The David Greene Show: Episode Summary
Podcast Information:
- Title: The David Greene Show
- Host/Author: David Greene
- Episode: 5 Secret Methods | Mortgage Monday
- Release Date: December 16, 2024
- Description: Real Talk Real Estate with David Greene dives deep into the real estate business and investing, offering unfiltered stories, insider details, and expert insights to help listeners build wealth, pivot careers, and understand the intricacies of the real estate industry.
1. Introduction to Mortgage Monday
[00:00 - 02:13]
David Greene kicks off the episode by introducing "Mortgage Monday," responding to listener demand for more focused content on mortgages within the broader Real Talk Real Estate podcast. He emphasizes that this segment is tailored for those interested in financing, saving money on real estate deals, and understanding the mortgage industry. David introduces his partner, Christian Bachelder, affectionately nicknamed "Big Brain," who brings expertise from their ONE brokerage.
Notable Quote:
David Greene [00:00]: "If you do want to improve your knowledge, improve your wealth, and improve your ability to get better deals, this is the show where Christian Bachelder and I break down mortgage news."
2. Current Mortgage Rate Trends and Economic Influences
[02:13 - 04:24]
David and Christian discuss the volatility of mortgage rates, highlighting the fluctuating nature driven by economic uncertainties. Christian elaborates on factors such as job reports, Federal Reserve policies, and recent tariffs announced by the Trump administration affecting rates. He points out that rising tariffs on countries like Canada, Mexico, and potentially China could influence product costs from major retailers, thereby impacting the broader economy and mortgage rates.
Notable Quote:
Christian Bachelder [02:44]: "There's just a whole lot of uncertainty... it's going to be very interesting to see how the markets react to that."
3. Demand and Supply Dynamics in the Housing Market
[04:24 - 10:20]
The hosts delve into the Mortgage Bankers Association's report indicating a 6.3% jump in mortgage applications, driven by a 52% increase in purchase demand compared to the previous year. Despite this surge, the affordability crisis persists due to high home prices and elevated mortgage rates. David challenges the common belief that rising rates must lead to declining home prices, noting that prices have not significantly decreased despite rate fluctuations.
Christian discusses the difficulty in tracking actual buyer demand, as many home purchases occur off the MLS (Multiple Listing Service), making inventory tracking less accurate. They highlight the challenges for first-time homebuyers, who are becoming rarer as more buyers already own property and leverage existing portfolios to purchase additional real estate.
Notable Quotes:
David Greene [07:22]: "There's a whole bunch of wiggle room and flexibility and a lot of dynamic nature in the lending industry."
Christian Bachelder [08:23]: "All the wholesalers. That's nails on a chalkboard right now, right?"
4. Five Secret Methods to Secure Better Mortgage Rates
[16:18 - 38:58]
David introduces the main segment: five strategies to secure better mortgage rates, independent of the overall rate environment. Christian provides expert insights on each method.
a. Credit Risk Score Optimization
[16:18 - 20:47]
Christian explains the importance of credit rescoring—a process of fine-tuning one's credit score to move into a higher pricing bracket, potentially saving thousands on closing costs. He emphasizes that small adjustments (e.g., increasing a score from 698 to 700) can yield significant savings.
Notable Quote:
Christian Bachelder [16:40]: "A credit rescore is fine tuning your credit. It's not meant for these massive jumps."
b. Reevaluating Down Payment Strategies
[20:47 - 24:21]
Contrary to traditional wisdom, Christian and David discuss how putting a lower down payment (e.g., 5%) can sometimes result in better interest rates than a higher down payment (e.g., 20%) due to recent policy adjustments by the Biden administration. They suggest that borrowers evaluate the trade-off between paying PMI (Private Mortgage Insurance) and securing a lower rate.
Notable Quote:
Christian Bachelder [22:18]: "It is cheaper on your interest rate to put 5% down instead of 20 right now."
c. Shopping for Rates on Sale
[24:21 - 34:50]
Christian demonstrates how to navigate rate sheets to find "on sale" rates that may be more advantageous than the standard par rate. He provides a visual example, showing how different rate tiers can offer better deals when analyzed properly. David warns against being deceived by lenders who quote only par rates without disclosing rate sheets and associated costs.
Notable Quote:
David Greene [29:17]: "If you are going to buy it, there's no world where that would be the right decision."
d. Buying Down the Rate
[34:50 - 38:58]
The hosts explain the concept of rate buy-downs, where borrowers pay extra upfront to secure a lower interest rate. Christian provides a clear example, illustrating the break-even point where the cost of buying down the rate is offset by monthly savings. They recommend this strategy for long-term property ownership, typically exceeding 27 months.
Notable Quote:
Christian Bachelder [36:20]: "If you intend to keep this loan for more than two years and three months, it makes sense to buy down your interest rate."
5. Introducing the Fusion Product
[38:58 - 42:42]
Christian unveils the "Fusion product," a unique offering by ONE brokerage that involves splitting a high-balance loan into two smaller, more competitively priced loans. This strategy is particularly beneficial for purchases in the $1 million to $2 million range, potentially saving borrowers significant amounts on interest rates.
Notable Quote:
Christian Bachelder [39:58]: "A Fusion product is breaking up a high balance loan that is worse priced because of how large it is into two smaller loans."
6. Commitment to Client-Centric Service
[42:06 - 42:42]
David emphasizes the brokerage's commitment to transparency and client savings, ensuring that their loan officers prioritize the clients' best interests over personal gain. They encourage listeners to reach out via their websites and social media for personalized assistance and to benefit from their expert mortgage strategies.
Notable Quote:
David Greene [42:06]: "We want them to know that they can trust us, that you're not going to get ripped off, which can happen from other lenders."
Conclusion
[42:42 - End]
David wraps up the episode by thanking listeners for their commitment and reiterating the importance of using knowledgeable professionals to navigate the complexities of mortgage financing. He invites feedback and suggestions for future episodes, reinforcing the show's mission to help listeners build wealth through informed real estate decisions with honesty and integrity.
Notable Quote:
David Greene [42:27]: "We will stay committed to doing everything in our power to serve you and help you build wealth through real estate with honesty and integrity."
Key Takeaways:
- Credit Optimization: Small improvements in credit scores can lead to significant savings on mortgage rates.
- Down Payment Strategies: Lower down payments may currently offer better rates due to policy shifts, despite the additional cost of PMI.
- Rate Shopping: Understanding and navigating rate sheets can uncover hidden savings not immediately apparent through standard lender quotes.
- Rate Buy-Downs: Paying extra upfront can lower monthly payments, benefiting long-term property owners.
- Innovative Products: The Fusion product exemplifies creative financing solutions to secure better rates on high-value loans.
Resources and Contact Information:
- Christian Bachelder: the1brokerage.com | Instagram: @the1brokerage | Email: christian@the1brokerage.com
- David Greene: davidgreen24.com | Instagram: @davidgreen24
Feel free to leave comments, suggestions, and questions on their respective platforms to engage further with their expert insights.