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- [00:00]
A
What's going on, everyone? Welcome to Real Talk Real Estate. This is Mortgage Monday. We've got an interesting show for you. When to lock and when not to lock. The age old. Should I lock my rate or should I wait? Do I want to roll the dice or do I want to err on the side of certainty? We're gonna be going through different scenarios as well as what's going on in the market today. To help you make this call, I'll be joined today by my buddy, my partner and the broker of the one brokerage, Christian Bachelder, who's actually looking incredibly handsome. What did you do to your hair and beard, Kahlo?
- [00:31]
B
Haven't had a haircut in two months.
- [00:33]
A
Is there gel in your hair?
- [00:36]
B
Probably something. I don't remember what.
- [00:37]
A
You look like James Dean doing mortgages. I don't think I like this.
- [00:42]
C
There we go.
- [00:42]
A
I look like Vin Diesel that hasn't seen the sun.
- [00:45]
B
And all you got to do is go two months without cutting your hair, David. That's the secret.
- [00:49]
A
I wonder what I would look like. I'd probably look like a vacuum cleaner, door to door salesman. If I tried to do that.
- [00:55]
B
The slick back.
- [00:56]
A
Yeah, Exact. The comb over.
- [00:58]
B
Yeah.
- [00:59]
A
I don't live my life the comb over. I live my life one quarter mile at a time, just like Vin Diesel himself. All right, so as we discussed on previous Mortgage Mondays, the Fed appears to be finally lowering rates. Now Trump and his administration have to figure out what do we do with a very slow economy, not a lot of jobs and a housing market that's a mess. Curious to see what they do when it comes to this, but at least we got some kind of movement in a good direction. And this begs the question, should people lock rates now before they go up, or should people wait thinking that they're going to continue to go down? Now, to add some nuance to the conversation, it was intimated in his press release that Jerome Powell gave the head of the Fed that rates would continue to drop. And we released on our last show that we that he appears to have said or that the markets have taken into consideration more rate drops for the end of 25 and rate drops going into 2026. So help us understand, when it comes to mortgages, as the smartest mortgage lender that I know, how should people go into buying a house and locking their rate? You know what, actually, before you answer that, let's start with what is a rate lock? How do they work? Then we'll talk about if you should do it or not.
- [02:10]
B
Yeah, good question. So let's, let's imagine a scenario. You got in a contract, super excited, buying a house, and you're going around and shopping for rates. You get a rate from one lender. And let's say you're shopping for the par rate, which is the rate with no points, right? So no buy down. So you're just getting the average market rate. One lender gives you six and a half, one lender gives you a 6.75, the other lenders gives you 6.6. So you're all right in that mid to upper six range. Perfect. You kind of have an idea of where it is when markets are volatile, whether it's up or down as they are right now, we're having pretty substantial rate cuts currently happening within that. Let's say normal escrow timeline is 30 days. That's what most Realtors write their contracts for. You have 30 days to decide and commit to a rate. So a rate lock is basically a loan commitment. That's, I'm committed to this pricing, I'm committed to this rate. If it closes this way, I'm satisfied.
- [03:07]
C
Okay.
- [03:08]
B
Now, during those 30 days, a lot can happen, especially in markets like there is today. What that means is that that initial rate that you got quoted at 6.5, 6.6, 6.7 with your three lenders, let's say you went with the lender that was at 6.5. Cool. You selected the lowest rate. Let's say that lender locked you in on day one because the loan officer was not very privy to the Fed announcement. They weren't really tracking the market. They just knew that they were your cheapest option that day, and, and they wanted to lock you in. Let's say you go through two weeks now with that lender, and it turns out lender B, the one that was at 6.6, let's say, reaches back out to you and says, now, hey, I can get you a 6%. What did you miss out by doing that? You missed out on a half a percent interest rate deduction, right? So that's savings. That's a significant amount of money. That's half percent of your purchase price every year in interest. What you lost out on is not working with a loan. Instead of working with a loan officer that was aware of the market and knew how to take advantage of the right data lock, you just went with the cheapest one up front. Now, if that lender is also knowledgeable about the market, obviously they would have adjusted down as well. But if you waited to lock Your rate instead of day one of escrow. And you waited two weeks, which there's no timeline. You don't have to lock your rate on us. It has to be locked before you close. But it can be locked any point during those 30 days, you would have saved substantially on your mortgage. So let me give a real life example. Cause we just had this happen with a borrower of ours.
- [04:47]
C
Okay.
- [04:47]
B
I won't name drop her, but she's a borrower currently in a store.
- [04:49]
A
Hold on, before you get to the example, let me ask a question about this. Yeah, go for it. If you lock a rate and rates go up, you're safe. But what everybody asks is, rate just went down, can I unlock and then lock again at a lower rate? What's the answer for that?
- [05:04]
B
Yeah, good question. The usual answer is no, with one caveat some lenders have. They're called float down options, which is where they allow you to take advantage of the market even after you've locked. It's not very popular. Probably like 1% of lenders in the country offer them. So usually the answer to that's going to be no.
- [05:24]
A
And are you paying money to get the float down option?
- [05:27]
B
It depends on the lender.
- [05:28]
A
Sometimes they've cooked that into their rate or your closing cost.
- [05:31]
B
Yeah, there's usually some gotcha, you know, associated with it. However, the benefit of working with a broker is that we're not tied to a specific lender. If you're getting a loan with the Chase bank, you're getting a Chase bank loan, a broker. I have hundreds of lenders in our network.
- [05:45]
C
Right.
- [05:46]
B
So what we could do is, assuming there's enough time left in the contract, we could remove your loan with one lender and place it with another, and we can get a new rate log commitment with the new one. Now, you want to be careful because we only have 30 days to close. And if we're three weeks in and transferring lenders, you typically don't want to do that.
- [06:02]
C
Right.
- [06:02]
B
Unless you can negotiate an extension. And then the realtors get upset and the seller's mad. You know, there's, there are situations that make sense. What's the better way is if your loan officer is relentlessly pursuing market research and they know what is likely to come, we leave your rate unlocked. And if there is a 90% likelihood that rates are dropping in the next 30 days, that's good odds.
- [06:24]
C
Right.
- [06:25]
B
And they will let you leave you stay floated, which is the industry term for when you don't lock a rate. And that loan will Float down to whatever the going market rate moves to.
- [06:35]
A
Okay.
- [06:37]
B
Once you lock it, that's what you get with that lender.
- [06:40]
C
Okay.
- [06:40]
A
So that's the question is if. If for some reason there's a catastrophe, or actually, probably the opposite of a catastrophe. I don't know what that would look like, but rates go from 7% to 6%. Like, man, this is huge. But I'm locked in at 7. There is a possibility where you say, okay, we will have to 86 this entire loan, find another lender, start over, probably need a new appraisal. Probably your escrow is going to have to extend. We're going to have to submit a new loan application. Their underwriters may ask for different things. Like, you were close to the finish line, now you're not. But that is an option for some people. Assuming that the seller will grant them time. Correct.
- [07:17]
B
Typically, if you're working with a broker, yes. With a bank, no.
- [07:20]
A
Oh, that's a great point, actually, because there is no lender to switch to at a bank. They've got one option.
- [07:25]
B
That's correct.
- [07:25]
C
Right.
- [07:25]
B
If you're working with a broker. I'm not employed by anything. I don't have to give you a Chase loan or a Rocket mortgage loan or any loan. We can pivot and I can say, hey, Rocket, too bad you lost this one, and send you over to Chase, send you over to Wells Fargo, whoever it is.
- [07:40]
C
Right.
- [07:41]
B
So with a broker, that is. That is a. Of working with a broker that you.
- [07:47]
A
Have other options you can switch to. Okay. I mean, I. That makes sense now that you say it. I've just never consciously thought about the fact that when you're working with a direct lender, you can't do that. And I will say most people who are getting loans have no idea if they're working with a broker or a direct lender. They do not know what the difference would be. I didn't know. The difference was before I met you, I just knew there's different loan officers, which I thought was synonymous with lender lenders. So I would call a loan officer a lender, because that's how we talk about in real estate, what the lenders say.
- [08:14]
C
Right.
- [08:15]
B
Call themselves lenders.
- [08:16]
C
Right.
- [08:17]
B
I've said it probably many times on this podcast that I'm a lender.
- [08:20]
C
Right.
- [08:21]
A
But we're not lending our own money. So we're not lenders. We are loan officers. We're brokers, we're brokering loans. But that. That becomes synonymous. And so when you speak of it that way, why Would anybody think that there's a difference between a broker that has a hundred banks or ten banks, however many relationships they've set up to work with versus a loan officer that works for a bank that can only lend that bank's money? And I think that's how most people probably find out about it. They walk into Wells Fargo and they see Johnny, who's always nice and he's got some candies on his desk and Johnny smiles and he wears a suit and a tie and you feel comfortable with Johnny. And then you get raked over the coals with the interest rate because Johnny knows it's a layup, because you're not shopping him to anybody and his values, that he's nice, not that he's a shark. If you want the shark, you come to us and we go eat people up for you. But you don't have to deal with it. That's what Christians here for.
- [09:10]
B
And to give you an idea, I actually have these numbers. Last year about 23 of mortgages were done by a broker in the country. So almost 80% were done by direct banks. And that's 80% of people who in the vast majority of situations, with a couple exceptions for like jumbos and high balance loans that brokers could have beat. On average, the NMLS puts out these numbers every year. You guys can research it where brokers on average last year, what the what the nmls, which is the National Mortgage Licensing System Service. I forgot what that stands for. But they actually compare loan offers that are given based on the type of lender that, that did it. And on average broker, Any loan that went through a broker was 4,200 cheaper across the entire country per loan. Last year it's 4,000 bucks. The average loan amount or the average purchase price last year I think was just under $400,000 in the country.
- [10:06]
A
So it's about one price of the house. It's about 1, 1%. Yeah, but if you're putting, if you're putting 20% down on a $400,000 house, you're talking about $80,000. 4,000 is a much bigger percentage of that. Yeah, right. And then if you're looking at a primary residence where you might put in 5% down, that's 20 grand. 4 grand is 20% of your down payment. Yeah, that, that you could have saved. Now I know many people wonder, well, if it's better, why doesn't everyone do it? My two cents on that. The banks giving the loans can either give them directly through their own people because you walked into Wells Fargo and said, I'll take a loan or they can go through Christian. When they go through Christian, they have to compete for your business. They have to give you a competitive rate because Christian will take you somewhere else. When they go through Johnny, the loan officer with the tie and the nice smile and the candies on his desk, they. They don't have to compete because it's some nice lady who doesn't understand how mortgages work. So they put their advertising dollars towards the direct channels because their profit margins are insanely higher when they don't have to compete. They don't like guys like us that shop you around to different places, that find out who's got the best deal, who's got the rate on sale, who's going to give you a benefit because you got this thing, all the work that we're doing because they don't make as much money on your loan when they go through us. So there's your answer as to, well, how come so many people do it that way? It's because they don't watch Mortgage Monday. Now, if we could get 7 million subscribers to the channel, we think that we could actually turn this around and that America could have great loans. So if you guys would like to see that happen, we need you to spread the word and tell everyone about Mortgage Monday and make Christian the real life James Dean of the loan world.
- [11:43]
B
All right, there has been a benefit. Two years ago it was 18%. So we're up 5%, 18 to 22, 22 or 23 last year. So mortgage brokers are making. Making a kind of comeback. They took a big hit after 2008 because brokers had a bad name, which they deserved. Right. A lot of brokers in 2008 were not doing things the right way, but.
- [12:02]
A
Well, to add to that, there is an element of convenience that you may get when you work with a direct lender, because it's the lender, sorry, the loan officer and the underwriter are almost the same people every time. When you do it through us, we have to figure out a hundred different underwriting systems and it is much harder work for us, which means we will then have to ask you for more stuff. So it is a. It is slightly less convenient, to be fair, to save a whole bunch of money. I think our listeners are more interested in saving money than they are and having it a little bit more convenient. But if you're insanely wealthy, maybe you don't think that way. You just want to go to Goldman Sachs and they make it really Easy for you. And you don't. But if that's not you, and if that is you, thank you for listening. If you have a Goldman Sachs account, but that's not you, you need to be talking to Christian, which will give that information at the end of the show. Getting back to. To lock or not to lock. Why don't you share the scenario of a client that we had and how that worked out for them?
- [12:53]
B
Yeah, let's do it. So we had a client who submitted a loan. We're recording this September 17th of 2025. She submitted her loan, what it looks like August 24th. So we're almost closing. We're about seven days from closing.
- [13:08]
C
Okay.
- [13:09]
B
Her initial loan. So just to give you. Where we started was this is for an investment property.
- [13:14]
C
Okay.
- [13:15]
B
She started at seven and a half, 7.49.
- [13:18]
C
Okay.
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B
And that was about the par rate. There were no points.
- [13:21]
C
Okay.
- [13:21]
B
We waited to lock her because I do all the hard work. I follow the Fed, I know what the world is bringing. So we knew that it was highly likely that rates would be coming down. This was about a month ago.
- [13:32]
C
Okay.
- [13:33]
B
As we expected, rates came down today. She's getting a 6.75 at par. So what does that actually mean? Her monthly payment at a seven and a half was just about $3,500 a month. That's with her principal and interest, taxes and insurance built in. I'm not going to share a purchase price or all that out of, you know, confidentiality for her, but about 3, 500 bucks. At a 6.75, it was just about 32, about 3,250 roughly. So what is that? That's a $250 a month savings. Not because she selected a different bank, not because she got a bunch of quotes, not because she changed her purchase price or had to pay a bunch of points. It's because she worked with a lender that knows the market and I advised her to wait. Let's not lock it. Let's hold off. We'll lock it once it makes sense. And we locked her into data. 6.75. It's it. That's a huge, huge sales. 250 bucks a month with no added cost. The same property, the same everything. We don't have to resubmit her loan. We don't have to order a new appraisal. All of the things that you could add up that nothing, none of them are on this deal. It's only because we tracked the market, predicted it correctly, gave good advice, floated until we felt it was good to lock, and she saved a lot of money because of that. Okay, so that's a real world. And that's not bs, guys. That's a real file I'm looking at on my screen right here. That's the benefit of working with a lender who knows the market. Now, you may not submit your loan in a time period where there's significant rate drops. So I'm not by no means promising this to everybody. But what I will promise you is that this is what we do. If you work with us, we track the market and we give the advice as best catered to the current events happening in the world right now during the processing of your loan.
- [15:25]
A
Now, here's the risk to us. If we say we think that you should float and not lock and rates go up, you probably hate us. This is why no one likes to do that. No one likes to actually give you the advice that they would do. Because if they don't give you advice, you're probably not going to hate them. If they do give you advice and it works out, you're going to say, I'm so smart, I locked my rate. If it doesn't work out, you're going to say, my loan officer's an idiot. He told me to lock. This is how life tends to work. And that's why most people don't want to offer you the advice that you're looking for. They kind of gotta have a pair. And so when you're picking your loan officer, the nicest ones usually don't have a pair. They usually have a nice tie and some candies on their desk. And they have the political answers when you say, should I do this or should I not do this? Right. You ever listen to a politician, get asked a straight question and they say a bunch of words and somehow walk away from it, giving you no answer? And you're like, wait a minute, did you just put a spell on me? I don't think I heard anything.
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B
One of the most frustrating things, I swear, I laugh every time there's a debate and it is turns out into them just hijacking the conversation. It's always the funniest thing to watch.
- [16:28]
A
Gavin Newsom's the best at that. You're just like, I'm spellbound by everything you just said, but I found no nutrition in that thing at all. And then you just get so confused, you give up, right? So many salespeople work this way. The best salespeople, they do that, they just put this, like, little witchcraft over you and you walk away going, okay, I guess I'll just. I don't even know what we're doing. I guess I'll just wait for an email from them. You don't want that. You want the person that says, look, here's the risk, but here's what I would do.
- [16:52]
B
If.
- [16:53]
A
We're not going to argue with you. If you say lock it, we're going to lock it. It's your choice. But if you're looking for advice, you want to work with somebody who buys real estate themselves, who has a brain, who pays attention to the market and who plays the odds. That's all you can ever ask for. Probably why you're listening to the show. So in this case, it worked out really good for our client. And we're bringing this up because just about every single loan officer I know, anybody out there making content, anybody that owns a business, they are teaching their people, never answer that question. Here are seven scripts that you can use to get out of having to answer that question. Never take on the liability. We don't want them being mad at us if it doesn't work out, because that's what happens. People get mad and they look for somebody to blame. It's just not my philosophy. I'm going to tell you what I would do, and I'm going to tell you why, and I'm going to say, what do you want to do? And hopefully you're going to ask me clarifying questions, and I'm going to answer those questions, and then you're going to have clarity on what you think is the right thing to do. And it usually will line up with the same thing that we were thinking. Now let me ask you. There are other scenarios where we've had people that have been a little greedier. They're like, hey, I don't want to lock. I want to wait. And you may say you can, if you don't mind me saying so, I think you should lock. Here's why. What are the scenarios? Financially, economically, maybe even stuff in the news that people should be paying attention to to understand. In those scenarios, you want to err on the side of caution and not be greedy.
- [18:16]
B
I have this conversation for a person. I ask them what their tolerance for risk is. I do it all the time. So many people that we have in contract, I say, what's your tolerance for risk? Are you, you know, if your rate drops by a quarter, does that substantially change this investment? And if it increases by a quarter, does it kill the deal for you? If they're like, Christian, if. If the rate increased by a quarter, this property literally wouldn't make sense. Okay, let's lock it in. Let's not take the risk. If it works at seven and a half, but it wouldn't work at 775. Let's not risk a 775.
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C
Right?
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B
But if they're like, oh my God, 775, it would still work. But man, seven and a quarter would be beautiful. Cool. We'll float it. We'll have our stop loss where if it gets to 775, we definitely won't let it get to 8.
- [18:59]
C
Right.
- [19:00]
B
So we'll track it every single day. And I have plenty of people that they ask me every day when we're loans and contract for two to three weeks where rates at. Where rates at. Where rates. And I go daily updates. Here's where they are now. You saved 30 bucks by waiting from yesterday to today. Oh, Today you saved 250 bucks. Today you saved 500. Sometimes these are like thousands of dollars of swings, right? Sometimes they're swings in the wrong direction. Part of what my commitment is to anybody you trust, myself and the other people at the one brokerage with your business is that we do everything we can to stay on the absolute cutting edge of advice and guidance that's in the market. We track what Jerome Powell says like hawks, right. And we give the best advice we could. And like David said, we're not scared to give that advice. We will give it cautiously and we will give the best guidance we can. But if there's an opportunity to go save money, let's go do it.
- [19:48]
C
Right?
- [19:49]
B
Like if. If we feel very strong, 90 plus percent confident that rates will drop by the end of your escrow. I'm not going to in good conscious advise that you lock your loan today. Let's let it ride. Let's see.
- [20:00]
A
Right.
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B
Let's see if we can save you some money. Absolutely.
- [20:03]
A
Right now you got to remember we're not getting paid anymore if you save money.
- [20:07]
B
That's correct.
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C
Right.
- [20:08]
A
It's purely for you because that's what I would want. That's why I started the company. I wanted a loan officer that would do things the way that I would do them. I want real estate agents that will do things the way I would do. It's very hard to find that in this business and in the world today. I recently got injured a couple days ago, and I've been having to go through the healthcare system to try to find a surgeon that can fix me pretty quickly. And it has Been maddening to see how many W2 workers just don't care. They're just like, how can I get this off my desk and out of my face? And you make you go away. Do not care about the fact that that could have, like, lasting lifelong consequences for me. And I realized going through this, this is kind of the norm now. It's just normal that when you deal with a worker, they don't care. They're just like, how do I make you go away so I can go back to doom scrolling on Instagram or whatever. When you find somebody that cares about what you care about, you got to build a lifelong relationship with them. You got to hold on to that thing. You got to benefit them as much as you can. And you got to do whatever you can to help them with their goals because you know they're going to help you. So when you come to us, that's our goal. That's what we train our guys in. And if you're somebody who's listening to this because you like the information, but you want to work at a company that's invested in developing you, that's us too. So if you know or are somebody who is a licensed mortgage loan officer, please reach out to us. You can find me@davidgreen24.com use the chat option. And Christian, where can people reach out to you?
- [21:29]
B
Yeah, best way if you want to find out just more about the company, the one brokerage.com the best place just to get a kind of screenshot of what we offer. Second place. You want to get me directly? Instagram's the best, most direct route at the one broker is my handle. We'll put it down in the YouTube comments as well. But yeah, reach out. Shoot me a dm. Ask me about your scenario. Should I lock? I have a loan submitted with another lender. Can you guys beat it? Tell us where you're at, right? And we'll try to help you get to your goal of real estate investing.
- [21:55]
A
And if you're a real estate agent, we want to help your business, too. That's one of my commitments for 2025 and 2026 is to help agents sell more homes and do it with integrity because Lord knows we don't need another agent who doesn't care about your goals. We have plenty of them. So we are going to be recording more shows. Christian's going to join me on some of them when he slows down over there from closing all the loans in the country to be doing more podcasts for realtors on the Real Talk Realtor segment of the David Green show podcast. So if you're a Realtor who wants to be featured on the show, go to the website I told you about, use the chat option. I'll get you connected to the producers and we can get your information. And if you're a realtor who's listening to this and you would like to talk with Christian about how he can help you sell more homes, make it look like a rock star to your clients, definitely reach out. You can also just for general inquiries, email US intake@the1brokerage.com all spelled out. Christian, thank you for joining me today. Thanks for sharing these examples and thanks for working so hard to be a light in the industry for those that are getting ripped off all the time and for serving the people that work with us. I really appreciate you for that.
- [22:56]
B
Absolutely.
- [22:58]
A
We'll see you guys next week on Mortgage Monday.