Episode #001 - Have questions about financing? In this episode we visit with Terrie Goodloe. Terrie has been in the mortgage business for over 24 years as a Loan Officer in the Dallas/Fort Worth area. She currently...(https://youtu.be/0y4YZdY3WLE)
Episode #001 REN Podcast Transcription (Terri Goodloe)
Jason: Alright, good morning everybody. This is Jason Reynolds with Vision Realty and Investments. Today on the phone we’re actually visiting with Terri Goodloe with Service First Mortgage here in Burleson, Texas, and we’re going to kind of walk through some financing options for folks. We figure that might be a good thing to talk about here on this podcast. Without further ado, Terri, can you tell a little bit about yourself? How long you’ve been in the business? How long you’ve been at Burleson?
Terri: Yes. Hello, Jason, thank you for having me this morning. I grew up in Burleson, have lived in Johnson County all of my life other than a small stint in college. I have been in finance and mortgage for over twenty years, so seen ups and downs in the markets and the mortgage industry per se. I’m excited to be here and chatting with you this morning, I appreciate it.
Jason: Hey, you bet. That’s the first thing you talked about, you’ve seen the market over time. Can you kind of walk us through what current interest rates are now? I know they’re going up, but can you kind of tell us what you see them doing maybe over the next six months? (1:54)
Terri: Yes. Historically speaking, we see interest rates moving up in the spring, levelling out in the summer and typically, historically speaking, dropping back down at the end of year through January/February. This year, not a whole lot different other than we’re seeing interest rates moving upward starting really in January with the market and the economy. There are a lot of things out there that drive the market and the interest rates for mortgage financing, specifically the bond markets. When we see the stock market increase in their value, we typically see the bond markets go down which is tied to interest rates and lower rates. In the industry, we’re looking at increasing interest rates over the next four or five months and currently, the interest rates are driven by the mortgage type and your credit scores. Better credit gets a better rate, and also determining in that market as far as the type of mortgage if you’re getting down-payment assistance. What we’re seeing right now, FHA conventional four and a half, higher rates for lower credit scores and different types of other financing options.
Jason: Okay, awesome. So then, we’re looking at good credit. That’s also something probably important for folks to understand, is that your credit can also influence—how much would you say somebody that a great credit score is maybe getting a 4.5% versus somebody who maybe was right on the cusp of being able to get a mortgage. How much more of an interest rate would that equal? (3:53)
Terri: Looking at a client just yesterday in the market with FHA financing, their scores were just over 600, and 600 is our minimum credit score for financing with Service First Mortgage. At that 600 credit score, we were looking at 5 and an eighth or 5 and a quarter on interest rates for FHA.
Jason: Okay. We didn’t talk about this question Terri, but I’m jumping into it.
Jason: You’ve worked with a lot of my clients. A lot of clients sometimes jump in and they’re looking and say, “Well I can get a better interest rate on lendingtree.com” or some national bank, some website they found. I’ve always been an advocate for, “Hey, use somebody that’s here locally that you can use, that you can call if you need help”. What’s the difference between using you versus a bigger bank? We’ve talked about this before. Can you elaborate on their interest rates may look good upfront, but when it comes to closing time, what does that look like too? (4:53)
Terri: Well, when you’re looking at the market as a whole, at Service First Mortgage we are competitive. We want to be competitive and we are local. You can come into my office, you can find me, you can call me on my cell phone in the evenings and on the weekends. When you are working with the big banks or the internet companies, they don’t necessarily have a vested interest in our community. They’re not active here, they’re not local here, you can’t get a hold of them if you needed something quickly, whereas I’m available. I’m here to provide a service to my community as well as my borrower and my client. I think it’s important to know that I hang my hat on my honesty and my integrity and getting things done. Like anything, you can find somebody else. They’re just going to tell you what you want to hear, but when it comes down to getting the job done and being honest and closing the transaction on time, those are where the internet company and the big banks struggle because they’re front-end people that are on the phone or on the internet don’t have the twenty year experience in the industry that I have or my manager has. Being able to answer questions, getting the correct documentation upfront—and the initial interview with the customer is so important because I can ask some questions and I can hear the answers, and with the answers there are other questions. Whereas if you’re filling out an application online through an internet company, they can’t hear the clients voice. They can’t ask the client the open ended questions to really get to know the customer.
Jason: Right, yes. They also probably don’t pick up their phone at 9 o’clock when you need a pre-approval letter, like you do.
Terri: Correct, exactly.
Jason: Okay, awesome. Speaking on experience, there’s been many times where I think I’ve called you after-hours many times asking for a pre-approval letter because in this market we need it. We just don’t get that with the big banks.
Okay, awesome. Real quick, I want to walk through the different types of financing. There’s tons out there, but I wanted to kind of get an idea of types of down-payments and benefits. Pros and cons of these types of loans. The first was FHA. What kind of borrower would be looking to use a FHA loan and what type of terms are we looking at? (8:00)
Terri: Well, with a FHA financing, that’s typically reserved for your first-time home buyer, although you don’t have to be a first-time home buyer to get a FHA loan. It allows the borrower to get into a property with the lowest credit score. How that happens is a FHA loan is secured, guaranteed by the federal government or FHA (Federal Helping Administration). In the event that the borrower defaults in the type of loan transaction, the lender is not out because it is government secured by mortgage insurance, in that case through the loan. With FHA financing, we can finance a borrower with credit scores down to 600. They have a minimum down-payment of 3.5%. The seller, although it’s a little bit more challenging in this market, is allowed to pay up to 6% of the borrowers closing cost, and so there’s a lot more flexibility in the financing as far as the overall picture. When we look at mortgage needs working at a big picture, we’re looking at the borrower, the borrower’s credit, the borrower’s ability to repay their mortgage note with a payment. We also are looking at the property statistics, and so the property also has to pass an appraisal. With that, there can be no problems with the property. It has to be in good working order. FHA’s are more strict on the property side but more lenient on the borrower/credit score side.
Jason: Okay, so then how does that change as we jump down to conventional? (10:13)
Terri: Conventional financing is money lent by a bank or financial institution. They’re looking at the borrower’s ability to repay that note because there is no security specific if that borrower defaulted and quit making payments and the bank gets the house bank. The bank’s not in the business to manage properties: they’re in the business to lend to borrowers. You have to have a little bit better credit score However, there are some loan programs within conventional financing. With really good credit you can get in with as little as 3% down, and lower mortgage insurance again with high credit scores. We are doing more conventional financing than I’ve ever done in my twenty years, but you can’t have as much debt with the conventional as you can with a FHA, so what we call your debt-to-income ratio is a little stricter than on FHA financing.
Terri: With each loan program there are different guidelines and different parameters, so it’s important that your lender, your loan officer, the person you’re speaking with knows the guidelines and can fit you as the borrower into the best product for your financial situation. It’s just not a here-and-now. I don’t look at it as a here-and-now let’s get you in here, but let’s look at the bigger picture: what is the borrower's financial goal for the long-term?
Jason: Okay. You were saying on FHA credit scores can go down to 600. What’s minimum-type credit for conventional on average maybe? (11:58)
Terri: On conventional you’re looking at a couple of things. You’re looking at down-payment and credit score. With a bigger down-payment your credit score can go down to 620 but you’re paying a higher again with a lower credit score. For the best opportunity finance with conventional, if you have 680 to 720 you’re going to get your better rates, and then over 720 you’re going to get your best rates.
Jason: Okay, great. VA financing, can you explain real short—I know that’s 0% program but… (12:47)
Terri: There are two loan programs that specifically require no down payment, and one of those loan programs—they’re both federally insured—one of those is a VA loan. You have to have served in the military and received veteran’s benefits to get a VA loan. A VA loan is only for owner occupants’ property, meaning the veteran has to live in the house. We can finance a house of a veteran who is deceased by way of disability or the service of the veteran is the cause for death, so the house of a deceased veteran can also obtain mortgage financing with a VA loan, and that again is a zero down-payment. Now there are closing costs associated with every real-estate transaction, so the veteran would need to have the means to pay their own closing costs, taxes and insurance and title fees.
The other loan program is called USDA, and the specifics of a USDA loan is that the property specific has to be rural in nature, meaning the economics or the population of the city where it’s located goes into effect. If it’s outside of any large metropolitan area and outside the city limits, it would go with USDA financing. No down-payments required. A USDA loan also has an income cap, so there are certain income requirements. You can’t be over, like $82,000 annual income for the borrowers on the loan. It actually goes by household income, so if you have a couple and they have a 17-year-old son or daughter that’s working, then that income is part of household: it would be counted.
Jason: Okay. Now, on both the VA and USDA, credit score plays a role in that still though, correct? (15:04)
Terri: Yes, we can go down as low as 620 on VA and 640 on USDA.
Jason: Okay. Perfect. Well we are at 17 minutes now and I know I said 15 minutes, so a couple of questions we have left here---that I think what we’ll do is we’ll try and do a second session—is talking about working through maybe credit issues cause Terri is great about meeting with folks who aren’t at that point yet, but she can definitely tell you how to get in a good spot to where you could get a mortgage. And then maybe talking about some down-payment assistance programs as well. We will save that for a session two but thank you Terri so much for jumping on with us.
Terri: Thank you for having me, I appreciate it.
Jason: Can you just remind us again where you’re at, and then also how folks can get in contact with you? (15:59)
Terri: Sure. I’m located in Burleson, Service First Mortgage, 437 South West Wilshire Boulevard right in the heart of Burleson, Texas. I can be reached by cellphone at 817-925-8306, or you can search me on the internet at terrigoodloe.com. Anyone can apply online. If you have access to internet or computer you can click on the button that says “apply now” and I can reach out to you once you complete that application or call me on the phone.