Real Estate with Renee Featuring Success Mortgage Partners

Good morning, Gretchen. Good morning, Renee. And good morning on Facebook to those near and far, those live and those joining us later on instant replay. We are so honored to have you today, and I can't think of a more exciting topic than to talk about mortgages today, right? For real. Everybody wants a mortgage, right? I know. Well, you know, think about this. We were just talking, Gretchen, we're already in November. Pick me up off the floor. I actually went out on a limb and did what I never do, and I, because I went shopping for holiday decorations, I went ahead and put the new ones out. So it feels a little surreal, but can we all agree that if you're gonna give a gift that people remember you for, wouldn't a home be a perfect gift. Yes, and with your help, Gretchen, there's still time to do that, right? You're still closing deals by the end of the year. Just 360 easy payments, right? Yeah, there you go. A beautiful— we could get a nice keychain, a beautiful box for the keys. We could even provide a framed picture of the home. But mortgages could help you get a great A great holiday gift. So anyways, I deviated. I deviated. Well, Gretchen, we are so honored to have you here today. And before we do get into the topic of mortgages, I would love for our audience to get to know a little bit more about you, if you don't mind sharing.

Sure. I've been in Florida since 1993. Love it down here. And I've been married, my college sweetheart. We've been married for 32 years. We have two amazing children, Theo, who just got married last November. So he celebrated his 1-year anniversary and Natalie, who's been married for 2 years and she's actually my loan partner.

I don't know that I even knew that. I think that's fabulous. And I think anybody who matches their glasses to the logo in the corner is just style beyond belief. You know, we were, we were talking that, um, you do have a wonderful family and you're very family oriented. Yeah, and as you married them both off successfully, it's just added to the family, right?

Oh yes, uh-huh, yeah. I was telling you that we, uh, my son married our best friend's daughter, so we always joke around that it was arranged marriage. I love it.

If we were all that lucky, right? Yeah, absolutely. There'd be no divorce in the world. Anyways, well, fantastic. I'd love Gretchen, share a little bit about because you, you've been in the, in the mortgage business for quite some time, and I don't want to skirt past the depth of your experience, if you don't mind sharing a couple highlights of that before we get on topic.

Well, yeah, so actually I've been in the mortgage business for 4 and a half years. Um, I started it because my mom really needed— we needed to move her to an independent living facility, and I found out they had a reverse mortgage on their home and started digging and was really interested. And someone said, you'd be really great at the mortgage business. And so I started exploring and I love it. I mean, there's nothing more rewarding than helping somebody get into a home. And that's my favorite.

Well, and Gretchen's very good at what she does because if I've ever been online talking about mortgages and mortgage providers, I can't think of a single time your name hasn't been mentioned by someone who's engaging in that discussion. So to make the splash you have in the time that you've been in is pretty phenomenal.

Well, I think it's because when my husband and I first bought our home, it was a horrific experience. We had no idea what was going on. You know, it's overwhelming to purchase a home. You're in a legally binding contract. It's not like you buy a sweater, you hate it, you take it back. No, you are buying a home and you, you're in the process and got to keep moving. So I vowed that I would just really work with people, keep them up to date, whether it be the realtors or the title company or even, you know, my borrowers. Let them know what's going on in the process, what's to be expected, expected, what's going to come up next, just so they have, uh, that information. I think when people don't have information, that's when the fear creeps in. So actually, our office deemed me the loan coach, and that's what I go by because I spend a lot of time with people.

Well, and I will tell you, as someone who has the occasion to do a lot of work in the real estate space, and I see both sides of the loan process, both as a listing agent and a buyer's agent, I can tell you I think we will all agree, and I hope nobody's offended by this, the loan process with any organization is tedious these days. It is iterative and it is tedious, and there's a lot involved. And it often surprises people, even if they're a repeat borrower that maybe hasn't borrowed for a while. So the— there's just a lot required in terms of paperwork and documentation. So if we get that out of the way, my point is not to, to criticize the mortgage space because it is what it is. It's to say that you are absolutely correct. If you've got all of that and you know that there are— because of that involved process, there are lots of opportunities that could turn into frustration points. The lenders like yourself that do a good job at both managing expectation and communicating proactively get ahead of all of that, because you can't fix what's required to borrow money. It's an involved process, but you can fix and control how people experience that process, and that will serve you well, um, very well. So thank you for being that way. You know, when I look at recommending lenders, it's, it's certainly a big consideration for, for myself.

Well, even with COVID you know, it seems like there's more requirements with the concern of, you know, people losing their jobs. So I think if you just explain to people why, usually, especially with first-time homebuyers, I say, you know, look, if someone came to you, wanted to borrow $250,000, $300,000, you'd wanna know, can this person pay me back? And I think when they take a step back and look at it from like the lender's point of view, they get it. You know, it's just the common, we wanna know credit score, how do you handle credit? We wanna know your income, are you gonna be able to make the payments? How long have you been at your job? Do you have a good work history? And once they understand the reason why, they're more apt to, you know, to be able to provide that information.

Absolutely, I agree. So we all, this is very on topic, but we all know that closings with mortgages are a little more involved than a cash deal, everything from, You know, people don't understand why they can no longer sign remote, the time that it may take to get things approved. So we know that. So my question to you, and, and really you can almost speak from your very early experience on the other side of the table, what advice do you have to both agents as well as their, their borrowers on what they can do to help ensure that process goes smoothly?

Well, we set some very comprehensive guidelines up front. Obviously, you know, we— there's 4 things really that we evaluate someone on the risk factor. First would be their credit to see how they handle credit, make sure there's nothing derogatory on their credit report, and then trying to fix that up. Even credit scores. I work with people, maybe they're even at a 720, but a 760 would get them a better interest rate. I work to help them get there if it's possible, and then, you know, get them the best possible rate, and it opens them up to a lot of loan programs. And then income, you know, we have to gather all their documents and, and make sure that they have the income required for whatever purchase that they're looking to do. So I think really basically is gathering the information up front. So you set someone up for success to make sure that they can actually qualify and be approved for whatever property they're looking to purchase.

Well, and one of the things I think that surprises people is, um, most people know they have to provide maybe some tax information, income verification, maybe some information to show their expenses. The one thing that I think gets overlooked and surprises a lot of borrowers is following the trail. So, um, you know, one of the things I hear up front is, gosh, if they had just asked for everything up front while I was working on it I would be happy to provide those things, but the reality is sometimes you don't know what's needed until you get into the underwriting process where somebody is scrutinizing the file and looking at all the documentation, and then they may come back with some additional— what, Gretchen, what are some of those follow-up documents you tend to see asked about, just to sort of think about and get people thinking about, um —what they might be asked to provide.

Actually, just to step back a little bit, we have a program. It's like an initial underwriting program, and that will scan the information that we put in the file or that the person has supplied, and that'll let us know what documents are needed to back that up. So right up front, we collect the documents needed. I think now with COVID there's that checking again to make sure the person is still employed right before you close, or even if they're self-employed, to make sure you get the profit and loss statement for the year to make sure they're still, you know, a successful business, and a COVID letter to, to explain how COVID has affected their business. That sort of thing that investors are looking for to make sure this person again is a good risk. So my secret weapon is Natalie. She's always been, you know, brilliant on researching, so she always tries to go the extra step to think like an underwriter, like, okay, so this is a person's circumstance, what other documents do we need that makes sense to, um, so when they review the file, they're like, oh, okay, that, that's a good risk. And then we get the, uh, you know, the pre-approval, or they're clear to close. And if—

and I think, if I'm not mistaken, Natalie's your, your partner. Yeah, I wanted to make sure what the secret, secret weapon is.

Nobody can go forever.

Fantastic. So what— one of the things that often comes up, and I think these lines Gretchen, get blurred a little bit because every organization uses them somewhat differently. What is the— can you explain the difference for people between having a pre-qualification letter and a pre-approval letter?

Well, you would prefer a pre-qualification letter because that means that the loan officer has collected the documents that back up the information that the— you mean pre-approval? Uh, the pre-approval normally is not with all the backup.

Oh yeah, I've always been told it was the opposite, that the pre-qualification is before they've gathered it in the pre-approval. So this is good. Okay, so pre—

but when you get like a, um, a pre-approval from the underwriter, that's like, can— there may be some conditions. That would be the difference in that part. But I consider the pre-qualification— I'm sorry, I might be wrong— but the pre-qualification would actually be when your lender reviews all the documentation to make sure that the income is as stated, to make sure that there's nothing on the person's credit that could cause, you know, an issue, and make sure that this person is like really in great standing to move forward to purchase a property. So I always do the due diligence to make sure because, you know, you don't want to set someone up for failure. Um, nobody wants to have that sort of emotional experience like you had said earlier, whether it be the realtors, the, the person selling the home, or the realtors that are representing both parties, and then the person buying. We want to make it a good experience.

Yeah, and one of the questions I will sometimes get from sellers, Gretchen, is, um, somebody provide— you know, because when you're shopping for a home, you may have gotten a pre-qualification or pre-approval, whichever you end up getting, on Thursday, but you find the home of your dreams on Saturday and submit an offer, but it was for a slightly different amount. When I— so I'll get the question by sellers, should I be concerned that this pre-qual or pre-approval letter is, I don't know, $10,000 less than what they're agreeing to purchase my home. Any, any thoughts you can share on that?

Well, I don't issue the pre-qualification letter until the person is actually putting an offer on the property, because as you know, in Florida, taxes can be $5,000 for this home and $1,200 for this home. Insurance, maybe it's in a, like, in a really high flood zone area, or HOA fees, which could, you know, you could say someone's qualified for a $300,000 home, but when you start adding all those factors then perhaps they're not qualified. So I always like to say, let me know the property, let me just run the numbers, let's make sure we're still good to go. Because again, we don't want to ask someone to enter into a situation where they're not going to be successfully closed on the property.

No, and that's an excellent point, because if people are coming from outside of Florida, we do have additional cost buckets, um, and you hit on them. So when you're looking at what you can afford and when the lender's looking at what they think you can afford, it's more than just the home purchase. You talked about the taxes, the HOA fees or condo fees, any type of association fees. Um, sometimes there are CDDs, Community Development District fees, that are collected. They aren't taxes, but they're collected as a part of your tax. All of those things make a home a certain price to be able to carry it. And not everybody thinks about that when they are looking for homes. They eventually think about it, but I, I'm a big fan, Gretchen, on talking with the mortgage company up front on what you can afford in light of all of those, because it may mean that you may need to adjust your home purchase price. If you're looking for, you know, you want a golf community and you know that you, you can almost guarantee you're going to have association fees and, and perhaps some other things, so you may need to adjust your home price. I think that's an excellent point.

And sometimes first-time homebuyers don't understand it's not just the down payment, but then there's also closing costs. In the state of Florida, sometimes that seems like a lot to people. They don't understand. So that's another thing I like to get, as you know, close an estimate as I can of what is expected to them when they come to the closing table so we can make sure they have the assets. Because, you know, that would be awful if, you know, we get clear to closing, they don't have enough money to come complete the deal. So that's really key, important as well. And like you said, there could be extra fees on there that they are not aware of. We want to make sure that they can cover those and that they understand what they're getting into. We don't want to also wipe out someone's savings. You don't want to be house poor.

No. What if somebody asks you, and I have to apologize, I'm kind of putting you on the spot because you're giving me good follow-up questions, but I know how smart you are. When, if somebody asks you what should they kind of plan on for closing costs, is there a rough percentage range that you will often tell somebody just sort of when they're wrapping their head around it? Okay, so in school I always did horrible on estimates.

I would always find the exact number and then do like the guesstimate. So I, you know, some people say 3 to 4%. I like to do as much research as I can to let them know this is what you're looking at. So it depends on the property. If they're getting into a condo, it would be different than a single-family home. If they're in a property or an area they're looking that has a flood zone, you have to pay for your insurances, homeowners and flood insurance. You have to pay for a year up front. So that could be completely different than, you know, purchasing a condo where that's covered by the association. So again, I, I'm not a good guesser.

That's okay. And I'm laughing because I have like changed the pattern on my face. Like I thought it would be a beautiful morning to sit up in the front of my house where there's this beautiful window, but the sun has just started peeking over the top of the tree and has me chameleoned here. The sun is shining.

Everybody thinks we're in a tropical storm, but it's actually beautiful out today.

It has. And for any of those worried about us in Southwest Florida, the storm missed us. We got some— again, for what, 2 days? Um, and that was it. So no high wind.

That's what my husband said, we needed the rain.

Yeah, absolutely. Well, I wanted to also ask you, as you look at, you know, the start of the loan, and it sounds like you guys do a great job on due diligence early on to try to avoid this. But every now and again, people will be approved, pre-approved, pre-qualified for a loan, and for one reason or another may not make it all the way to the altar for closing. What are some of the reasons, more common reasons you see for that fallout? And while you answer, I'm going to close my blinds, so I'm going to pull myself off, but please keep going.

I'll try to take as long as it takes you. So, um, we, we also again let people know there's some things that you just can't do during the loan process, and That would be open any new credit, please don't do that. Obviously go out and buy furniture and use up your funds that you're gonna be using for closing costs, or even changing jobs right in the middle of the process. Those are things that really can just destroy your loan approval. So again, we just try to be very clear with people. A lot of times that's the first-time homebuyers, but I notice now because the interest rates are so low, Some people who could obviously pay cash for a property are taking advantage of the lower interest rates, but maybe they've never been through a mortgage process before. So again, we just, you know, let them know what the expectations are, let them know what the process is going to be, and kind of walk them through it. And that really is most helpful for our clients. Well, and you talked about the employment change.

The lines are gone. My house isn't near as bright, but the lines are gone. Um, you talked about employment change. I've actually seen this during COVID where unfortunately people may go through an employment change and that didn't even dawn on them. And especially I've found when you change industries, sometimes when there's a good continuity, sometimes that can help. But if you made a big change, um, and again, I think it goes back to risk, right? You guys are trying to assess the probability of continued employment. And when it's something new, both in terms of the type of role, the industry, and the company, there's more risk in that, right? Yeah. Well, I've seen that come up a little bit more recently than I have in the past.

And again, you, you mentioned a couple circumstances. If they're changing careers, and we really have to look at what they did prior, what the circumstances are, and if there's any opportunity then for them to get a loan. So we always look at the person's circumstance and see if if we can have it make sense. And we have what we call Scenario Desk, and it's our head underwriters. If we ever have a situation we're not clear on and can't really find it in the guidelines, we run it by them because we might have an investor with our company that would say, hey, yeah, that's something I would take a risk on, that does make sense. So we just want to give everyone the possibility of getting a home loan if they can.

Now that's true. And the other one I've seen more here than in other places is Naples has people in this area have their income come from a lot of different sources, and they may not all be traditional employment sources. So the other thing to be thinking about, if you are pulling the funds to purchase and pay for your home, having those early discussions is also important because I have seen— I have one customer I'm thinking of that pulls from some very different investment accounts that are hard to sometimes get people to buy into as hard sources of available income. And so that's another one that I've, I've seen more down here than in other areas.

Very true, especially again with people who maybe have more complicated incomes. They're not your typical W-2 employee. We, again, it's just having good conversations with them and asking those questions to determine what their situation is. And then in that instance, where their income comes from. So then we can start thinking about, okay, so how can we source this? How can we show this to an underwriter so that they understand that this is the person's income and this is how they're going to be able to pay for the mortgage?

Well, and I know I— before I wrap up with the open-ended question to see if there's anything else you want to share, I did want to take a moment with Success Mortgage Partners Um, tell us a little bit, do you do in-house underwriting? Is it outside? Tell us some things that would be interesting for people considering the services with your mortgage company to take into consideration.

So, um, all of our underwriters are in-house and I can call them up on the phone. That's why I chose this company, because, um, you know, as much as I build relationships with people, they're— it's a file to them. And I— we, we always write out like, you know, everything so that they can have like a story behind it so that they understand when they start reviewing the person's file that it's actually a person and why we, we selected the loan program and why the income works, etc. So, um, if there's ever any questions, we just pick up the phone and talk to them. And that's what impressed me the most about this company, because if you— it's sometimes hard to, you know, explain stuff on paper or even show it properly. So if we can have that opportunity to explain it and it can make sense, then, uh, you know, we win.

Clear to close. Awesome. Well, Gretchen, anything— we're— as we're rounding out a half an hour here, it goes so quickly— anything you'd like to share beyond what we've talked about, either about your approach as a, um, as a mortgage, um, broker or your firm, or anything that you're interested in sharing with the audience today related to mortgages?

Well, I think even with this COVID thing, the thing that bothered me the most was the lack of being able to be in front of people. But I started using Zoom and actually it's been even better because some people are coming from, you know, other areas to move down here because it's so beautiful here. And I've been able to go through the loan process. It's nothing like somebody rattling off numbers over the telephone. I know I'm a visual person, that just would never work for me. So it's given me the opportunity to really go through their loan file with them them kind of discuss their loan options and then help them to make an educated decision on which way they want to go. And that way, you know, everybody understands the process and they're, again, it's a better experience for them and they're very happy and satisfied with their selection. That's been really great for me. It's been, you know, it's hard not to go to closings because I get attached to my clients and I love to see them when they get to close on a home. It's very, it's very exciting and rewarding, but it's been helpful. So I think like when you choose our team that you're, you're getting someone that really cares. Even in this environment where you go to put a bid on something and there's now there's 6 bids. It's really difficult. So I even— you had mentioned the sellers wondering like, is this, is this some— this the person I should choose to purchase my home? I open up like, have them call me. I can talk to them about how I pre-qualified them and that yes, they are a good risk. And just help them maybe have more comfort in making their decision on who they're going to go with to purchase their property.

No, that's excellent. I wanted to offer one more thing when we were talking about this competitive offer. You know, it has not— it's not a surprise for people to hear that sometimes it can be tough to compete against a cash offer because they have one less contingency. Although sometimes financing doesn't mean you have to have a financing contingency. Agency, to be clear on that. But, um, I have told my sellers that you have to look at the whole package, the whole offer, because I see just as many cash deals fall apart as I do financing. Now, the reason they fall apart may be different. In some cases it's the same. But don't undervalue yourself if you are a borrower and your ability to compete for property That is not always the case. Yes, there is a strong bias towards cash. I'm not going to deny that, but there have been a number of times— even recently I had a property that had 5 offers on it and we accepted one with a mortgage. And the reason we did is I had laid out a spreadsheet showing the seller all of the variables, right? What were their contingencies? How much cash are they going to have into the deal? What are their closing terms? What are the circumstances? And the cash buyer was an investor. The mortgage buyer was somebody who wanted to move into the home to move their family. There was a much stronger emotional commitment from— not always the case, but from the, the borrower that gave the, the homeowner a sense of, um, confidence that it would go all the way through. Where with the investor, they thought, you know, if the investor finds one thing they don't like, they'll move on to the next property. We're just a commodity to them. And so I just wanted to, as we wrap up this talk on mortgages, share that simply because someone is borrowing money does not mean you have to be less competitive. Um, and I am, like you said, Gretchen, seeing many people who can afford to pay cash say, well, I'm making more money off of my investments in the market right now, I'm going to borrow money, it's cheaper to me. And great. And those are great candidates, by the way, for doing financing without contingencies. Yes. Um, so because, you know, if the loan falls through, they still have the cash to buy it. So that's right. Well, Gretchen, thank you so, so very much for making time for us. On this. You're awesome. If you are looking to learn more about mortgage solutions, um, she mentioned one thing— well, she mentioned a couple things, but two that I'll point out that, you know, should really give you some, um, pause to consider picking up the phone and calling Gretchen. One is she is absolutely committed. One of the things that I try to do in my business, and so I admire it when I see it in others, is the commitment to the customer. I think that's huge, and It shows in everything you do, Gretchen. If you don't know the answer, you'll find it. Um, you are solutions-oriented. And the second thing is, with the in-house underwriting, it really, really helps make the process be more connected and more successful at the end of the day. So two, two reasons to at least pick up the phone and call Gretchen, and her information is below. And we hope that you have a fabulous rest of the week. So thank you for joining.

Thank you for having me. You're awesome. Have a good day. Bye.