buyer and it buys down their rate 2% the first year and then 1% the second year. And, and then it goes back to where the rates were when they started. There's people all over town selling this program. I wanna caution people about it because if you're coming in with 5% and. You're thinking you're gonna refinance in two years with maybe 7% equity in your house. You, you could be in for, for some, for some trouble.
Alice Lema: Because why?
Guy Giles: Well, you might not have the equity to, to refinance. If everything's going up, you know, 20, 30% in a year, that's great. But we're not really in that atmosphere anymore.
Alice Lema: No, that's not normal.
Guy Giles: No. And even though it's, it seemed like it lately, [00:10:00] you know, even, even. With slight appreciation, that still doesn't give you the equity to be able to get a good deal to refinance your house. And I get worried about people in two years. You know, I had a couple of ladies that I, that I really respected, that I worked with back in oh five, and people were making so much money on this you know, on the option arm loan where you were basically, losing equity in your house every month. And they told me, Don't sell this loan.
This is gonna go ugly. And I did not sell it. You know, thanks to Peggy Nichols and Karen Burett. I don't know if you remember them.
Alice Lema: I remember them, Yeah, yeah, yeah.
Guy Giles: They kept me grounded. And, you know, I didn't get a Maserati through that whole thing because , I wasn't selling some bad loans and, and I just got misgivings about this, this two, one buy down thing.
You know, it might, it might get people a couple of deals closed right now. As far as for the client, if they don't have the means to pay that down or some way to do it, they, they may not be [00:11:00] eligible to refinance that thing within two years, and now all of a sudden, you know, you're, you're not looking at any kind of a crisis like we had in oh six.
I'm not expecting that at all. Nothing, Right. Nothing is coming together like that. But just. If you have someone like me or you know, someone trying to sell you on that, just just go into an eyes wide open and ask a lot of questions about, you know, what could happen down the road. Cuz there might be some situations where it's, it's really not a bad thing, you know, if your, if your wife's graduating from med school and you know, everything's gonna be done by then. You know, I mean, there, there are definitely, you know, times and places for things. But just look into this program if people are talking to you about it right now.
Alice Lema: So you just wanna caution people that if part of their strategy today in purchasing includes a desire to refi later, that they'd be very careful, cuz you don't know if that's gonna work out or not. Is that what you're saying? Don't automatically bake that into your decision today. Is that what you're [00:12:00] sayng?
Guy Giles: That would be my advice as far as that goes. And I do think rates are gonna go down and I'm not a big refi, happy guy, but you know, I, I do think there will be a lot of people that are getting into houses right now that there will be the opportunity to refinance. It's just if you, if you don't even start out with that 20%, you know, in, in two years, who knows if you're gonna really have enough to, to to get the thing done. So,
Alice Lema: So basically be comfortable with the decision you're making today. If it works out later to refi, you're saying great, but don't make that a life moment so that you're having problems later cuz you did not get your refi.
Guy Giles: Correct, Correct. Yeah. Because even with this two one buydown, they are going to be qualifying you as it, you know, just like it was a full, full rate, you know? Without the buydown, so people will be able to afford it. But if, if that's what you're counting on, you know, how fast a year goes. Yeah. Especially my age. [00:13:00] Fully moly. You're year is quick. And you know, I, I, I just, I just like to have real conversations with, with people, you know, you know, that's just kinda kinda how I chose to run my business.
But I, I am seeing people starting to make offers. There are still, you know, opportunities for the sellers to buy your rate down permanently. And, you know, we're, we're starting to see these mortgage backed securities kind of come around. I'm, I'm hoping that we've, we've about peaked on these, on these rates. You know, I, I, I can't say anything for sure, but, but I do still see lower rates next year, so.
Alice Lema: Interesting. Well we'll see. And we talk to you every month. It's great. We're, we're speaking with Guy Giles of Churchill Mortgage, our in house lender and what was that program called?
Guy Giles: It just a two- one Buydown.
Alice Lema: A two one Buydown. So if you hear that term, Go back and replay this radio show so that Guy could explain it to you. .
Guy Giles: Yeah. And, and, [00:14:00] and again, there may be situations where, where it is a good fit, but just, you know, like I said, life happens quicker than you think and, and you just want to go in with, with all of the info if you're doing any of, any of these.
Alice Lema: Yeah, exotic can be troublesome later, so we wanna keep you out of trouble, right, Guy?
Guy Giles: Yeah. I, unfortunately, I sat across a lot of people when I worked at, at JP Morgan that had gotten in the loans in 05, 0 6 and one of the things that was really crazy was Chase would not do a manufactured house. But they acquired Washington Mutual, so everything probably seemed great to all those people that bought manufactured houses. Then when Chase bought 'em, they wouldn't do it. And to do the True Heart Program, which was a program that kind of bailed a lot of people out from being underwater. You had to go to your own servicer for that.
And because Chase chose not to do manufactured houses and they still don't, people, people, a lot of people just got [00:15:00] stuck where they could not refinance. And, you know, I just, I, I would hate to see a rule change or the house does not appreciate, like somebody thought they might or just, you know, whatever. And just get, just get stuck with that rate going up. Yeah. So just, just be careful.
Alice Lema: Now we gotta take a quick break. We're talking to Guy Giles, Churchill Mortgage. Our in-house lender comes on the program the first week of every month. So glad to have you back again. Guy. We're gonna take a quick break. We're brought to you by Guy Giles Churchill Mortgage. Thank you very much. We're also brought to you by John L Scott, Ashland, Medford, and our local Rogue Valley Association Realtors. Will be right back.
Well, hey, Southern Oregon, welcome back to the Real Estate Show. We're so glad you could join us again today. Giles of Churchill Mortgage is back giving us an update on what's happened in the mortgage world and just kind of generally how our economy is affecting housing. So before the break, I, we were talking about a program that we want people to kind of [00:16:00] be careful of. Not necessarily saying it's a bad thing, but it has to do with planning on refinancing later.
And you're saying just don't have that hardwired into your business model cuz the economy might not cooperate?
Guy Giles: Well, yeah. I mean and basically, when you're doing a refinance, you, you know, if you have mortgage insurance, say you came in with five or six or 10% down, you may not have that 20% by the end of that two years, so you might find it, a whole lot more difficult to refinance.
Alice Lema: Because you can't refinance out until you've got 20%. Is that correct?
Guy Giles: Yeah. I mean, there are programs, but a lot of times you're just putting yourself right back in that same position. I mean, it might eat up some of the rate that you might be gaining and, and I'm still proponent of getting in the game, you know, so so don't, don't hear what I'm not saying.
Just, just, just be careful if you got some, you know, slick guy or girl trying [00:17:00] to say, well this is okay. Cuz you can just, you can just refinance soon and, and everything will be all right. And these are just conversations I wish people would've had with me when I was buying my first house, that, that they really didn't, so.
We're just about educating people when they, when they come in and, we're, like I said, I've never really done bad on any house that I've ever bought, so I'm, I'm a huge, you know, it's a huge part of my portfolio and I think that you know, that. That that is good. Just, just what, whatever lender you use, just make sure you're getting educated on all this stuff.
Alice Lema: So yeah, and don't hard wire your future decisions. That's like good, good lesson for life. So, no. Do you mind if we talk briefly about the stock market, cuz the stock market is just really struggling.
Guy Giles: It it is, but just kind of like, like housing, you know? It just, it went up and up and up and, you know, don't [00:18:00] panic. It, it, it will be okay. You know, your, your stocks will go down and, you know, it needed to correct it. It just had such a run up for so long. You know, and then all of a sudden they just pour in all this, this covid money and everybody's just kind of coming, you know, kind of sober and up off, off a long drunk, it almost feels like.
You know, I think everybody's just, you know, just trying to get everything kind of the right size right now, you know. We've, yeah, we've had, we've lost a lot of money in the stock market right now, but if you look historically, it will come back around. You know, one thing we have is an election coming up, and it's not that the Republicans taking the house and the Senator are gonna save the world, but gridlock is generally good for the markets.
Alice Lema: I find that so interesting every time you say that. Yeah. And why is that?
Guy Giles: Well, the, the, the biggest part of it is nobody can, nobody can move in a huge direction because you're gonna have one idea from the House and the Senate. And you're [00:19:00] gonna have a different idea from the presidency, and then nobody's gonna have a two-thirds majority to be able to override a veto.
So you just can't have any major, major things happen in, you know, with, you know, in regards to policy. And that makes investors feel a little bit more comfortable, you know, about, about business.
Alice Lema: So that just cracks me up though, that gridlock and congress markets will applaud . That's so funny. Yes.
Guy Giles: Well, if, yeah, if, if you look all the way through the, the Clinton era, you know, there was, there was a split, Right?
Alice Lema: That's a good example actually.
Guy Giles: Yeah. And, and the stock market did great. And then, you know, there are some headwinds, you know, opec, this, this week's gonna cut production and, you know, so fun oil prices and, and all of that. I just, I still think it's time to just lock both sides in a room and say, you can come out, you know, when , when you work something out instead of just [00:20:00] blaming the other side.
Alice Lema: Well, there's some conversation this week that I've been hearing from people that their money that's coming outta the stock market, they wanna put in real estate. Are you hearing any of that chat?
Guy Giles: I think it's you know, probably happening for a little, for a little while. I mean, it's been going on anyway. Yeah. Yeah. I mean, I don't think that's just like, just like something completely new, but , you know, I don't profess to understand, you know, everything about the investment side of things. I understand it, you know a lot about the treasuries and the mortgage back securities, but the, the stock market's one of those things that perception is so much of everything.
You know, you'll get consumers, don't have any confidence. There's actually, they've tracked that with the consumer confidence, but people will just kind of, kind of follow when people start selling off, you know, everybody gets afraid and they don't even realize that those moves happen electronically before any human actually even had [00:21:00] their hands.
Alice Lema: Yeah. Well that's probably true too, but my my wondering was, well, if the stock market is losing all that, Equity in that financial investment type and the money or some amount of it comes into real estate, those would be more buyers.
Guy Giles: Yeah. I mean, I, I'm definitely seeing a whole lot of people, you know, that that would rather have their money right now in, in property than they would in the stock market. You're always gonna need a place to live. And you know, we lost, we lost so many people out of the construction industry when, you know, in, back in 06, 0 9, you know, through all those years. And a lot of those people weren't even replaced.
And then you, you add on top of that more and more and more regulations for buying houses. It's harder and slower to even get a house built. So there's, there is a lot of pent up demand. You know, [00:22:00] it's, and, and I, I see that for the foreseeable future. You know, I mean, they're just not gonna be able to build houses fast enough to, to be able to keep up.
So, you know, why not invest in, in something that's just a tangible asset? You know you know, it's just not gonna go under. If everybody decides drinking Pepsi is a bad thing for a week or you know, the egg industry goes under cuz we're worried about cholesterol all this month. So, you know, having a house and something that you can rent out or something that you can live in, you know, is something you can, I don't know, kind of bank on for the future.
Alice Lema: Well, the older investors, older folks in general, remember during the seventies and eighties, if you owned real estate, then hyper inflation, you know, kind of worked for you. So you know, that idea of putting your money in hard assets. Do you have any, anybody talking to you about making those kind of investments just for inflationary reasons or are you, [00:23:00] we're still pretty much just trying to find people a house to live in?
Guy Giles: I, I think it's finding something that's affordable right now. I think you probably work with a lot more investors than I do. I've heard you. I've heard you talk to people. If somebody's actually thinking of investing, I would definitely suggest that you call Alice. I mean, she's made that a huge part of her business. Well, you, it's like I'm talking about you third person, . I've been doing that, you know, a lot longer and, and a lot more than, than I have.
Alice Lema: Well, and it's just that in Oregon we have this kind of weird rental price structure. I, I shouldn't say weird. It's rent control. Yes. But it's had, you know, there aren't any other states in the union that have statewide rent control, I don't believe. And so it's been like this big experiment the last few years just to watch what happens. And the investors are doing really well if they're willing to put up with the program. Well, and,
Guy Giles: and, and with the inflation, that's kind of changed how much people could actually raise their rates, hasn't it? I I understood that You could raise 'em, what, [00:24:00] 11 or 14% or something this year?
Alice Lema: Well it's 7% plus cost of living in the state of Oregon. That big number that you heard about is for 2023, the State of Oregon, because the cost of living inflation is so high, it'll be 7% plus seven and half percent inflation.
Landlords for 2023 can legally raise the rent 14 and half percent. I cannot imagine anybody doing that. 7% is pretty substantial, but Yeah, . That's why I wondered about the stock market. If people are taking the money out of that, are they gonna start buying houses and duplexes and apartment building?
Guy Giles: Yeah. I, I, I haven't seen that. I've just, the, the main thing that I've seen is people that do realize it, that rents go up every year and they're just, they're just kind of done with having the house sold out from under them or,
Alice Lema: Oh, and that's so traumatic. Oh my gosh. Yeah.
Guy Giles: Or j just for, for whatever [00:25:00] reason, you know, you can kind of buffer yourself if you're, if you're in a house against inflation, you know, your taxes are gonna go up every year and your ,insurance might go up and it might be on you to, you know, replace that that HVAC system or something. But you can really control in, in the long run. You know, I just, I always use the example of, of that, that house that I bought upon Hillcrest all those years ago. You know, I mean, people would kill for a one room apartment for what I got in that thing every month.
And you know, just if you get in there and stick. You know somebody calling you up saying, Hey, I want to find a flipper house right now, that's probably not, you know, the, the greatest thing. But if you do have.
Alice Lema: No, not in a stabilizing market, I don't think, What, what do you think about that?
Guy Giles: Oh, I think it's, it would be, it would be absolutely crazy.
Alice Lema: Well, and long term is easier on, you know, you're sleep every night , so.
Guy Giles: I would think so. You know, you are right. People are nervous [00:26:00] about the stock market. They're a little bit nervous about everything, but you know, we, we go through these times and the old hippy friend of mine, really grounded me one time when she said, We're not building bomb shelters right now like we were when I was a kid. And you know, that's, It's true.
Alice Lema: Wow. Wow. You know what? I'm at the tail end of that. I remember, and we did duck and cover drills in our classroom. Could you imagine? Forgot about that. Yeah.
Guy Giles: Could you imagine that? Saving you from a nuclear attack? You're sitting under your desk.
Alice Lema: Yeah. Well, Yeah. Well, they did close the curtains in the school too.
That's true. That's true. Excuse me. We're talking to Guy Giles, Churchill Mortgage. Our in-house lender comes on the show first weekend of every month. What kind of buyer are you getting right now? I'm just kinda wondering like what kind of person is coming through your door. I think it's a fabulous time to buy. I know that's chaotic. I know it's scary, but what kind of person is coming through [00:27:00] your door right now looking to purchase?
Guy Giles: Well then in the last week or two it's been people that all of a sudden their house sold. And they've kind of been pre-qualified and just kind of sitting back for a little while and now all of a sudden, you know, their house sold and you know, so, so we're now talking about getting them in another one. And that's happened, you know, three or four times in the last week.
Alice Lema: Oh, that's awesome. So inventory coming on the market, people are getting their house sold and finding another place to live. We haven't had that in a while.
Guy Giles: It hasn't, it hasn't felt like it. It's, it's been really weird, you know, I've had a lot of long construction ones going. But you know, so they've been just kind of trickling in. But, but no, we're, we are starting to see people with their, their own house selling. So it's, it's, it's kind of nice, you know?
Alice Lema: Well, it is a domino, you know, That's how, that's how it gets going. Again, it's, it's interesting cuz the market will kind of, pause in unison, like somehow, and then get going again in unison. It's, it's very strange, but [00:28:00] that's, that's how it is. We're talking to Guy Giles at Churchill Mortgage. We will be back here shortly after a couple quick words from our sponsors. We're brought to you by John L. Scott, Ashland, Medford, our local Rogue Valley Association of Realtors, and of Churchill Mortgage. You can also have a repeat of this broadcast tomorrow, Sunday at 6:00 PM We'll be right back. Don't touch that dial.
Well, welcome back to the Real Estate Show folks. So glad you could join us. We're talking to Guy Giles at Churchill Mortgage and Guy in this segment we're gonna talk a little bit about the future , because as we were talking during the break, we both have a similar prediction, don't we, for the end of the year.
Guy Giles: Yeah, I, it feels to me, Like this right now, literally may, maybe even last week or whatever was, was kind of the, the bottom, just kind of the nastiest, just everything [00:29:00] against you, you know, that that could be, and, and I, I do really believe in the, in the coming months that it's gonna be better with rates.
It's gonna just be better all the way around. And, you know, there might be, I think there might be sellers out there that are thinking, well I missed the boat, so I'm not gonna put my house on the market. And I would think that, at least from what I'm seeing on on my end, is you might have given something up to sell your house, but then you're asking for a little something, buying your house.
So it's, it's kind of a wash and people are ending up getting into a few houses. I actually had a real estate agent tell me yesterday that something was a good buy and I don't think I've heard that in a long time.
Alice Lema: Yeah, well it's the prices have softened just enough, right? Yeah. Like there's a house in East Medford with a swimming pool for $400,000. That's, it's small, but it's like, I couldn't, cuz we haven't seen, I mean, remember how expensive anything with a pool [00:30:00] got during the shutdown?
Guy Giles: Oh man. Yes, it was, it was crazy. I, I still remember way back when back in 06 when there was a house, a friend of mine had as a listing that, and it wasn't big and it was whatever, and it was $199,000. And I'm like, holy moly, any house that you can get for under $200,000. And it was tiny and, and not a great neighborhood. And that's just kind of how that $400,000 house with us, with the swimming pool feels to me, right. That, you know, there, there could be some, you know, it's not, it's not the time to just quit looking for sure.
Alice Lema: Yeah. Well, and I really believe we're at a bottom right now, locally, possibly nationally. And I think you would agree but we'll see. This is the prediction we're making right now is I think we're gonna kind of stabilize here and we do have a, a little bit of appreciation. You know, Jackson County's what, 5% up [00:31:00] 2022.
Guy Giles: , I mean, the predictions and everything that I've heard are, were, you know, around four, four and a half, four the whole year, you know, for next year. So that seems kind of in line with that. It has definitely it's not going up like it was, but you know, but something a little bit more sustainable probably will feel a little bit better for everybody all the way around.
Alice Lema: I think so too. And I love how you always point out that it's in our opinion as housing professionals, that it's better to be in a little more normal market than that hyper accelerated. Cuz in the hyper accelerated you are overpay drastically. And that's just not normal sustainable.
Guy Giles: Yeah there's, there, there's a big difference in, in. You know, crossing your fingers and going $40,000 over with a little bit of a lower interest rate, or having a little higher interest rate, maybe asking for some closing costs that'll get your, you know, your rate closer to where it was, but before and, and you're just not [00:32:00] overpaying for that house.
And I, I kinda like that strategy all the way.
Alice Lema: Well, it's all all about the payment, right? It's about the payment.
Guy Giles: Yeah. That's, that's what it boils down to. I've had. A bunch of people come to me and ask, Well, what can I approve for? And if my grandma co-signs for me, how high can we go? And, and I try to just go backwards with these people and just say, hey what's a comfortable payment for you?
And while they're shopping for a house,
Alice Lema: Oh, that's a great place to start.
Guy Giles: Yeah, yeah. I mean, and have 'em try it on cuz this, this is gonna take 'em a little while to find a house. So just, just have them you know your payment's $2,400 a month, pay yourself that right now you're renting for, you know, $1,700. Just pay yourself that and see how comfortable it is while you're shopping for a house.
Alice Lema: Oh geez. That is such a good idea. Wow. Well, yeah, you get, I wish, I wish I
Guy Giles: Would've written it. It was actually years ago. I heard that from somebody and it made so much sense.
Alice Lema: I wanted to ask [00:33:00] in the few minutes we have left, if you have any advice for first time home buyers, tenants, so many of them, the side effect of the interest rates going up, they're on the sidelines temporarily, right? Saving, have a little more money, buying a little smaller house. What is your advice between now and Christmas to help them kind of get back on.
Guy Giles: Well, for one thing, I'm sure your parents would rather see you in your own house than a nice Christmas gift for them.
Alice Lema: So friends and family plan, love it.
Guy Giles: That's my, my biggest thing is, is is like I said, save some money, which seems weird in an inflationary market, you know, cuz any money that you have in the bank is kind of eroding right now. But if, if you can take that, that difference in what the rent would be, act like you've already got that house payment, you are saving money at that point. And just put that into, into a side account. And it doesn't take all that long if you just cut out a few [00:34:00] different things and see what you can really live on.
Just make yourself a budget. And a budget will actually after a month or two, feel like you got a raise because you know where, where your money's going. And it's so easy to just nickel and dime it here and there on all these little things, you know? Take one you know, well thought out, trip to the grocery store a week instead of 15 small trips down there and I've, yeah, I've been guilty of that. You know, you'd think there'd be more fun places to hang out than Food for Less, but I spend probably too much time down there.
Alice Lema: Lunch is, yeah, the new way to buy a house, making your own lunch. and Churchill Mortgage is a big fan of helping people have orderly finances before they enter their housing career.
Guy Giles: Yes. Yeah. You know, and, and, and it's just, again, it's all just about that strategy and, you know, we like to just sit down with people and, and, and come up with that. Because if you look in the long run, rents are always gonna go up. And if you can save a little bit right now and get into a house, [00:35:00] I think it's just better in the long run.
Alice Lema: Yeah. The, the wealth building for your life and your family and plus it just feels good. You can't explain that feeling of what it's like to drive in your own driveway. Yeah. Or mow your own lawn or mo.
Guy Giles: Well, yeah, I would say that. I mean, the only thing sucks more than mowing the lawn is mowing someone else's lawn
Alice Lema: Right, Right. Are paying for them to have your rental lawn mowed. Yes. Yeah. So a couple good ideas for people who are on the sidelines, and I guess you know, this goes for first time home buyers and other other kinds of buyers. Saving money by pretending you have the mortgage already, hitting up your trusted friends and family to help you with this purchase. Any, any other ideas people can work on? What about helping their credit score? What can they do between like now and Christmas work on that if you can.
Guy Giles: Well, don't, if you run up your credit card, that's not gonna, I mean, I, I, I don't use a lot of credit cards, but I did for a big purchase not [00:36:00] that long ago just because my wife said I needed the points.
First thing happens, I get an email from Credit Karma that I have a balance on my credit card and I need to watch out, and I'm just like, Holy crap. You know, It goes, it goes fast. So if you can keep those credit cards under about 30% utilization, just make sure you're making your payments on time and that's, that's the big thing. And then just, you know, have it, if you get fed up with your credit card, you know, that's another thing where I'd maybe differ a little bit from Dave Ramsey as far as, don't necessarily close it out because you know, some old credit is better than none. Maybe throw it in the freezer.
Alice Lema: Oh, we're gonna, we're gonna have to save some of that for next time. Sorry.
Guy Giles: Yeah. You know. Yeah. We can go into that a lot next time.
Alice Lema: All right Guy, Churchill Mortgage, Thank you so much. We'll be back again next week. Have a beautiful weekend.