Video Closed Captioning:
good morning good afternoon good evening
folks Michael zuber one written out of
time back with our wednesday guest matt
the mortgage guy how you doing sir i’m
doing great mike always a pleasure to be
here chat with you always always good
combo oh man i appreciate it so hey one
of the things that we talked about i
think it was two or three weeks ago as
we were saying that the uh
the mortgage industry as a whole is
going to go through some adjustments we
actually called out
what happened at better.com right they
they let go of 900 people because the
business has changed
uh i think we are starting to see
kind of the good and bad
as the adjustment occurs i think that
the mortgage brokers industry will be
smaller in a year than it is today
because again a lot of the lending will
be
just different less refi all of that but
you had some pretty good data
around cash out refis
and it looks like um we’re setting some
some record numbers again which
you know your house is an atm that
didn’t end very well last year yeah and
that’s the thing too it was like is it a
good thing is it a bad thing um i’ve got
a data guy that i get with and it’s
enjoyable for me because you know i’m in
the trenches i’m talking to
hundreds of consumers every single month
so i kind of have a feel without seeing
the data and then you look at the data
which concern like confirms what i’m
feeling right and you know from from a
mortgage originator standpoint
more and more
cash out refinances being done
and if you think about it with
you know home values at an all-time high
people have more equity so they have
more opportunity to cash out refinance
it makes sense right and so me and you
talked about this the shrinking pie
where there’s less and less people
some people describe it as you know
moneyness or net benefit where if if
tons of people are s are in 275 2875
2.99 there’s less benefit for them to do
a traditional cap like regular term refi
right but um
you know the the numbers on cash out
refinances have
gone past one third of all mortgage
originations oh wow somewhere in the 35
range so i want to say that again so
just for people that don’t realize so
that means
one-third of new originations or new
loans are are
essentially cash-out refunds right and
we’re talking conventional loans which
is like far and away like you know the
most the majority
and so we can look at that and you know
rough numbers 35 percent of the loans
being written are cash out refinance 25
percent are rate and term okay and the
other you know roughly 40 percent is
purchased okay and um
you know it’s uh
as rates go up you’ll see the total
refinance versus total purchase kind of
adjust
adjust and rotate back um
and for me
that’s interesting in itself
what concerns me from the standpoint of
you know a mortgage broker that has
you
know
a focus on serving consumers right focus
on helping people making
sure that people are set up for
long-term success
with their mortgage which translates to
their finances
it scares me a little bit because you
and i both know debt can be an amazing
tool and i talk to people every day that
are using this home equity
and and doing it correctly right they’re
paying off high credit card debt or
they’re taking out and they’re putting
it in a secure investment that
appreciates over time and
you know that’s
the good side of it the bad side the
chainsaw that can cut your arm off is
people
and i don’t think this is happening as
much but i’m warning against it right
now cash out refinance to buy a vote
cash out refinance to buy a 90 000 car
uh you know cash out refinance and blow
the money which is probably
even worse right
you don’t want to take it out for the
sake of taking out because you’re able
to right you want to put together a plan
and
you know i can see the data from a big
box lender
not to name any names but quicken
over 50
of their loan volume is cash out
refinance well i just want to talk about
that because again i have i did a loan
with them i don’t know three or four
years ago was one of my first refunds as
rates were coming down support me three
years ago
they are um
extremely aggressive
right they have blown up my phone
multiple times a day
for weeks
telling me hey you did this loans with
us before we can do better this time
right and really what they are is
they’re just a machine that’s hungry for
deals they got to feed the pipeline and
they’re they don’t have my best interest
in mind
they’re trying to keep their sales
machine going so my big warning for
folks is these big box lenders like
quicken in this example and again i can
say that as a consumer of it and knowing
what they’re doing
um
they’re not they’re not service oriented
they’re not looking at your situation
and saying no quicken is always going to
say yes of course you need that 25 or 40
or 80 grand get it now before it’s gone
you know
yeah i used this example it was funny
because i
um
i want to record some of these calls
i’ve got six personal mortgages and i
let these folks call me because i want
to hear what sales people are saying
yeah when when when my first objection
was like low rate don’t need to
refinance no thanks it immediately
turned two and it’s like part of a
script right from a big
sales center is all they are um he asked
me some like really vague question like
what do you have out back
and i was like what do i i said out back
is that where the rates are like what
what do you mean what do i have out back
well maybe you want to put in a pool
you know and and that was like i’m like
okay i see what you’re i got smart right
and and that’s what i’m afraid of
because you know
dealing with consumers i understand it
i’m a human being as well yeah emotion
sometimes can drive a decision if you
get excited about a kitchen remodel
putting in a pool then
the the reasoning part of your brain
shuts off and it’s you don’t even see
the fact that like oh they charged me 14
000 in fees oh i’m paying an extra three
eighths of a percent on 460 000 in
mortgage debt all the bad things that i
want you to avoid the call center loan
officer or assistant or you know they
might not be licensed
they could care less about that the
long-term picture i i want people to
hear that again one of the things that
i’ve learned after 20 years of selling
software
is you can you have a choice as a sales
rep you either go in with logic
you know savings hard dollars blah blah
blah blah or
you go and try to get their heart first
you get your heart by talking about a
pool a swing set a adu whatever it is
and then the logic shuts off you’re
absolutely right so
watch that be careful for that watch
them fishing for that that person will
ask you what’s out back that’s a genius
move
but we’ll set some people up for failure
because then they’re going to start hey
honey did you know that they just talked
about a pool what do you think of pool
costs 40 50 grand oh we can get that in
our house wouldn’t you like to do that
at our house instead of going to the
neighborhood
oh next thing you know you signed up for
400 extra a month and that’s the thing
is is is that any any business knows
that we live in a society where
consumers are like that sounds
affordable on a monthly basis that
sounds like it makes sense if you’re
financing something over 30 years for
486 dollars a month
you’re signing a big check that’s a big
check yeah yeah
so folks what we’re saying here is it
again i think what i’m saying i i don’t
want to put matt’s words in his mouth
but my what i’m saying is be very
careful
mortgage brokers these big box stores
they’ve always been aggressive but
frankly it made sense is right
broker b next to mortgage brokers yeah
independent mortgage brokers that are
the good guy yeah and then there’s big
fintech and there’s and there’s big you
know retail operations that are the bad
guy uh talk to a person not a machine
right right and that that’s the thing
too is is is consumers in my opinion a
lot of times are focused on the wrong
stuff they’re focused on only interest
rate they’re not looking at total cost
they’re focused on you know cheapest
when the the cheapest is usually not the
best like you might find the cheapest
financial advisor in the world and you
lose 22
right or you find a financial advisor
that’s a little bit more expensive
and and you see 30 gains right in the
mortgage it can be similar where like
yeah maybe if you try hard enough you
could find somebody that’s cheaper than
me in my group but i’m telling you by
structuring the deal correctly
by putting your you know best interest
in mind and having the conversation you
know
extracting out of you what your goals
are and then say based on your goals
here’s what i see as a good mortgage
solution
it’s not always going to be a deal
there’s going to be plenty of times
where i go
listen you’ve got this much
locked in at 2.75
you only have enough equity to pull out
17 000 and cash out you would never do
that raise the interest rate on all that
debt for this 17 000 just leave it alone
right
one stat i’ll throw at you that’s that’s
amazed me yesterday as i’m talking
through stats
they have stats for
like
the payoff rate or the turnover rate
for specific pools of mortgages and
there’s a pool of mortgages that are
like
2875
that should be paying off like six to
eight percent because this payoff is
within 12 months okay right
that pool is paying off at a 20 rate
what does that mean
basically means that like all these pool
of loans that were written
at two point eight seven five
are being refinanced out of oh my
goodness
oh a one in five
oh my god why would they do that
that’s my point is like you get somebody
and and i know this you know i i i don’t
expect every consumer to be a financial
expert right but don’t get yourself in a
position where somebody is able to
you know i i’ve seen the the number
gymnastics and that well
i mean i even have the phone calls too i
remember talking to a guy about like why
would i refinance and he tried to he
tried to he was talking to the wrong
freaking guy but he was like well your
rate will go up but it’ll be this and
that and this is why it’s better and i’m
like what you’re saying makes no sense
the unfortunate part is like
somebody who
just to a random consumer it’s not you
know they’re they’re great at their day
job they’re not a financial person right
talks them from 2.875 to three and eight
or three and a quarter
minimal cash out or whatever the reason
is
people are doing it and like the data
shows it you know one in five people
maybe some of those made sense yeah
maybe
maybe but i would guess that the the
rate where they should be getting paid
off like six to eight percent are the
ones that made sense and then two-thirds
of them didn’t make sense they got sold
yeah they got sold that’s what’s
happening a lot now i just saw i think
yeah black knight reported it this
morning 24 of loans originated have a
less than three percent mortgage rate i
really think this is going to slow down
the real estate market because you’re
not going to get the move up buyers but
folks if you keep refining your 2.875 at
a one in five clip stop that that is too
much right yeah and i mean here’s the
thing
greatmortgagebroker.com reach out to me
and my team i love it when i when i when
i hear stuff from my team that aligns
with like how we’re doing business
because we had somebody yesterday who
came back to us was like hey i really
want to do this i want to remove
mortgage insurance and my team comes to
me and says
deal doesn’t make sense i know if
they’re saying that
they’ve done the work right they’ve
looked at it and said
this person is going to remove mortgage
insurance but their rate’s going to go
up
we’re going to tell them to stay yeah
it’s going to be a net net loss just
because you got yeah yeah i mean
like here here’s the thing too
and and to be completely transparent and
honest with people there’s going to be
mortgages written where
it’s it’s it’s a net wash all this costs
for this minimal savings and it’s going
to take five or seven years to recoup it
or more
the only winner
is the company that writes the loan and
gets the commission yeah i don’t want to
be that company i don’t want that person
to do that right so
greatmortgagebroker.com great advice
2022 is going to be the year of the cash
out refinance i want to do all the good
ones i want to do the ones where it
helps people win i want to help people
avoid or it doesn’t make sense i love it
one more time matt how can they find you
because my channel my folks need to
reach out and just see if their
situation makes sense because you will
tell them no right if it doesn’t make
sense and they’ve been reaching out i
want to thank everybody who’s reached
out uh to the team you know on monday’s
youtube live i had a couple people
thanks matt i get connected with brandon
he’s great hey thanks matt we just
closed him with bo he was great um
greatmortgagebroker.com you fill out a
quick form where you’re at what you’re
looking to do we’ll be in touch uh
within a day and put you on the right
path very cool thanks matt