The Jon Sanchez Show
09/05-How to lock in a mortgage rate.
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I'm doing great. - Long time no talk, what an hour or so ago we were just chatting. (laughs) - Yeah, yes we were. Yes we were. - What happens in an hour these days? - Well, come to my world. How about a few seconds it can change dramatically. That's exactly what it was today. (laughs) Oh my goodness, it was a wild ride. Once again, I mean, this volatility is just unsurpassed that we're experiencing intraday today, guys. It's just today, yesterday, the day before, I mean, it's the world that we live in right now. And that brings me to my first little housekeeping note. I wanna thank all of you that attended our handling volatility and your retirement accounts webinar. Last night we had an excellent turnout and really enjoyed spending time with all of you Jason and I both. And so thank you for attending. And we'll keep you updated on our September webinar, putting all the pieces together on that right now. So we'll get that announced here shortly in the next few days or so. In the meantime, let me tell you what we have lined up for you tonight. We're gonna help you in this crazy thing called a rate lock, right? So what you pay for a new mortgage comes down to a number of different variables. First, you have my world and Dwight's world, the economy. You have the anticipation, ooh, sound familiar, of what the Fed's gonna do. You have the bond market. You have the loosening or tightening standards of lenders that Dwight always educates us on. And then secondly, let's move in, pardon me, let's move into your personal life. You have your personal situation. You have your credit, your down payment, terms of the loan, the purchase price, et cetera. Well, in this volatile rate environment that we find ourselves in, it may be time to lock in a rate. And whether it's right now, a week from now, one month from now, whenever it may be, what you're gonna learn tonight from the boys is gonna help you when this time period does occur. But how do you do it? Well, we're gonna explain how tonight, when we go through the fundamentals of locking in a rate, right? Dwight, you've touched on this, hit and miss many times over the decade that you've been on this show. But tonight, we're really gonna drill down. And I think the timing of this, and I hope you agree, is very apropos simply because again, these rates are changing very, very dramatically at all the times. Luckily, the trend has been down, but we all know things can change at any moment's notice. And our listeners need to be prepared as to what to do when that time comes, that they go, you know what, it's time to lock things in and how this whole process works. - Absolutely, John, and we've talked about it. It's all about Windows now, right? Windows of opportunity, and to your point, I mean, what I tell you at 10 a.m., I could have two price changes for the worst by 1 p.m., you know, and that's the way that this market moves. I just remember when I first got into this back in the 80s, you know, we were waiting for the little facts thing to come across that shows when the market faced out. I mean, it was snail paste, right? It was a sloth paste market. You know, you didn't move rates were, you know, kind of what you got today. You know, you did get a little bit of change, but now it's just, I mean, what we would gain or lose in a week or so, now it can happen in hours. So it's really good, it's really good advice to be prepared and ready when that window, or what you believe is that that market rate you wanted, yeah, to go ahead and take care of it. And that there are provisions that go outside of that, you know, if you make the wrong play call, which we'll go through, you know? - Yeah, I'd rather be safe than sorry, right? I'd rather be safe than sorry. I'd rather know what my upside, my worst cases, right? - Yeah, let me ask you this real quick before we get to the stock market and then back to you. Let me ask you this, Dwight. Out of, let's say a hundred loans that you do, how many of those get locked in prior to the close of the deal? - Well, they all have to do. - How many people request loan loans? - Yeah, so they've got to be, so typically, John, you try, the best marketing strategy is try to lock your loan 30 days or less. But what you don't want to do is give up higher rates because you're waiting for a 30-day lock, right? When you do it, you've got 45 or a 60. But most of the time, people will lock between the 30 and 15-day period of closing the loan, 'cause we've got to get the lock disclosures out, things like that. But I've actually had people in Korea, and I've had clients that actually delay the closing when the market is moving, and this goes over back over the years, 'cause they're seeing the market improve, so they're going, and so, some of these savvy people, but now, today, as you know, what we used to know, 10, 15, 20 years ago is completely different, so it's an interesting dynamic. I mean, it moves, yeah, if you've been in this a long time, you know back then, it never moved in, now you've got to stay on top of it. It's on my phone, it's on my, you know, it's on everything I have, so. - Absolutely, absolutely. - But yeah, it's definitely a very, very fluid market every day, every day. - Exactly, so folks, what you're going to learn from Dwight and Corey tonight on this loan lock situation is really how this whole thing works. Dwight, it will take you behind the scenes as to, you know, when you call him up and say, "Dwight, I want you to lock in my loan," what he has to do, we'll talk about if there's any expense involved with it. Again, the time period that it takes to lock in a loan, wins the best time to do it, and some of the parameters that you need to be looking at to make that decision, 'cause it is a major decision, it's something that you're going to live with, you know, in many cases for years once you lock in that rate, so a very important decision. Corey, how much does it come into discussion with you as a real estate broker, the loan locking parameters? - It really doesn't come up too much. I mean, to Dwight's point, I'm going to move so fast now that I get a good idea, so let's say you and I are out, we're going to make an offer. Well, I already know kind of what your rate is at that point because I can see the prequel letter and whatnot. So if we get that deal, and let's say it's 30 or 45 days, I watch the market just like the two of you do, so if I see a good day, and the market rates are down or whatnot, I may send delighted text. They're also my buyer and they call it the line. That might be a good day to lock, but I always leave it up to the buyer and the lender to decide. - Sure, sure. - You can't tell me that the majority of real estate professionals go that extra step to do that, Corey. In other words, notify the buyer and the lender that it may be time to consider a lock-in. That's got to be just beat, yeah. - There's going to be a lot of text that go out the day after the September meeting to help people to lock his rates just like this. - Gee. Maybe a little bit late at that point. - Could be a tad late at that point, but that will be a lot to go out. - Absolutely. All right, well, I can't wait to get to this topic, guys, but let me get down to the stock market side of things today. Again, another wild ride. This market is focused on one thing and one thing only. It's not so much the September 18th medium of the Fed. Even though, again, the probability has increased slightly this week of a half a percent cut instead of the quarter percent, Jason. I went into details of that last night. But what the market is focused on, guys, it's all about labor now, right? Everyone is highly anticipating tomorrow's non-farm payroll numbers. Now, let me set the table just a little bit. So today, as we always do the day before the non-farm payroll numbers, we get the private sector job numbers from ADP. So ADP released these numbers at 515 this morning. The street was looking for about 140,000 jobs to have been created again. This is the private sector tomorrow's everything, basically. All the other different sectors are public, et cetera. So expectation, again, was 140,000 today. Number came in way below that, 99,000, that was it. Now, when this happened, the market began to reverse in the pre-market session as investors began to digest what this really means. And so the theory going into tomorrow is, all right, if we have a lower than expected jobs number, what is that gonna do as far as the Fed's decision? Well, you would think common sense says, well, okay, a lower jobs number means that inflation is coming down. So, you know, again, the Fed should probably stick to the quarter percent rate cut that everybody's anticipating. If their numbers hotter, right, then just the opposite. The Fed may lean more towards a half a percent cut. And as Jason and I discussed last night, I'll tell you, I don't want a half a percent cut just because I don't think the stock market is gonna react positively to that. They're gonna look at it as, oh, there's something lurking in the future and they're gonna panic on it. So I'm leaning that I want the quarter percent cut. Now, back to the non-farm payroll numbers. So what is our expectation? So if I take you back to July's number, this number was a major surprise also, big miss there. 114,000 jobs, that was all that was created, again, back in July. Now, depending again upon whose guesstimate that you're looking for as far as tomorrow's number, I would say the average consensus is about 161,000 jobs. I've seen some as low as 150,000, but I think the street average is about 161,000. Now, what's interesting, if you go back into history just a little bit, and I'm just talking to the last few months, I pulled this data guys before the show, and I was quite surprised to look at this trend of what we're seeing on the non-farm payroll number. So follow me here. I went back to March, okay? We had 310,000 jobs created in non-farm. April, that dropped all the way down. I know you guys remember, to only 108,000. May, a little bit of an uptick, 216,000. June, way down to 179, and then July down to 114. So if we kind of draw a line in the sand from May, again, 216 down to 179 in June down to 114, the trend is going down. And so, it's gonna be very fascinating to see Wall Street's reaction tomorrow, depending upon this number. Again, expectation 160,000. What the reaction is gonna be, both in your world, Dwight, as far as the bond market, and then of course, my world, as far as the stock market is concerned. I almost think that it's gonna be somewhat of a damned if you do damned if you don't type a scenario. Again, back to the case I just made. If the number is too hot, then people can panic on that. If the number is too low, they're gonna be calling for slowing economy, recession, looming, so on and so forth. And that's exactly what happened today. We had the initial claims numbers check in, and they barely budged, but they were down 5,000 for the first time following to the state unemployment benefit, brought the number to 227,000. Continuing claims down only 22,000 to 1,838. But I'm telling you guys, because this number was not positive, everybody was talking about, oh my gosh, a recession is looming, right? These job numbers are not looking good. We had the challenger gray data that was released also, yes, this morning, which showed that layoffs, increasing just a bit, nothing dramatic, but they're increasing. So a lot of data, of course, is coming our way, showing that the labor market is suffering a bit, and that of course, as Corey has always alluded to, so absolutely correctly, you know, without a job, you're not gonna go buy a house, you're not gonna go buy anything in the economy, that of course will have a negative impact to corporate earnings, and you know, the cards begin to fall apart at that point. So tomorrow's number, again, be released at 5.15, or excuse me, 5.30 tomorrow. I will have those at 5.53 with Ross Mitchell, as we go through the numbers on my stock update. So very, very important report. All right, when we come back, I'll tell you what the market did today, and Dwight will take it over as far as the mortgage rates, then we'll get into our topic, how to lock in a mortgage rate. Kristen Snow, how are you this fine afternoon? Welcome back to the John Sanchez Show, on his stock 780KOH with Corey Edge of Edulility, Dwight Millard of Guild Mortgage. All right, we finished down to 19 on the Dow, but boy, let me tell you, I won't bore you the details, it was a wild ride, just to get to that point. Ups and downs, as far as the wild ride. A half a percent loss, 40,756 was our closing level. The NASDAQ eked out a small gain of 43 points, or a quarter percent, closing at 17,127, S&P down 17 points, or 0.30%. Over to the commodity side, it was kind of boring in oil pits, OPEC plus members agreeing to curtail any future increases for the next couple months. So oil finished unchanged on the day at $69.14, feels good at the pump, doesn't it? Gold prices were pretty strong, $17.10 rise, $2,543.10 an ounce, and a 10, or excuse me, a four basis point decline on the tenure treasury, with yield close at $3.73. Ms. Millard, how do we do in the 30 year mortgage world? Yeah, this ought to make everybody happy. Lowest rates in a year and a half, John. So today, the 30 year fixed rate, according to the mortgage used daily, 6.35 down three basis points. But again, to your point and topic last week, 15 years at 5.85, and the 30 year FHA 5.72. So I mean, the rates are starting to cooperate with those that have been sitting on the sidelines for a while. So, to your point, I think we're gonna get a movement tomorrow, so, you know, do I lock? Do I not lock, right? I mean, you know, if you're gonna get movement one way or the other. You want to do the topic tonight. Yeah, exactly. All right, Corey, give us the report card. What are you hearing seeing being an active top notch broker in this town, as far as these rates coming down? Pick up an activity kind of flattish, because kids are back in school. What's going on right now? Yeah, I think it's still, it's a little flat. I'm still seeing a lot of open houses and same price reductions, different things. I think there's always some, this time of year there's some investigation going on on the solar side to see what the market price is, because even if you're getting traffic and stuff and people aren't writing offers, that could be for a number of things. It could be time of year, it could be school to your point, it could be that people are waiting for these rates. They're anticipating lower rates, so buyers are super smart these days. If they think they can grab a quarter point by sitting out for a couple of weeks, then maybe that's what they do. But I still, it's not to the point where it's anything other than seasonality, at least in my mind. I don't see any drastic changes out there that would lead to anything other than just your normal. I mean, I went to Home Depot the other day and they already have all the Halloween stuff out, so people are pretty old. I saw that too, yep, I went over the weekend, yep, I saw the same thing, yep. I'm sure Costco priority has Christmas stuff, haven't been in there. Corey, I got a question for you. Now, we were talking about seasonality and so on and so forth. I don't have the data in front of me, so I'm gonna kinda just cuff it here just a little bit. But most of the data that I'm seeing, pending home sales, new home sales, et cetera, on a nationwide basis seem to be drifting down. Again, I saw the data the other day, I didn't log it into my mind, but overall nationwide things seem to be slowing on, again, the real estate market. Are you concerned at all with all the years you've been doing this? Are you concerned at all that we find ourselves in this declining interest rate environment? Like Dwight said, lowest rate we've seen in a year and a half on the third of your mortgage. And we're not seeing all these people, as we've said many times, coming off the fence, coming out of the woodworks, coming out of their caves to go, you know what, I can finally lock in or I can finally get rid of, I'm okay, getting rid of my 3% to move over. Or to your point, do you think they're just sitting and waiting right now? Are you concerned, surprised at all with that? - It doesn't really concern me yet, you know, you don't. Everything looks normal until it's not, right? So this could be the start of something major that we don't see, I don't think that's what's happening, but you don't know it 'til you're in it. I think there's a ton of buyer fatigue out there, John. I mean, it's been a long year already, you know we're only nine months into it. It feels like the buyers have been out there battling battling and even with, on the buyer side, specifically, even if you're out there and the rates have come down and everybody loves it, come down a point, come down two points, whatever. The prices haven't really started to come down yet. So they may be waiting for a little bit of savings there. And as far as the current owners with the 3% mortgages, like we talked about, it may take a little bit more. Maybe you got to be inside that six or five and eight for that to be enticing. - And I think that's where it is. I think if we break six, which do I, I think you agree that it wouldn't take a lot. I mean, especially if we get an aggressive fed cutting cycle as many anticipate for the rest of this year, that we could break 6% on the 30 year. And then that's going to make it real attractive for those with the 3% to go, okay, I'm sub six right now. Yeah, let's sell this house and go buy that shiny new one. - Well, and not only that, John, I think you're going to start to see some refinance activities. So that's only going to-- - I just rip up some, you've been ahead of that. - Drop up some, you know, prop up some businesses and things like that. So it's in my humble opinion. It's a win, win, win for everybody. But, you know, to Corey's point, we'll have to see which way the direction the housing prices go, so-- - Sure. - But I'll take the lower rates right now. That's my world, so I'll take them. - Yeah, that's true. - That's going in the right direction. - You had a question for me, Dwight? - Yeah, so, you know, we talk about these job numbers. And I've been, I've been really, really, you know, troubled over the 818,000 correction on the jobs number. - Few. - That, yeah, you know, that came out. Yeah, one, it feels like to me that wipes out all the jobs created that they kept saying they had. I guess I'm trying to figure out, was it political? How do you miss that big? I mean, I can see 818,000, 818,000. John, that appears to me, I don't know, is it shenanigans, it bothers me because we keep focusing on the job report, but if they can adjust it by 818,000 and nobody even plays an eye, what the heck? - Well, you know, if I had the answer to that question, Dwight, I'd be kicking it on a beach, just sipping an ice cold corona right now and not sending hair working. So, I don't have the answer, nor does anybody, how the government does this, but for those of you not familiar with Dwight's talking about, remember it was a month ago, a few weeks ago, somewhere around there? With the BLS, the Bureau of Labor Statistics, the government organization that issues the non-farm payroll numbers that we'll receive tomorrow, they came out with their annual preliminary revision. So, remember, preliminary is the keyword here, right? And this is where they adjusted on an annual basis, fewer jobs, 818,000 to Dwight's point, and that was from the time period of April of 2023 to March of this year. So, 1818,000 fewer jobs, which equates to about 68,000 fewer jobs per month than what they originally told us. Now, to your point, why didn't Wall Street react negatively? They did a little bit, it was a real initial shock, but everybody came back, glasses half full on this report in many traders' minds, and they went preliminary, right? Now, this number's gonna be revised to Dwight one more time. Let's see, I think it's gonna be February of next year. They'll revise this quote for the final time. So, we'll see if this 818 holds, or if maybe there's gonna be more or less, it's anybody's guess at this point, no one really knows, but how did they miss it so much? Yeah, that's the million dollar question that no one seems to be able to answer, and I don't hear the government coming out and saying, "Okay, guys, here's how we miss this by 818,000." They're not saying a word. So, I don't know the answer to it, I wish I did. Like I said, I wouldn't be sitting here as much as I love you guys. I wouldn't be sitting here right now doing this. I would be somewhere else relaxing. But, and it's gonna be interesting to see if this has any type of impact on tomorrow's numbers, 'cause if I remember, we got this number after we received the July non-farm payroll numbers. So, yeah, will this have any major impact on tomorrow's numbers? Again, that's why this number's so important tomorrow. We will find out and see the result. Yeah, well, I just, it bothers me because it's, you know, when you put so much emphasis on the number tomorrow, then we should have go back and put, you know, now you could say, "Hey, maybe we are in that recession, maybe we are," you know. But, but we've been talking on the show for a long time. We're not seeing all the job growth, you know, you go, you know, I mean, if you're in the street, the trenches, you're not seeing it. And so, I mean, to the point, it proved us right, but it just, it just feels like to me, it was just like, "Oh, him, ha, 818. "If I made that mistake, I'd be in prison." (laughing) You know? Right? (laughing) But, I don't, you know, so, yeah. Well, again, that's why I brought up the point that, you know, the trend on the non-form payroll, just going back to the last three months, is trending down, ADP's trending down. All the data's showing that it's trending down, other than the initial claims, you know, that I cover each and every Thursday. That's what's got everybody kind of confused. Why that number is not budging. I mean, we've been stuck at this, you know, 220, 230,000 filings for the state unemployment benefit for months now, and it's just not budging, which again, has economists scratching their heads. So, great question Dwight, but again, we will see you at the number show tomorrow. Let's turn it over to Greg Nef. He's got news traffic on weather. - Okay, great. Welcome back to the John Sanchez Show on Newstalk 780K, with Dwight Mallard of Guild Mortgage and Quayage of Edge Realty. Once again, we had a 219 decline on the Dow, NASDAQ up 43, S&P lost 17. Real quick guys, before we get to our topic tonight, how to lock in a mortgage rate. I do want to mention I failed to do this earlier when I was telling you about the street projections for tomorrow's non-farm payroll number again, 161,000, which would be an uptick from the previous report of 114,000. They are expecting the unemployment rate to drop 1/10 of a percent from 4.3 down to 4.2. Street doesn't really pay attention to that number per se, they're looking at the actual jobs number, they don't care so much about the unemployment rate. So, failed to mention that, so I apologize. All right, let's get into the rate lock scenario. Now, those of you that have owned a home, bought home, sold homes, et cetera, you probably were told by your mortgage professional, "Hey, do you want to lock in the loan?" You're like, "Yeah, sure, why not?" But not really understanding how the whole process works. So, for those of you that maybe have never been in the real estate market, let's kind of explain what a mortgage rate lock is, Dwight. It's really nothing more than an agreement between the borrower and the lender that guarantees, "I'm going to get this specific rate, "I'm going to lock in for a certain amount of time." Take it from there. - Yeah, so I mean, basically, John, it protects the borrower from any rate increases, but it also protects them from the rates going down. So, some of the best things you can do as a mortgage professional, and to Corey's point, he does as a real estate professional, is kind of coach and talk to the buyer, the borrower, you know, what are the things coming up? Like, non-farm payrolls, you know, let them be involved in the decision. The more that they are not included in the decision, the more frustrated they can become because they didn't get a chance to, "Hey, I do want to lock that rate." One of the things that I would tell people is that, "I'm going to give you the information. "This is my opinion. "This is, you know, how I would do it." But, you know, to lock your loan, I simply just need you to text me, call me, email me, you know, before, you know, I mean, before midnight, I guess, you know, that's why I can protect the rate. The beautiful thing with most companies, John, now, they realize that, "Hey, if you made the call to lock "and you did it in good faith, "hey, I want to lock the loan," and rates go down. And in this market, you have that possibility on a downward trend that all of a sudden, now, maybe the rates are a half a point better than when you locked. Most companies have a renegotiation policy, John, that they will, you know, they will provide to the loan officer, to, you know, to the production field. So make sure-- - Does that call the float down option? - Well, yeah, so that's a, there's an actual provision where lenders will charge you to have an automatic float down. I like that less because it costs you upfront. I like the renegotiation. Just hold firm on that because the reality, John, is if the rates went down and you're not gonna work with me, I can just go down the street and reapply and give them all the stuff that I just get and people understand that. So, you know, I don't say that because, you know, I don't say, "Hey, lock and shop and move," but give the lending company the ability to help you because what's gonna happen, John, if rates go up, so this is the answer some people would say. If rates go up, I'm gonna say, "Hey, John, rates went up, would you pay a higher rate?" No, so why would I, you know, why then when they go down? So, you know, it's a really tough situation, but one of the things you gotta remember, you gotta be proactive. So there needs to be an application going. Now, it could be a two-by-determine property address 'cause so a lot of companies now have the ability to lock a two-by-determine address. You know, we didn't have that provision years ago, but now they allow you to lock a two-by-determine, so it's a lock and shop program. So you can lock under a TBD in most cases. So, but in order to lock, I've gotta have a live, active, you know, file going so that I can lock it. And again, I'm kind of jumping around, but time- - Yeah, let me get you back on track. 'Cause you're jumping way ahead of some of the questions I wanna ask you. Let me curtail you for just a second here. I think it's important that the audience understands Dwight, this doesn't magically appear. Dwight doesn't have the power to go to the money sources and say, hey, you know what, John's a great guy. Give him, you know, rates are currently 635. Lock him in, right? There's a lot more behind the scenes. Can you give us very quickly what goes on behind the scenes when I tell you, as a borrower, to lock my rate in? - Well, so typically, if we're not in the middle of a re-pricing, right? For better or worse, if we're not, so they'll lock down in the middle. - Things are calling in other words. - Yeah, if they're calling, then simply my execution or my inside of our system to lock, that should be enough right there to let secondary know, to let everybody in marketing know that that particular loan has been locked. And-- - But will they go out like-- - Both systems. - Will they, sorry to interrupt you, will they go out like a new developer, right? One of the publicly traded new developers where we've talked a lot about rate buy downs and things. And you've said they go out and they buy a block of money. Is it the same thing with this, the lender will go out through their wholesale lines or whatever and buy, you know, say I'm buying a house for a half a million, go out and buy a block of money, you know, half a person, or at that rate, or how does that work? - Yeah, no, well, typically they're not gonna go out. I mean, they will hedge some, but that what you're talking about with a builder, that is specific, they are going to pay to commit to that. Now, behind the scenes, yeah, I'm sure we're hedging the mark, I'm sure we're buying and trading different things, especially if rates go down, you're gonna make sure you can deliver to that. But, and so we get published rates every day for multiple investors and we get to actually choose, you know, hey, we're gonna go with Penny Mac or, you know, whatever that investor is. And when we exercise that lock, that is under that program specific and it's locked. And that, now, if you get into, like you said, where you buy a block of money, that typically is done through the builders and they'll do that. And then you'll close inside of that forward or that commitment they bought. And that's a whole 'nother game, that's where they've gone out and they've actually secured the money and they bought it down. And you're starting to see a lot of that, John. And to be honest with you, I talked to a company the other day, they had their biggest forward commitment purchases last month, believe it or not, in declining market rates, right? I mean, that one-- - What does that mean for purchases? - Well, where you go buy a block of money. - Okay. - So they had a bunch of builders, they had more builders buy blocks of money than they have seen in, ever seen. And I'm going, that's confusing because you're in a downward and a trend of interest rates. So you're buying something. So, you know, but now they're getting to advertise on buy downs, separate permanent buy downs, because they've advertised 3.99 rates, you know? So it's a marketing tool and it works. - Okay, perfect. - Yeah. - Well, unfortunately, I've got about six questions that I'm gonna ask you and we've only got through one and we've got one more segment to go. So we're gonna hustle guys, we get to the next one. Corey, hang tight, I promise I'm gonna bring you into the conversation. - Sure. - So let's wrap it up with Kristen Snow in the Right Now Traffic Center. Welcome back to the John Sanchez show on News Talk 780K. Oh, it's Mr. Corey is of Edge Realty, your phone number, sir. - 673-6700. - Beautiful. - Mr. Mallard. - 240-2022. - Excellent. All right, we're talking about, once again, how to lock in a mortgage rate. So we got a fly here, guys. All right, we talked about again, what is a mortgage rate locked? Just an agreement between you and the borrower, or again, you're locking in your rate. Now, when you lock in the rate, remember, this is, Dwight, the first point is, of course, you gotta get pre-approved, and like you said, you need an address to do that, or something similar, correct? - Yeah, you need an application. Yeah, you have to have an application. You can still do it off with TBD if you need a term, yes. - To be determined, okay, very good. Now, Corey, any points you wanna add on the rate lock side of things? - Not so much on the rate lock mechanism that he's talking about, but how long? I think it's important, Mike. - And if I'm something for us, do I need to find 30 days or six months? - There you go. Thank you, Corey, you're on the same page. Dwight, that's my second question. The duration of the rate lock. How long can we do this for? - Yeah, so they're kind of back now, John. You can go up to a full year. That's in many cases to be built home, but typically you're talking an extended lock, which comes with a fee, a small fee, anything over 60 days. So six days in, you know, those are usually without any type of a fee upfront, you start getting 90, 120 and things like that. They're gonna be a little fee paid upfront that will be credited back at closing. But yeah, remember, I think we talked a few months back. They pretty much did away with the room and the rates are going crazy with one year locks. Now you can, they're back a little bit. So yeah, there's, yeah. - All right. - And those usually come with a float down feature that you were talking about. So generally those long term locks will have a float down feature probably 30 days before you close. - Right. If you miss that folks, the float down option is again, if you lock in, let's say at 6% and rates drop, then the lender will then allow you to, and they say they go to five and a half to then, you know, assuming everything being equal, be able to get the five and a half percent mortgage. That's the float down side of things. - Correct. - Okay. Now, nothing's for free to write, my third point. What's the cost of a rate lock these days? - Well, so it's 60 days in and it's, it doesn't cost anything with most companies. You get 90, 120, 180. You're going to see somewhere between a quarter to a half a point upfront, but it's credited back to the what, so whatever you pay is credited back to you at close. - Okay. So let's say I've got to pay a half a point. Let's just say, let's say it's 5,000 bucks. - A hundred and eighty six month lock? - Yeah. - So that means I have to write you, you mean the lender, a check for that rate lock longer than the 60 days or so? - Correct, correct. So whatever that fee is, then it can range, it can range from a quarter to a half. And it could be a little even more on a year lock, but yeah, you'll, you'll write that check for that lock, but it's credited back to you. And you still have the float down feature. So, they're just running. - Good, I'm sorry. - I was going to say that typically what they're going to do is they're going to go out and already exercise that lock and, and buy that money. So that's why they're passing it on to you. And then if you go somewhere else, then they're not stuck with that cost. - Should borrowers, should this be one of the preliminary questions they ask of a lender is, what's it going to cost me for a rate lock? - Yeah, they should have been asking it when rates are low, right? I mean, I mean, I want to lock my 4% way out. Yeah, would have could have showed up, but right now it's not as important, John, because of the, you know, what we talked about that there is this underlying current that rates are kind of on the downside a little bit. So it's not as important, but it is, to some people it is. So if you're, if you feel good locking out six months, 'cause you just not comfortable, it's there for you. - Absolutely. All right, my fourth and fifth question is the rate lock extension we touched on that. And then the float down option, we've discussed that. So I'm going to wrap it up with the six point. And then I want to, Corey, I want to talk to you a little bit about the buyer's representation agreement. I want to kind of get an update of what's going on with this new way. Of course, the buyers have to hire real estate professionals and pay the cost. But lastly, Dwight, on the impact of the market fluctuations. And I'm going to throw this to a question actually to both of you. Let me start with you, Corey. Is this, do you have the same mindset like you always tell the listeners and your clients, hey, if you like it, lock it in. Don't lose sleep over it. Don't try to play day trader and, you know, wait for that absolute perfect rate, 'cause you think rates are going to go lower. In other words, trying to time the market, which no one can do. Is that the same type of advice you give borrowers, Corey, when they're talking about, when do I do a rate lock? Absolutely, especially with the float-down feature that Dwight has explained through the whole show, because you're protected there. And that's another way, John, for you to sit on a beach with a Corona's figure out how to sell stocks with a free float-down feature, so people can get on for the cheaper if it goes down. Good point. And you corner the market, but that's a pretty good point. All right, very good. Guys, Dwight and I were chatting off air before the show, and he was telling me that it's starting to become a little bit of a challenge with this topic we discussed, and everybody's aware of it now. The buyer representation agreement, this is where, again, the old days of your seller splitting the commission with the buyer's agent, and of course, your agent is the seller. Corey, real quick, what's kind of the report card? What's going on with this? We're now a few weeks into this real quick. Well, we should do a full show on the next week, but it's confusing. It's confusing on the buyer side, because they're not really understanding what they're supposed to do. It's confusing on the agent side, because it's just a new way of doing things, and people need to be aware of how you can get through it. And the pros and cons are really, there's a lot of traps in there, if you don't aware. Dwight, what are you hearing as far as, I know you're not the real estate broker, like Corey is, but you're seeing and hearing some situations also that you want to explain next Tuesday? Yeah, oh yeah, John, it's putting first time home buyers and a lot of confusion, a lot of state of uncertainty because of the fee that is upfront that they're potentially have to pay. Yeah, and people walking away from loans because they can't afford to pay that commission. So all right, guys, I think that's a great idea. Let's do that on Tuesday. We'll get an update from both of you of what's going on with the new buyer's representation agreement/situation. Excellent job, boys. We'll do it again tomorrow night. Nonform payroll members don't miss it on the John Sanchez show. God bless our good evening. This program was sponsored by Sanchez Wealth Management. The material in this program was intended as general information only and should not be taking a specific investment tax or legal advice. None of the information on this broadcast was intended to be a solicitation for the purchase or sale of any security. Further information is available by contacting John at santheswealthmanagement.com or 775-801-01. John Sanchez offers securities and advisory services through Independent Financial Group LLC, a registered broker dealer and investment advisor. Member FINRA SIPC, securities only offered in states John Sanchez is registered in. Sanchez Wealth Management LLC and Independent Financial Group LLC are unaffiliated entities. Dwight Millard is not associated with Sanchez Wealth Management LLC or Independent Financial Group LLC. Dwight Millard, co-host, NMLS number 241259. Guild Mortgage Company Equal Housing Opportunity, NMLS number 3274, Dwight Millard, NMLS number 241259. And free mortgage company number 11441. Branch address 5370 Kitzley Lane Suite 101 and 103 Reno, Nevada 89511. Phone number 9723812410. The information provided today is for educational purposes only. The position strategies or opinions of the show do not necessarily represent the position strategies or opinions of Guild Mortgage Company or its affiliates. All information loan programs, interest rates, terms and conditions are subject to change without notice. Guild Mortgage offers home loan financing only. Guild Mortgage Company is not affiliated with the John Sanchez Show. Any speakers, companies or institutions featured. This is a paid advertisement. - When you need meal time inspiration, it's worth shopping king supers for thousands of appetizing ingredients that inspire countless mouth-watering meals. 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