Client Success Story – 3 Key Takeaways

Achieving Homebuying Success: Key Strategies from a Client’s Journey

Transcript 

Ryan Hillard: I recently had a closing and this closing was made possible by three things that the clients did correctly. I want to share a little bit of their success story and some of the takeaways from that, that could be helpful for you as well. Just to give a little bit of brief background, I have clients that they were past clients, and they didn’t need to be because we could have worked the same way with anybody, but they knew that they wanted to buy a new home for a number of reasons, and also keep the home that they were departing, but they didn’t necessarily have the income to hold on to both at the same time and make the debt to income ratio work. There was a little bit of preparation that was necessary. In doing so, one of the first things that I would just say is beneficial for everyone is they reached out and got in touch with both me and their real estate agent at the same or similar time. I could help them understand and run the numbers, and then he could help them understand the markets that they were interested in. Identifying price points to see if these things would mesh and if it was something that was even going to be a possibility. If it was necessary to do the rest of the work that they needed to do. 

Improve Credit 

Ryan Hillard: One of the first things that they really needed to do beyond that… Was improve their credit a little bit, it wasn’t necessarily leaps and bounds that they needed to move their credit, but we were able to identify that if they got just a few points better on their credit score and If there were some things that they could do to take action on it was really gonna help them save quite a bit of money. They were able to do that, which was great. They took action. Where a lot of people don’t. But, because they knew what the goal was, they were able to take action. It wasn’t a ton of points, but it was enough to get them into that next tier, and that did two things. First, it allowed them to decrease their interest rate by about a quarter point. So a quarter point in rate would be moving from 3.5% to 3.25% or 3.25% down to 3.0%. On these loans, that obviously helps, and, you know, any savings is good savings. Even more impactful than that was the effect that it had on their mortgage insurance. Getting into the next tier for their credit score, it allowed them to decrease the monthly mortgage insurance payment by $300, give or take. That is a significant amount. I don’t care who you are; I would say that $300 a month on your housing payment is significant. There would have been a way that we would have still been able to work this, even if they hadn’t done those things, but it would have involved being able to close, working on the credit down the road, and then coming back, six or eight, nine months later. Rates would be different, other factors could be different as well, and then they’d have to refinance and incur some additional costs at that point that really weren’t necessary because they took action up front. 

Putting a Lease in Place to Offset the Departing Residence

Ryan Hillard: The second thing that they did, remember that I had mentioned, wanting to hold on to the house that they were departing and still buy the new one. Being able to fit both in wouldn’t have really worked with their debt-to-income ratio, and what you’re able to do in these situations, because this is a conventional loan, they were able to get a lease, have that in place, knowing that this would start once they vacated. The lease would be in place and allowed it to use 75% of that lease income to offset the mortgage payment. For example, if their mortgage payment were $1,000 and their lease payment was $1,000, they wouldn’t be able to use one for one. They would use 75% of that, so it would be $750, that would offset the $1,000, but instead of a $1,000 payment impacting their debt-to-income ratio, only $250 of that would. Now, if the lease payment is more than that and you take 75%, then it just offsets the departing residence’s mortgage payment, and that was exactly the case that happened here. Because of that, it freed up that cash, so to speak, that income and allowed it to make the debt-to-income ratio work with the new residence. So, it improved their credit and got a lease in place to offset the departing residence.

Worked With a Full-Time Professional Real Estate Agent

The third thing that they did was they worked with a professional full-time real estate agent who was able to understand what they want, advocate for them, and negotiate on their behalf. There were a few times during this process that things had arisen with the house that they were looking at. Knowing that the seller did want to sell and make a deal happen doesn’t mean that they’re just gonna give it away, right? There could be someone a week later if they put it back on the market, a number of things that could happen, but working with a full-time professional real estate agent who knew how to negotiate, allowed them to keep the deal together, so all of the hard work that they did up front was still able to pay off and be rewarded by them getting into a new home. 

Ryan Hillard: Just to recap, doing a few things by getting out in front of this process and weighing their options ahead of time, taking a little bit of action and working with a professional agent, allowed them to accomplish their real estate goals of maintaining an investment property while purchasing a new home in a new neighborhood with the school district that they wanted to be on so they could continue with their expanding family. 

Ryan Hillard: If you need help with any of that, if you have questions on how any of that might work, please feel free to reach out to me, and I’d be happy to walk you through the process, provide any insights that I can, or connect you with a real estate agent as well.

Ryan Hillard: This is Ryan Hillard with the Ford Mortgage Group. Have a great day.