Mortgage Monday - Look for THIS in a Conventional Loan | Episode 53 Summary

Podcast Title: The David Greene Show
Episode Title: Mortgage Monday - Look for THIS in a Conventional Loan
Release Date: April 21, 2025
Hosts: David Greene & Christian Bachelor
Description: In this episode of Real Talk Real Estate, David Greene and Christian Bachelor delve deep into the nuances of conventional loans, offering invaluable insights for both aspiring homeowners and real estate investors. They debunk common misconceptions, highlight the strengths and weaknesses of conventional loans, and provide a comprehensive guide on selecting the right loan officer to ensure a smooth and beneficial mortgage experience.

1. Understanding Conventional Loans vs. Non-Qualified Mortgage (Non-QM) Products

Key Discussion:
David and Christian begin by distinguishing between conventional (conforming) loans and non-qualified mortgage products.

Notable Quote:

• Christian Bachelor [02:23]:
  "The main difference with conventional or conforming style loans is that they adhere to what's been determined as the industry standard...as long as your loan, you as a borrower and the property fit into what has been defined as the standard box, that's conventional."

• David Green [00:00]:
  "We actually do primary residence loans, owner occupant loans... conventional loans really well better than the average bear."

Insights:

• Conventional Loans: Governed by Fannie Mae and Freddie Mac standards, including debt-to-income ratios, credit score requirements, down payments, and property types (typically one to four-unit properties).
• Non-QM Products: Include DSCR and hard money loans that fall outside conventional guidelines, often catering to investors with different financial profiles.

2. Strengths and Weaknesses of Conventional Loans

Key Discussion:
Exploring the advantages and potential drawbacks of opting for conventional financing.

Notable Quotes:

• Christian Bachelor [02:27]:
  "Strength is access to it. If you walk into any bank in the country, chances are they do conventional loans... you usually get the best deal in the conventional space."

• Christian Bachelor [03:29]:
  "A lot more accessible for just the everyday person, not the 100 property unit investor."

Insights:

• Strengths:

  • Wide Accessibility: Available at most banks nationwide, fostering competitive rates.
  • Lower Down Payments: Options as low as 3-5% for primary residences.
  • Cost-Effective: Typically lower interest rates and better terms compared to non-conventional loans.

• Weaknesses:

  • Eligibility Constraints: Strict adherence to standardized criteria may exclude some borrowers.

3. Selecting the Right Loan Officer: 9 Essential Qualities

David and Christian emphasize the critical role of a competent loan officer in the mortgage process. They outline nine key attributes to look for when choosing a loan officer.

3.1. Pre-Approval vs. Pre-Qualification

Key Discussion:
Clarifying the significant differences between pre-qualification and pre-approval.

Notable Quotes:

• Christian Bachelor [04:52]:
  "A pre-qualification is just a lender responding to what you say and giving you a paper that's not really worth the paper that it's written on... a pre-approval requires a full underwrite."

• Christian Bachelor [06:51]:
  "Our pre approvals are typically a little bit more invasive than another lender would be. But we do that with your protection in mind."

Insights:

• Pre-Qualification: An initial estimate based on unverified information; not binding.
• Pre-Approval: A rigorous evaluation involving documentation and verification, providing a more reliable indication of borrowing capacity.

3.2. Turnaround Time for Pre-Approval

Key Discussion:
Importance of swift pre-approval to facilitate timely property offers.

Notable Quotes:

• Christian Bachelor [08:29]:
  "After our clients complete a loan app, we usually run 24 to 48 hours for a return."

• David Green [08:47]:
  "That's why we have a dedicated team that does nothing but churn these things out."

Insights:

• Efficiency: The One Brokerage boasts a 24-hour pre-approval turnaround, significantly faster than the industry average of 3-5 days.
• Competitive Edge: Quick responses enhance the likelihood of securing desired properties in competitive markets.

3.3. Staying Updated with Industry Standards

Key Discussion:
The necessity for loan officers to remain informed about the latest loan products and regulatory changes.

Notable Quotes:

• Christian Bachelor [11:07]:
  "Your loan officer's knowledge and the way they track updates and new announcements on the market is very, very, very important."

Insights:

• Adaptability: Being aware of new programs, such as Fannie Mae's reduced down payment requirements, allows loan officers to offer clients better and more varied financing options.

3.4. Rates on Sale

Key Discussion:
Analyzing and selecting the most advantageous mortgage rates beyond just the lowest numbers.

Notable Quotes:

• David Green [12:27]:
  "We look for those rates that are particularly good deals on that day... finding those little sweet spots in the rate sheet is the gold standard of what makes a good loan officer."

• Christian Bachelor [16:24]:
  "The majority of the loan officers that you find out there have a W2 mindset... they just want to do the minimum work possible to get the most money they can."

Insights:

• Holistic Evaluation: Assessing multiple rate options, associated fees, and the overall cost structure to identify the best deal tailored to the client's financial situation.
• Transparency: Educating clients on the true cost of different rates, including points and closing costs.

3.5. Waiving Impounds with No Fees

Key Discussion:
Offering borrowers flexibility in managing their property taxes and insurance without additional costs.

Notable Quotes:

• Christian Bachelor [21:48]:
  "For our conventional loans, you can waive impounds for free... something that I'm passionate about because we're talking about conventional loans and how we're uniquely competitive with them."

Insights:

• Client Preference: Some borrowers prefer managing their taxes and insurance payments independently rather than through an impound account.
• Cost Savings: Eliminating fees associated with impound accounts provides financial relief and greater control for the borrower.

3.6. Lender's Involvement During the Offer Process

Key Discussion:
The advantage of having a loan officer actively support the client during property offers to enhance credibility and competitiveness.

Notable Quotes:

• Christian Bachelor [23:13]:
  "Borrower super qualified... I just want to make sure that you don't have any questions or concerns over their credibility."

• David Green [24:49]:
  "Your agent is getting frustrated because they don't want to tell you no... that's why we have a dedicated team that does nothing but churn these things out."

Insights:

• Advocacy: Active involvement from the loan officer can differentiate a client in multiple offer scenarios by vouching for their financial reliability.
• Trust Building: Continuous communication ensures that both the buyer and seller have confidence in the transaction's integrity.

3.7. Utilizing a Diverse Lender Network

Key Discussion:
The benefits of having access to a wide range of lenders to secure the best possible mortgage terms.

Notable Quotes:

• Christian Bachelor [27:21]:
  "We have over 100 investors in our funding network... what I do is I actually go to these lenders, I negotiate a dropping of their rates."

Insights:

• Negotiation Power: A vast network allows for better rates and terms through collective bargaining and individualized negotiations.
• Tailored Solutions: Ability to match clients with lenders that best fit their unique financial profiles and loan requirements.

3.8. Clear to Close Turnaround Times

Key Discussion:
Achieving swift "clear to close" statuses to expedite the home purchasing process.

Notable Quotes:

• Christian Bachelor [31:59]:
  "We average around 12 days in our turnaround for clear to close... which is less than half the typical 30-day escrow period."

Insights:

• Speed: Reducing the time to clear to close can prevent delays and provide flexibility in negotiations, sometimes allowing for early closings which can be financially beneficial.
• Efficiency: Streamlined processes ensure that transactions move forward without unnecessary holdups.

3.9. Accessibility and Support Beyond Traditional Hours

Key Discussion:
Providing continuous support to clients, accommodating their schedules and urgent needs.

Notable Quotes:

• Christian Bachelor [34:59]:
  "We answer on the weekends... your loan officer has your personal cell phone, not just a company work phone that turns off at 5 pm."

• David Green [35:09]:
  "We're hungry and we are going to fight for you... we like you to watch our YouTube videos... we are hungry and we are going to fight for you."

Insights:

• Availability: Being reachable outside standard business hours ensures that clients can address concerns promptly, enhancing their overall experience.
• Personal Touch: Direct communication fosters a stronger client-loan officer relationship, building trust and reliability.

4. The One Brokerage's Philosophy and Approach

Key Discussion:
David and Christian articulate their brokerage's commitment to integrity, client success, and building long-term relationships.

Notable Quotes:

• David Green [17:40]:
  "Our goal at the one brokerage is not just to finance a house and then discard you... we want to build a plan for you to scale a portfolio."

• Christian Bachelor [20:24]:
  "We are integrity and honest driven lenders... we want to educate you into what the best one to pick is."

Insights:

• Long-Term Focus: Prioritizing client growth and satisfaction over one-time transactions to foster ongoing partnerships and referrals.
• Integrity-Driven: Maintaining honesty and transparency to build trust and distinguish themselves from competitors who may prioritize profits over client welfare.

5. Advice for Investors in Uncertain Economic Times

Key Discussion:
Guidance for real estate investors facing economic volatility and unpredictability.

Notable Quotes:

• Christian Bachelor [39:46]:
  "Invest defensively, save your money, maximize cash flow, maximize return on investment and return on equity... surround yourself with the people giving you good advice."

• Christian Bachelor [40:24]:
  "We are in the riskiest time in our economy since I can remember being in my professional life."

Insights:

• Defensive Investing: Focusing on strategies that minimize risk and ensure steady returns.
• Financial Prudence: Emphasizing the importance of saving, efficient cash flow management, and maximizing investment returns.
• Reliable Guidance: Highlighting the need for competent real estate agents, property managers, lenders, and other professionals to navigate the complexities of the market effectively.

6. Conclusion and Calls to Action

Key Discussion:
Wrapping up with invitations for listeners to engage with The One Brokerage for their mortgage needs and opportunities for loan officers to join the team.

Notable Quotes:

• David Green [38:32]:
  "Lastly, thank you for listening to Mortgage Mondays... If you have a question that you would like answered on the show, head to davidgreen24.com Ask where you can submit your question."

• Christian Bachelor [37:10]:
  "If you're a loan officer and you feel like you've hit your ceiling... reach out to us."

Insights:

• Engagement: Encouraging listeners to subscribe, ask questions, and connect via social media for personalized assistance.
• Recruitment: Inviting experienced loan officers to join their burgeoning team, emphasizing growth and support opportunities.

Final Thoughts

Episode 53 of Mortgage Monday provides a comprehensive exploration of conventional loans, demystifying the mortgage process and equipping listeners with the knowledge to make informed decisions. David Greene and Christian Bachelor not only highlight the technical aspects of securing a conventional loan but also stress the importance of integrity, efficiency, and personalized support in the mortgage industry. Whether you're a first-time homebuyer or a seasoned investor, the insights offered in this episode serve as a valuable resource for navigating the dynamic world of real estate financing.