Unlock Low Rates: Expert Tips on Assumable Mortgages with Stefani Howorth

Hey everybody, what's up? Welcome back to the New and Experienced Investor Podcast. Today we're talking about assumable mortgages, and it's a show you definitely do not want to miss. I'm one of your hosts. I'm Alex Barnett. I'm the new guy.

I'm Joe Homs, and I'm the experienced guy.

That's right. Uh, we have an amazing guest. She's a rockstar agent, uh, working with investors and retail buyers alike. Before we bring them on, I just wanna remind everybody about our upcoming meetup.

It's this Monday.

Yes.

It's here.

All right.

You're back.

We're back.

You've been gone for 2 weeks. It's been like really lonely around here. You know, having lunch by myself and all that stuff. What?

I've been lonely too.

Yeah.

Yeah.

I know.

Just lonely. Monday at Hangar 24, 6 o'clock, and you are the star. So hopefully we'll get people introduced, and then if you want to get up and tell everybody what you do and how you're doing it, I'll give you 10 minutes to do that.

Yeah.

It was a lot of fun last time we did it. And you learn a lot from people that are actually doing things.

Yep.

So please join us Monday. We will be there.

Yeah. And it gives you a chance to speak about what you're doing and possibly find the help that you need to get to the next level. Um, I always like to remind you guys, you get the most out of this podcast because it is live by jumping in the chat and getting your questions answered. So make sure to share this episode right now with your friends. Far and wide. It's, uh, one of the most requested parts of the show because we— they get their questions answered. How cool is that?

And don't forget, we are the number one podcast in Laguna Hills.

That's right.

Woo-hoo.

Took us years to get there. So don't forget it. Uh, before we launch into the topic of assumable loans, um, let's give our 2 tips of the week, shall we? I would say tip number one is don't try to time the market. And we're gonna be talking about assumable loans. interest rates, the interest rates are, you know, quote unquote high right now. You can still get a lower rate by utilizing creative finance options that are there. So don't try to time the market. You can still find great deals if you have these tools readily available. Sounds like a good tip.

That's my tip. Sounds like a really good tip.

Thank you.

Yeah. Uh, I forgot we were supposed to give a tip.

I know. Me too.

You got one in your back pocket?

Do I?

Consumable loans.

What's a tip? I would say never stop learning. And this is a good example of never stop learning, 'cause I talk to a lot of people about, you know, creative financing and consumable loans, and they kind of give you that, you know, thousand-mile stare. It's like, what are you talking about? Yeah, consumable loans have been around pretty much forever, kind of like subject-to. has also been around forever. Creative financing has been around forever. It's just that maybe you have not heard about it. And in this type of environment where interest rates are still high, you have to learn how to do these things to get ahead. And that's what we're going to learn about today.

Amen to that. So let's go ahead and bring our guest in today. We have Stephanie Howarth. Steph, how are you doing today?

I'm great. Thanks for having me back.

Absolutely.

I love what you've done to the place.

Thank you. We are on season 3. I think you were on season 2, maybe.

Who knows? Yeah, 23.

Doesn't matter. Anyway, if you guys want to go back and see her full story there, check out the previous episode. Why don't you give just a short and brief bio, introduce yourselves to the new listeners?

Okay.

I am Stephanie Howarth. I'm a real estate agent and I am now hanging my license with Joe Homs at H&M Realty, and I'm now feeling like I'm a power player.

Nice. Yeah.

Yep.

You were always go— you were getting ready to launch the last time we talked to you.

Last time I was with a different broker. I was still finding my way.

Right.

And, um, thanks to Joe's mentorship, I landed here. Thank God. And I'm like Joe said on his tip, learning every day, whether I want to or not.

Yeah, I hear that. And you have a couple properties in escrow currently is what I hear. And you're working on, well, I guess we can dive into it. You guys have carved out like a niche, this new niche of working with buyers and teaming them up with assumable loans. Can either of you jump into that?

Go ahead.

Okay. Thanks, Joe.

Yeah, absolutely. So let's see how much you've learned.

Here comes the test.

Pop quiz.

So Joe set us up with an affiliate, withrome.com. And through withrome.com, you can surf the internet for homes that are listed already. But the robots are engaged in the activity of finding out if they are FHA or VA assumable loans. And so then the client finds out, oh, I'm interested in this rate. I can't believe I can get like something sub-3%, you know. And so then they reach out to us and then we vet the property and find out if the property does still qualify for an assumable loan.

That's great. Yeah, I guess go into more detail about what an assumable loan is. I mean, it's in the name, but How hard is the process? How long does it take?

It might add about 10 to 15 days to the typical escrow, depending on how quick the buyer qualifies for the assumable loan. But basically, you're looking for an FHA loan, and you'll need to be an owner-occupied purchase on that property. And then also VA loans, if the VA is leaving the entitlement with the property, then you can be an investor purchasing it non-owner occupied or owner occupied.

Gotcha. So you can be an investor and still reap the benefits of an assumable loan.

It's tricky though. Joe and I have been educating the listing agents and the players, the power players involved in this game that we're learning to play. We are educating them because we seem to be the ones knowledgeable about the process, and the listing agent doesn't even realize that the mortgage is assumable on their listing. So we help them understand that that's a marketable tool.

Yeah.

And then after that, we get the buyer qualified through that lender that's holding the loan. So it's a process, but if you're willing and tenacious and courageous and open-minded, Then it's a great way to obtain, what a prize.

Oh yeah.

A reasonable interest rate.

I know. Yeah, it's like everyone's complaining about these rates. There's properties available right now with, like you said, sub-3%. Are you seeing that pretty often?

Oh yes.

Yeah. All these people that bought 2019 to 2022 that secured a really radical low interest rate, they— those homes are available now and the finance portion of the loan is still intact. They haven't paid it down that much. And so it's easy to come up with a way to finance or gift into the equity. There's more to it.

Right. Yeah.

But I think people like to bellyache. I think the number one objection is, People are conditioned to bellyache.

Yeah.

And that's the number one hurdle. Once you get someone open-minded and willing, then I think that you're— I think that's the biggest hurdle because you— I have to get like the listing agent to stop bellyaching and be willing and then have the homeowner understand that it's available and then have the homeowner Call the lender and see if they're— then if all of those parties are, you know, up for the game, then we can all play and we'll have 2 winners at the end of the day, right?

Yeah.

Someone sells their home and someone gets a radical rate.

Well, yeah. What are, what are the biggest objections? I mean, the way you're explaining it, it seems like a no-brainer, but what, what are you guys seeing as far as objections from one, the agent, And then to the seller.

Keep going, you're doing good. You're doing excellent, keep going.

I love this guy, he's so good. Okay, so on the VA side, we're finding that the homeowner might be taking the entitlement to the next property to purchase the next property for themselves. So if the homeowner really wants to sell their home, They will sacrifice the entitlement and leave it with the property so that the buyer can assume it. The other possibility is that the buyer is a VA, so then it can assume the loan.

Right?

Right.

So can you, can you kind of briefly go over what the entitlement is? What does that mean?

Well, when the homeowner purchased the property initially and obtained The VA loan, they got that because they're a VA.

They're a veteran.

Yes, they're a vet.

Okay. And that's called the entitlement.

That's called the entitlement.

Okay. And then the entitlement says that the government's going to loan them— well, not loan them, but they're going to entitle them to have this much money to purchase this home. However, if they sell it to somebody that's not a veteran, Then they're going to lose that purchasing power if they want to take that and go purchase someplace else. Correct. So that's what you're talking about. They're losing their entitlement.

Yes.

So that, that's a big hurdle.

That is a big hurdle. Yes. And that was explained to the audience in a great way.

Okay.

Thank you.

Okay. So if you're a veteran, but like you said, if you're in a position where you need to sell the property, and this is a way to sell it, Then you have to make a decision. You know, do you want to sell the property and unfortunately lose your entitlement until it gets paid off? It may not be forever. It may get paid off. I mean, the average time, um, a buyer stays in a home is 3 to 5 years here in California. So I mean, it could get paid off, or they could be like me, and I've been living in my house for 40 years.

Forever.

Yeah. So then, then you're out of luck with me, but Anyways, okay, so that's the big difference. And that's one of the biggest hurdles that you have to deal with on the VA all the time.

Yeah.

Okay. On the VA side. Okay. Does not apply for FHA. The only hurdle there is that the buyer has to be owner-occupied.

Yeah. And typically, it's crazy to find how many— I don't know how many you find, but I find refinanced FHAs. So now they're conventional.

Yeah.

So yeah, that's the other hurdle.

Yeah. Okay. So let's maybe go into the numbers a little bit. So, you know, I know, sorry. So, you know, let's just take an example here. So we're purchasing a property that is listed for $1 million. And it has a VA or FHA loan, doesn't matter. Let's say for $800,000. Okay. So you've got $200,000 in equity there. You would normally have to put down 20% on a property, correct? So you can literally put 20% down, assume this mortgage at 3% or less. 3% or less.

Yeah.

I've seen it as low as 2.6%.

I mean, this is a win-win, isn't it? Yeah.

I mean, we got the 20% either way.

But let's make it crazier.

Okay, make it crazier.

Okay, so they purchased for 8 or 9, right? Let's say 9. And now it's 1.4, right? So it's more than 20%, right? Okay. We're finding that with Roam.com, they can get a HELOC to finance the second, to finance the gap.

The gap, the gap funding, right?

The gap funding is where it's at.

We have, we have an escrow right now where they didn't need to finance the gap even though it was $700K.

Mama, dad.

They got gift, well, a little bit of theirs and a little bit of mom and dad. So there was a mixed gift to do the cash on the gap. But there's creative ways to do it. I've been saying since I got in the game, know the rules of the game And play it. Don't sit on the sideline and bellyache until it, you know, conditions are perfect, 'cause they're never perfect.

Right.

Life's hard.

Okay, so let's, I mean, we've got the numbers down, we've got the possibility of getting a very, very low interest rate. Are there some properties out there that you can put like $10,000 or $20,000 down?

Not in Orange County.

Okay, but are there some properties out there?

Yes, absolutely.

And where are they at?

Well, I believe with ROAM is national, so you can look—

No, no, but let's say local here. Where's the best places you're going to find those type of properties?

Can you give this, make this multiple choice?

Hemet Mobile Home.

Riverside.

Hemet Mobile Home.

San Bernardino.

Final answer.

Anywhere around a military base is a great opportunity because they get deployed, they move to a different state, and then they have to sell. And, you know, there's a decision that needs to be made. And I see some on the website all the time, you know, do you put $10,000, $20,000 down and assume that financing? Okay, so the hardest part— so let's talk about when we get a client. We get a client, I send them over to you. What is your process to get to the point where we have them in escrow? What is that process? Because I don't want everybody to think like this is, this is a ground ball type thing. No, I want them to know how much work you do.

Yeah.

Yeah, well, the only ground balls I get are from Joe. Okay, that's it, right? The clients, it's a different story. Clients need to be completely courageous and wanting this as much as we do for them, right? They can't just be shopping. Oh yeah, yeah, you know, even though with Roam makes it very simple to search, once you find a property and we need to vet If it still has the assumable loan intact and it's not been refi'd into a different type of loan.

Mm-hmm.

Then after we find out that it's assumable and ready to go, then I'm going to call out to the listing agent, make sure they're on board. Then I'm going to make sure that they talk to their homeowner to talk to the bank, make sure all 3 players are on board. with the idea. There's some people that are so uncomfortable with even— they're not curious enough that they won't even entertain the conversation.

Dang.

So what do they say? They're like, yeah, what's—

where's the biggest gatekeeper? Is it the agent?

I— it could be. It could be. Well, the VA, it's an anom— you know, there's—

Yeah, but before you get to the VA—

Okay, so on the I'll tell you the biggest hurdle with the retail agents across the board, whether you're talking about assumables or anything else that you're knowledgeable about and they aren't, it's pride.

Right.

So I've run into that. They don't want to talk about it because they should have known it. And they're just like, what? What are you talking about? I didn't know. You know, that's not true. Or they shut you down. So just ignorance and pride.

Are you just— do you call and you're like, hey, I noticed it's an FHA loan. Are you aware that this is assumable? Have you guys considered taking offers? Is that how the conversation goes?

Yeah, it does. But you cold call a lot.

Oh yeah. They're just like—

You have to do the warmups first and you have to just understand if they're willing to talk. Yeah.

Otherwise they're like, I can't, don't even call me. Just text me or just put in the offer.

Yeah.

That's what they say. Just put in the offer.

Yeah. Or how could you, we'll have an investor interested in an outlying property, you know, in other counties, and they won't entertain an offer blind contingent on viewing. And we're like, we just wanted to let you know that this is our pathway in which we'd like to— would you even entertain— would it be worth us going out to the 909 and checking it out? So that it's— I mean, not all really Retail agents are this way. I'm just saying, you know, there's a small percentage of people that are just closed-minded.

Oh yeah.

And then there's ones where she has notified them, and then suddenly and miraculously it appears on the listing. This is an assignable loan. Yeah, it's like, oh really? Thank you for telling me that, Stephanie. I appreciate it, you know.

I'm just generous with information, which is fine because that's how I got into the business. So it's like what goes around comes around.

Yeah.

But it is like, did you know? And they had no idea. And that's happened a handful of times where they're like, oh, now it's like granite countertops and solar and an assumable loan. It's like, mm-hmm.

There you go. Just helping out the competition.

Yeah. Well, It wouldn't be competition if they'd let me, if they'd entertain my buyer's offer.

So what's sort of the avatar of someone who comes through this website With Rome? Is it With Rome?

With Rome. Like Rome if you want to.

B52s.

Yeah.

Okay.

Not Rome like Italy.

What are you seeing? Is there like a pattern of a certain type of buyer that's going through there?

I have investors. I have Family people, like family members, you know, just.

And they're they're.

I I would say end users and investors.

Yeah, I would say the biggest one is they're looking for the low interest. Yeah, the lower the better.

Right.

That's their first goal.

And that demographic is everybody.

Right.

Yeah.

Yeah, I'd say.

But you know, they're on there for that reason.

Mm hmm.

And I I field a lot of these calls as well, Joe. Is this real? It's like, really, I can do this?

It's fantastic.

This is not something I'm going to get into and pay a lot of money or whatever.

Right.

And then it doesn't work out. Yeah, no, no, this is real. Yeah, definitely real. Yes, there's a lot of moving parts. Yes, you have to negotiate all that stuff and get everybody on board. But at the end of the day, This is a great option.

Yeah.

Yeah.

So what are the moving parts that differs from a standard conventional offer?

Well, that's the secret sauce and we can't divulge that here.

Come on.

I think it really is just the fact that he knows what he's doing. And, you know, I wanted to say it is a special time in the market for this to occur. We won't have this window of time because as the You know, years, a couple of years from now, these financed interest rate loans will be paid down more and their equity will grow. So this is the time.

Yeah.

And then Joe has done this in different cycles of the market since he's had such a long enduring career in real estate.

There we go, calling me old again.

Experienced, yeah.

Yeah.

Very, very experienced.

I take it as old.

Yeah.

Decades worth of experience.

I am not responsible for how you hear my, Yeah.

Okay.

You know, I honestly have to give Stephanie a lot of credit because she's really good at talking with people. And, you know, it's got an even tone and they listen. Hopefully most of them listen. I'm a little bit more different and more black and white. And it's like, dude, do you know you've got an assumable loan there and you can sell your house that way? Yeah, no, I never heard about that. And I don't have time to talk to you. Okay, whatever. She'll continue to talk to him. She'll keep him on the phone. It's like exactly what you did.

I was gonna say the same thing.

It's exactly what you did.

Old war stories with Alex.

Yeah. She'll be talking to some guy for an hour. You know, it's like—

I don't know about that.

Oh, really? Like, you know—

It goes by pretty fast.

Let's move on.

Yeah.

So no, no, I'm glad. I'm glad we partnered up on this. And she takes care of that end of the business.

I think we work well together because I reassure them that, you know, there's going to be some— I reassure them. But he also is such a resource and has seen it happen. So he reassures them with like the technicalities.

Yeah.

And there are people who try to do this and they just lose the wind in their sails because they don't know what they're doing.

Yeah, because you need to tell them it's going to be a little bit of a longer process.

Just a tad.

45-day close. That's what you do. And the— you can— the banks will underwrite and switch the person on the loan in 45 days.

Yeah.

And we— you've seen this with subject-to. You guys are so familiar with that. I'm learning more about that. But a subject-to, you're not qualifying for the loan. That's lickety-split. Whereas assumable, you are actually qualifying for the loan.

Correct.

When you take it over and that other person is not on title at all anymore.

Right.

And I guess, yeah, it is because as sub-to has been getting more popular over the last couple years, oh, the secret's out. You're seeing People that have taken over these loans and then stopped paying. So then the seller ultimately is left holding the bag, and there's really no recourse to the person that took over this loan that promised them, you know, whatever they did. So with the assumable loan, this— the new buyer is on the hook for that, which is how it should be.

Yes. So yeah, totally different process. Yeah.

Okay. Because I've just heard from The internet that it could take, like—

You get your information from memes.

Like 6 months to go through this assumable process. Bellyache.

There's that bellyache again. Prune the, prune the week away. I don't, I don't want the week. I want the courageous.

Right. So, I mean, what really, I mean, why do you have to be courageous? It's like, you, cuz is it because the seller has to now talk with their bank back and forth a couple more times and they wouldn't normally have to do that?

Yeah.

So I just think buyers need to be like, I think buyers in any purchase in real estate right now need to be strong enough to do it. I think it was, it came to them easy in that low interest rate season and they just want it easy again. And it's not, it's not, I, I'm sorry to break it to you. It's not.

What's not easy?

Well, you'll have to be creative. It's not like—

Real estate.

Yeah.

Yeah.

Okay.

No, I get that.

But if you're a buyer and you're like, I want to purchase this property, here's my offer, it gets accepted.

I mean, well, yeah, beyond that, like, real estate is a complex little beast, right?

Yeah.

But then you have a buyer that has never purchased anything before and they're literally on the phone with you daily.

Right.

Uh, Joe, I filled out the application to get the assumable going and stuff, but they want me to upload the contract and stuff. Is that okay if I do that?

Right.

Yeah, they need that. They need the contract. Yeah, they need that.

Okay.

Um, what about this? The bank statements they're asking me? I go, this— remember we had this discussion? You're literally qualifying for this loan. Yes, it's at a really low interest rate, but they still need to make sure that you're going to be able to make the payment because, you know, once it transfers, it's in your name.

Right.

Okay, you're responsible at that point. It's not like the subject-to that you were talking about and people walking away from that, which is, you know, shame on them, but it does happen. So yes, you literally, literally have to hold their hand. You know, it's like a normal brand new spanking brand new buyer.

Yeah.

You literally have to hold their hand during the entire transaction, but there's several more moving parts.

Okay.

Yeah.

And is it the same as, you know, traditional lenders where W-2 is God? Anything else under that is like they're gonna be picking through all your—

Yeah, same thing.

Lift the skirt.

Yeah, no different.

Check under the hood.

First child. First child.

Okay, that's where the buyers need to be courageous. But I mean, if you're planning on buying a property anyway, you know, that brings up a great question.

The buyers that we work with They— I— we make them get a prequal, okay? We make them go through that process because we know at the end of the day, they're going to have to do that again. They're not going to go with the lender that they've chosen because they're going to assume the financing. But if they've gone through that prequal process and they came out the other end looking good, then we know that, you know, they're going to be able to do it on the assumption as well.

Can we talk about that? Because I really would like to hit many ears as possible.

No, we can't.

Let's move on to the next subject.

Go ahead.

Purchase power. The number one thing I'd love buyers to get in their brain, in their noggin, is purchase power. Some people, what is that? And isn't it self-explanatory? But I will explain it further. Purchase power is your ability to purchase and how powerful that is. Is it weak? Is it strong? Is it amazing? So pre-qualifying, For the purchase is essential.

Mm-hmm.

You, like, you're looking at homes in the 1, 2, but you don't know if you can shoot for that. So why? You know, I'll take you and nurture you and take you to look at homes all day long, but we're not going to write on anything until you know your purchase power. And with ROAM, I keep plugging this like a commercial, But you can prequal online with Roam.com. And so just get a prequal letter going with them, know your purchase power, and then we can move forward with the assumable loan pathway if you so choose.

Yeah.

I had a client that we got through with Roam and they decided to go ahead and purchase a new build. And the new build gave them an incredible 2-1 buydown. So they had like a 2.3 or a 2.8 on the first year.

On a new build.

Yeah, on a new build. Yeah, and then next year it'll be 3.8 and then 4.8, which is incredible on a new build. So they didn't go the assumable route, but they knew their purchase power. And so they were trying to do the assumable loan thing and they just found that this fit them. And they could get it done. Yeah. So, yeah, know your purchase power.

I think that was a wifey thing. She didn't like the houses they were looking at. She says, wait a second, we can buy a brand new house. Why don't we do that?

It might have been, but the commute— they had chosen some properties that were like committing him to commute for his work.

Let's see, again, that's a wifey thing. It's like, I don't care how far.

He likes to drive.

He did not. No, he did not. He did not. Yeah.

Okay.

You can say it was the woman, but it's not. Not in this case.

Not in this case. The one time.

Joe wants to accuse the wife.

Are there certain pockets of these in certain areas? Or is it all spread out around something else?

It's just like Zillow. And so then a new listing comes on, the robots analyze it.

Yeah.

Okay.

Crackin' Lori.

Are you gonna buy a robot when it comes out?

Okay, segue squirrel. Oh my gosh, I have to tell you, I was driving here on the way to the podcast. There was a family, husband or dad, mom, kid in the stroller, and a robot dog. Make this make sense. Why was the robot dog being walked? I just—

he wasn't pulling the, the The, you know, baby stroller?

No.

Really?

Off leash too. And I have a problem with that.

Where did you see a robot dog?

Over by Lake Forest Great Park. Or it's not a great park, sports park.

Is it a kid's toy?

It was a normal— it was bigger than your French Bulldog.

Oh.

It was the strangest thing. And I'm like, taking the robot for a walk too.

We were out at lunch today and talking about a self-driving car that's coming out in June. And also robots. And Alex and Lauren are going to buy both.

Yeah.

Because she doesn't want any, you know, she doesn't want to do—

I don't want to do any chores anymore.

Yeah.

So the robot's going to do everything. All my laundry, all my dishes.

And then he's just going to have a fleet of, you know, self-driving cars and just live off that.

Okay.

We had a good time at lunch.

That's the future.

That's the future. We had a good The future is robotic.

Yeah.

No, having one of those in our house would be terrifying. It'd be so scary.

I don't even know how I would do that.

To answer your question, they are all over. But a lot of them where you don't have to put a boatload of money down are near military bases.

Okay.

Okay, then the next hurdle is, you know, are you willing to give up your eligibility on this property or not. The one that we're doing, you know, unfortunately, the veteran passed away. So that was an easy one. You know, obviously, he doesn't need it. You know, thank you for your service.

Can they still— oh, so you can still assume that?

Yeah, we can still assume that. Yes.

Because they won't be using their entitlement.

Right.

But Joe had mentioned earlier in the pod about less down. So lower price points. And I'm thinking Oceanside and you lower your specs. So 2-bedroom, 1-bath, right? Rather than a house, right? So you're going to get in the 6s or something like a low price point. And so then you can fill the gap easily.

Okay.

If you're thinking of an end user, then you might want more. But if you're thinking of an investment property, come see us. Talk to us. We know.

Now, I did find one in Needles the other day. If you really want to go out to Needles, it was literally $10,000 down. Yeah, that's it. You know, and unfortunately, yeah, it was turnkey Needles. Turnkey Needles. Unfortunately, no, it was FHA. Then you have to live there.

Then you have to live there.

You have to live there. It's VA then. But unfortunately, it wouldn't cash flow if I bought it. Even in Needles, it's like, well, I guess you can imagine what the rents are in Needles, you know.

Then you section it off and you rent by the room to all the crackheads out there. There you go.

Look at your wife's face.

You make that $10,000 back real quick.

I think you're ready for another pig on property.

I'll take a pig over Needles.

That's what I thought too. It's too far.

Yeah, it's really far.

We did—

It's like out of state.

We did look at some properties out there one time.

When I first started.

When he first started, he wanted to buy this duplex. And the whole time I was like, let's not do this. And luckily the guy backed out because I don't remember why he got nervous with the sub-2 or something. And I was in the background just like, thank God.

Yeah.

Yeah, the appreciation.

Thank God for Lauren.

I know, really.

Lauren's doing the math.

Thank God.

Yeah, yeah, yeah.

No, thank God for Alex, man, over here to everything.

But see, sometimes he'll get a deal like right to the end and I'm like, are you sure we should do this?

And then it falls apart if it needs to.

Yeah, but if I could have more Alexes.

You are persistent.

Yeah, yeah, yeah, yeah.

A couple of deals that are getting ready to close that you've been working on for It must have been a year so far.

I think so.

The mobile homes?

Yeah.

Yeah. The seller keeps changing their mind and you keep letting them out of it.

Yeah.

You're so nice. It's like me, I'd be calling the attorney. Hey, you signed a contract. You need to complete this transaction.

Oh yeah. I called an attorney.

Is there any holding money on that?

Yeah. Well, no, no, no. It took us that long to get to the—

It's closed.

Yeah, it's closed. And now we're going to be in there. On the 1st, actually. So 2 right next to each other. But yeah, persistence is key. Is it possible with these assumable loans to have the seller carry the entry or the—

Oh, seller financing on the gap?

Instead of like me. Yeah. So because you have to make up the difference of whatever the mortgage is with the new purchase price, can that just all be carried by the seller?

Yeah.

Instead of the HELOC.

That's— yeah.

You're amazing. You should work for Joe Homs.

There you go.

No, absolutely. Yeah.

Okay.

Yeah. I mean, those— that's a conversation you have. Like, I know you're 85. Do you really need this money? Or would you like a paycheck in your mailbox every month for the rest of your life? And then you can take that and give it to whoever you want in your trust, will, whatever you want to call it.

Yeah.

Yeah, no, absolutely. Yeah.

And so I would see like the lender having a problem with that for some reason. They don't care?

Well, you know, the lender, as long as they see, you know, that 20% gap there, I can't imagine that they would have a problem with it because they're protected, you know. Yeah, they would probably take it into account to make sure that you could actually pay whatever it is that you're paying.

Okay.

Yes, they probably want to see, you know, some, some money down, not 100%.

Yeah.

But who knows? I mean, all you can do is try.

Yeah.

You know, I know they come back and say, well, we'd like you to put 20% down.

Yeah.

Okay, that's— and I guess that's what we have to do.

Well, and what you could do is have somebody bring the 20% for like a day. It closes Then they put the money back to—

Gator funding?

Yeah, they get— and then they— then you put a note there instead.

Okay, you heard the word fraud?

What?

Okay.

Yeah.

Why?

How is that fraud?

Because you're telling the lender that this is what's going to happen in the transaction. Somebody's going to put 20% down. They say it's a gift fund. And then all of a sudden, the next day, they see a second on the property. Don't you think that's— It changed my mind.

No.

No, it doesn't work that way.

Sorry.

After escrow. After the fact.

See, Joe, without us, he'd be in jail.

He would. I'd be visiting him in jail like one time. Like, Alex, you messed up.

Okay.

We would have had pot in jail.

Signed the divorce papers.

Here they are.

Yeah, she sent me signed divorce papers.

You're out.

No, it's white collar. I'll be in there for like 3 to 5 max.

You're gonna wait? Yeah.

Bring little Johnny to visit his dad and—

Oh my God.

Is there a little Johnny? Oh my God.

No, I'd just be showing up with our cat.

Yeah, I don't want to see you. All right. Staying out of hot water.

Okay.

I don't know. Maybe it's possible. Maybe it's not. So—

Real quick. Real quick. We have a couple questions that I think go along with this. Shahin asks, can assumable mortgages include second liens or HELOCs? And I think they mean like if the seller has a second lien or HELOC on the property.

Oh, sounds like it's not clean.

So the first mortgage is assumable. Okay. So it would not, it would not work unless the second mortgage is willing to do that. And they're not going to be willing to do that.

But I want to give a shout out to Shaheen because he's in ADU business.

Okay.

And construction. So anyone who's on the comments, I'm going to give a little shout out to.

Okay. Thank you for that. Appreciate it.

Yeah. We have a—

you're such a nice person.

Robust audience today.

There you go.

He also says great podcast, by the way. Thank you.

Thank you.

And then one more that I think goes along with what we were talking about. Liz asks, what should people look for when seeking out a sumo polo? Is it just the interest rate? Or is there anything else?

That the financed amount is still pretty much intact. You're only going to find it in recent purchases. When I say recent, I mean 2019 or more recently than that.

Yes, but there was an FHA loan that I looked at the other day. And it had a total of $20,000. That is assumable, but, you know, it's like, hello, what is that going to do for me?

Yeah.

So yeah, you have to—

You want to—

You have to look at, you know, how much of a gap there is from the loan to the purchase price. 20% or more, you're doing okay. You— I mean, literally, if somebody wanted to buy that one, for $20,000 and assume that loan. You could, but it's like, you know, that's not realistic. So yeah, I would say try to keep it— the gap as close as possible. Yeah.

Low equity.

Low equity. Low equity. Absolutely low equity.

And bring the— bring the property, uh, listing to us and we'll analyze it for you.

Yeah, she can do that.

Excellent. Any, any other ones?

Uh, the Gutierrez group is in the chat saying hello.

Is it Steph or Leo?

Steph. And, um, Austin— oh, whoops, hold on here, doubled up on something. There we go. Austin says, go Stephanie!

Nice. Heck yeah.

TIE Corps title. Go Austin!

All right, cool. It did bring a fan base. I like that.

Yeah. Yeah. Can I like self-title myself as the queen of networking?

Oh yeah, I would.

Queen is matriarchal. How about princess? No, not princess. I'm not that sweet.

There you go.

There you go.

Nice.

Thanks, babe.

You're the best.

I mean, you guys have been working with Roam now for like, I think a couple months.

Yeah, it's the beginning of the year.

Okay.

Yeah. Yeah. So you've had, you know, I guess leads or however it works, like people come to you, clients. How many are getting to the finish line? How, how many have been serious out of the ones that you've worked with? How many are you—

It's a work in progress, you know, a handful so far.

Yeah.

In a short period of time. Yeah.

That's great.

Yeah.

Yeah, we have a few that are shopping.

Mm-hmm.

Yeah, you know, that's all part of it.

Yeah.

Yeah, because you see these pictures online, and then once you actually go, if this is going to be your primary residence, then you kind of get a feel for what, you know, what it's actually like.

Yeah.

So it takes time getting our investor buyers to see the property in person is one of the hurdles, right? Because that's a requirement of the listing. So if we find a listing—

oh God, I hate that.

I know, just like blind offers. What's the difference? What's the difference?

Yeah.

Contingent on viewing.

Open up the conversation. You know, let's, let's start here. Okay. Because like, geez. Yeah. You know, we're not asking to break into Fort Knox.

Okay. Exactly.

Do you want to sell your house?

Do you want to sell your house?

Do you have any offers? No. But you won't take mine.

And you've been on the market for 60 days, 90 days. It's like, hello.

I know. You know, I was trying to think of a way around that, but with the Supra, they'll know that you've been there, right? Can't you just say, oh yeah, I've seen it?

Sometimes it's a combo.

Okay, so I've already been there.

On a car?

I did see it. Yeah, I walked in.

You see Supra on the listing?

No.

No? I don't know what happened to Alex today and his podcast.

He went to the South.

For full disclosure, he is not a licensed real estate agent. Oh yeah, of course.

Okay.

No, he's not.

No, no, no, no.

That's why Lauren is here.

here to keep them on the straight and narrow.

Yeah.

Because I'm just like, okay, that's your one objection? You're like, well, you need to go see it. It's like, oh yeah, no, I already saw it. Oh, okay. Well, can I put my offer in now? Yeah.

I don't believe you.

Yeah.

I don't get the—

I can see your name through the lockbox.

Exactly. So that's the part.

And these days I've got a video camera and I didn't see you. I didn't see you go through the lockbox. Even though it's a combo, I didn't see you.

Oh, you know what it was? It was the next door neighbor's house. I thought it was yours.

Breaking and entering now.

Let me— I'll get out there. Yeah.

Yeah.

Joe, can you tell us why a retail agent— do they have ground to stand on that they— the buyer needs to see the property in person?

They just want to make sure that you're serious. That's, that's really the only thing.

But blind written offer is not serious? That's what I just, you know, boggles my mind.

It depends what You know, the offer prices and terms and stuff. But—

They're not even curious about looking at the offer price and terms.

So, you know, maybe this is something that you should explain a little bit more to them. It's like, you know, this is a different type of offer. This is an offer that you need to check with your seller. Your seller needs to check with the bank to make sure that we can assume this property.

Yeah.

If we can assume this property, then you've answered that question. So now we'll bring the buyer over to take a look at the property, you know, but we just wanted to make you aware that we're serious and here's an offer.

And I will add—

Does that sound better?

Yeah.

Well, that's an example to the audience of your mentorship. If you'd like that, come join the team. He'll school you.

And I will add, now with technology, I'm able to just blind offer like 100 people a day. Whether I'm serious or not. You know what I mean?

You're one of those guys.

I'm just saying, I'm— I don't— I don't. Yeah, but you can. So I could see where agents are like, this isn't actually serious. You're just— you're a VA in the Philippines.

I like Alex's answer better. Thank you for explaining that to me.

So I get it. I get why they do that.

Yeah, it makes sense to me now.

I can tell the difference between— like, I can tell when an offer has come from the software you're using too, because I've gotten quite a bit of them myself. So Jessica, she's an experienced So I tried to explain that to him and he was like, no, it's gonna work. Yeah, I'm like, it's a dead giveaway that it's like not run through like, you know, zip forms.

Oh, I know. But if you do enough of them, then you'll get the agent that just accepts it.

Yeah, yeah, true. So keep doing it.

Yep, keep— there we go. With that, let's jump into Reaction Time. So this is the part of the show where we've curated a few videos, and I would just love to get your honest, unfiltered reaction. Producer, what do we have?

We have the shocking truth about assumable mortgages.

Oh, okay.

Before you try and assume somebody else's mortgage, here's 3 things you absolutely need to understand. Number 1, you have to pay the difference between the existing loan amount and the agreed-upon purchase price. So if the loan balance you're assuming is $350,000 and the purchase price is $500,000, you have to pay the seller $150,000 in order to assume that mortgage. Number 2, let's say that you are fortunate enough to find somebody to do the second mortgage to cover the difference in cash that you don't have. Well, that extremely desirable interest rate that you did this for in the first place is no longer as desirable because you now have something called a blended rate. And number three, if you're selling and you are a veteran and you have a VA loan, unless the loan is being assumed by another veteran, you will lose your entitlement on your next purchase.

Before you try, I would take the assumable loan on 350 and finance the 150. I don't see a problem with that. The blended rate issue. Yeah.

Okay.

Do you?

No, not at all. We went over all this stuff. It's nothing new.

Yeah, yeah. No, all that's true though, right?

Yeah, all that's true.

Yeah, he's got it in the fancy graphics to help you understand.

Yeah, but he's trying to scare people. And like, yeah, you shouldn't do this. You know, it's like, oh my God, a blended rate. Yeah, well, what is the blended rate? The blended rate, if you assume, you know, something at 3%, maybe the blended rate is 4%. Oh my God, the blended rate's 4% now. You know, it's like, hello.

And one misconception I thought is, um, VA loans, the new buyer doesn't have to be a veteran. Some people think that.

Correct.

Some people—

Did he say that?

No, no, he was saying unless it's a veteran taking it over, you're gonna lose your entitlement.

That's true.

True.

Yeah.

Okay. Yeah. But some people just straight up think the VA loan can only go to another veteran.

Oh no, no, that's not true.

That, like, I've heard that.

It can go to anyone, and, um, it can go to an investor as well.

Yeah, but they will lose their entitlement.

Correct.

Which maybe they don't care.

Maybe they don't need it.

Maybe they're not around.

Or they really want to sell the house, and so it's attractive. You know, no other offers are on there, right?

Okay, what else we got?

Sub-to versus assumable, which is better?

I like it.

You can still buy a house at 2% mortgage rate in 2025 through something called subject-to. Here's how it works. Let's say you're buying a $400,000 home and the seller owes $300,000 on their mortgage at just 2%. You give them $100,000 to cover their equity and you promise to take over the monthly payment on that $300,000 instead of taking a brand new $300,000 mortgage at 7%. However, this 2 things that nobody tells you about it. First, that $300,000 mortgage, that's still in the seller's name. So if you stop paying, they're liable. Now second, and this is worst-case scenario, if the loan has due-on-sale clause, meaning the bank can demand the full payment of the mortgage the second the title changes hands, now both you and the seller are in legal trouble. Now there's a safer route, mortgage assumption. It's the same low rate as subject to, but this time you go through the bank, pay a small fee, and then loan gets transferred legally into your name. So if you mess up, Lease is on you, not the seller. You can still buy a house at 2% mortgage.

We're not in Kansas anymore.

Yeah.

Where are we getting these $300,000 houses?

Oh yeah, in Oklahoma.

San Bernardino Needles. Oh yeah.

Yeah. First of all. Yeah. Trona. Have you ever heard of Trona? Trona, California.

I have not. I'm a California girl.

It's right next to Needles.

It's right next to Needles. Barstow. Out in the— you look at the map, there's gonna be a section, a bullet train.

That's why its name is desirable.

Yeah, you hold on to that for the next 40 years.

That's true.

40.

You're gonna be a millionaire.

Yeah, the bullet train, right? Okay.

Yeah, but he's basically saying it's safer For most parties, the assumable. But is that true?

Going back to, going back to what Joe had said about subject-to and your example, when the buyer stops paying on the subject-to, the homeowner still has the asset, correct?

Well, no, because the title will change. Yeah, the mortgage, the debt will stay in the seller's name, but the title, you're on title. Yeah, so it gets It gets tricky.

Yeah, I guess it is safer to go with the assumable loan.

Yeah, it's a lot safer. And what people are doing now is they'll create what's called a mirror wrap. So they'll put the seller in second position for like to have a lien on there. So if they need to foreclose on their previous house, they can still foreclose. Because if you're not a lien holder, the person can stop paying and you can't even start the foreclosure process. So it's kind of yeah, it's pretty nuts. So people have gotten into you know pretty bad situations.

Turn off the fire hose. I'm good.

Yeah.

Do we have any more?

We got one more.

Okay. Hey.

Okay.

Local.

Huh?

Local.

Local.

Yeah. Local. What does that mean?

Well, no, the British.

Oh, the British price.

The guy had like a heavy British accent on the last one.

Okay.

She goes.

Not. Sure. This one is, do open houses work to sell houses?

Oh, here's a dirty little secret about open houses your real estate agent doesn't want you to know. Open houses don't sell houses. Only about 3% of homebuyers found their house because of an open house. Vast majority of prepared and qualified buyers are actually going to see the property privately in a showing with their agent. The truth is, open houses are really a marketing tool for agents to find future homebuyers, to build their future Before you pack up and head out for a couple of hours, think about if this is the highest and best use of your time.

It's not.

Here's the dirty little secret.

What do you think?

I disagree.

Oh, this is gonna be interesting. Why do you disagree? Because I know you do a lot of open houses.

Love open houses.

Why do you do all these open houses?

Look at you guys.

You're all excited.

Go ahead.

I haven't excited guys in a while. This is nice.

Oh my gosh.

Okay.

Anywho, calm down. Calm down.

She's blushing. She's actually blushing.

She is. Yeah. Well, you stepped in it this time, didn't you?

I've been holding my tongue because we were talking about him in jail and she was going to bring a cat. I had a remark for that and I withheld it.

Okay.

Okay.

Okay.

Open houses are for prospective buyers for other future houses, but in this brokerage, Because I held opens, I've gotten the buyers in and bought. I had nothing to do with it other than holding the open, but they came and attended the open house and bought twice since I've been here.

Did they buy the house that they were going to? That they went to?

I'm holding the open. The buyers came and then they come for a second look. So the first one visited Portola. I'm the lucky charm.

Yeah, but I think what he's trying to say is you didn't represent them.

Correct. I could have.

I could have.

And then the Stone Creek one, that one just went into escrow for Ryan. And that was me holding an open and the buyer came back for a second look. You know, both days came to my open house. So I disagree with him on that level. And I prospect well. So I have the characteristics, the personality to prospect in an open house. And I have the systems.

But you're prospecting for your clients to not necessarily buy that house, but something else. That's why you're there. That's what he's saying.

Correct. But I said, there's two, I think.

I mean, just because you're there and you show somebody the house and they end up buying it, With another agent, another lazy agent that wasn't there showing the property. That's not what he's talking about.

I know, but—

You're there to market yourself.

Correct.

And—

but he said it's a waste of time. And I disagree with that as well, because it is worth my time. I have, I have a database of prospective buyers that I nurture.

Yeah. No, he's saying it's a waste of time. He's talking to sellers at that point. He's saying like it's a waste of time if you do open houses because it's not going to sell through the open house. But one of the first things the seller asks you in the listing appointment is, how many open houses are you going to do for me? You know, it's like, because that's what they're used to having. It makes them feel good.

It makes them feel good that you're trying, that you're doing something.

Yeah.

And I'm like, heck yeah, I'll do an open house and collect more buyers for sure.

Absolutely.

Absolutely. Yeah.

I agree with that guy. Open houses are the bane of my existence.

I will do every open for you. Not needles. See, it's personality. It's not Lauren's personality. And she kicks ass elsewhere. Her strengths lie elsewhere. And my strengths are not in what she's good at.

But I could see it too. Like, we're hosting at a lot of like vacant properties. You know, there's not families living there. If you're a family, you got to pack up your animals, your kids, and be out of there every Saturday and Sunday so an agent can come sit there.

Yeah.

And it's not necessarily going to bring the buyer, then yeah, that That would be annoying on that side too.

Yeah.

I like your rule. If you're getting 5 showings a week without an open house, right, or more, right, you're priced right. You're priced right and you're getting attention, it'll sell.

And I feel more— well, he said, I think 3% of buyers actually walked into an open house and then made the offer. The other 97% is like they already have an agent. They go see it during the week. They put in the offer. That's gonna be your, your more qualified buyer, your more interested buyer. 'Cause they're not just like twiddling their thumbs, walking through, opening the cabinets.

I have friends, I have friends that just bought within months.

Right.

And they just were la la la Sunday walking into an open house and they're like, and then they felt it and they did it and they made it happen.

Did they go through you?

No.

That person is dead to you.

No kidding. That person is done.

No, just because you've known them for thirty years.

No kidding.

No, no, no, no, no, no, no.

He used to babysit their kids.

That does not fly.

No, no way.

Nope. Sorry, not a friend.

They're dead to me now.

Acquaintance at that point.

They're an acquaintance.

They're an acquaintance.

I heard.

I heard about this family that walked into an open house.

Yeah, exactly.

No friends of mine.

No, no. You can't have friends like that around.

Oh no, no way. No, they're not, they're not, they're not even acquaintances anymore. Yeah, the rules, you know.

Yeah, I mean, that's a pretty easy rule. It's like, yeah, they're not gonna have to fork over anything. They can make you a nice commish. Who is this person that they went to is what I would ask.

They're like, oh, I don't think that this—

Unless it's their mom.

No, I don't think this set of people Really saw me as the realtor in their life because they had others. But I think they bought with the open house listing agent.

It just keeps getting worse here.

No loyalties. No loyalties. No, no, no. But I'm just saying, it's the purchase.

They didn't even call their mom on that deal. Yeah, they kicked their mom to the curb.

Yeah, we're just gonna go with you.

Oh my God.

Okay, moving on.

It's all right, it's all right, it's all right.

They had to sell to buy as well. So yeah, it hurt.

Yeah, exactly.

Just just Laguna Niguel too. Yeah, exactly. Laguna Niguel bought coastal. Yeah, it was rough.

Okay. Don't. Okay.

Anywho, if it makes you feel any better, I had a close family member look me dead in the eyes and say they would never use me as their real estate agent in a million years.

Yeah.

Had a family party.

What's their occupation?

What's their occupation?

Uh, they were in sales.

Wow.

But yeah, no, there's no comeback there. Well, yeah, she just wanted—

they'll never buy anything from you.

I'd never buy anything from you either. So we feel—

I wouldn't buy ice cream because you're selling it.

Retired now, it's all good.

Yeah, I think it's pretty funny.

It was pretty funny.

I was just like, when you got your—

right when I got my license.

Yeah, still.

Yeah, but still, she's like, family's the hardest.

Yeah, thanks for the support.

Family's the hardest.

Yeah, yeah, it shouldn't be, but It's all right.

It's all gonna change with my track record.

Yeah.

Join a multi-level and then you'll realize how to onboard your family.

Yeah, exactly. Yeah.

Yeah.

Your close network. Any other comments?

Link me smart cards. Ghost app.

Get your business card digital already.

Yeah, I think that takes care of everyone.

We got Woo in the chat.

Thank you. Thank you for showing up. Appreciate it.

Yeah, no, this was awesome. Thanks for coming back and joining us on season 3.

Anytime. I can't wait to see the next redo of the studio.

Well, yes. And I love this niche that you are in. I think it's great.

I do it all. I do it all, Alex.

I know you do it all, but if you get known as the assumable person, that's pretty good.

Only for the next couple of years.

Oh, okay.

Yeah.

All right.

Yeah.

Get it while it's hot.

Why?

What are you predicting?

Assumable loans will be bought down.

Interest rates will be lower.

Okay.

And the gap will be larger because of inflating or increasing market value. So get on it now. You want an assumable? Call me today. When's the best time to buy real estate? Yesterday.

Now.

Now.

Yeah.

Now.

Okay.

Do it now.

There you go. And how should people reach out to you?

Um, twofold. How Worth It, @howworthit on Instagram. And, uh, you have my email there on the screen, right? Radical. Yeah, stephanie@hnmrealitygroup.com.

When's the last time you heard that word radical?

It's hella cool.

Like, you're dating yourself.

I like to date myself. That's my life right now. I date myself. It's my life.

Oh my gosh. Okay.

I don't want any unwanted attention.

I'm very particular.

I'm free.

Well, all right. Thank you guys so, so much for joining us. We will be back here next week.