With mortgage rates at levels not seen since 2001, many hopeful home buyers are wondering what their options are. In this episode, Paul speaks with Mortgage Loan Originator Karly Rosalez of The Money Store. With over 15 years of mortgage experience (working with buyers, sellers and builders) Karly explains the intricate details of finding the best mortgage to fit your personal situation. She breaks down several scenarios with examples so viewers never get overwhelmed.

The best way to get in touch with Karly is to call or text her at (805) 302-8224 or email krosalez@themoneystore.com. Karly Rosalez is licensed in California but can connect you with out-of-state resources. Read Karly’s full bio at https://karlyrosalez.themoneystore.com/

Have ideas for future episodes? We’d love to answer your questions – leave a comment! For any home buying or home selling needs in the Ventura County area of California, please reach out to Paul@HomeAndRanchTeam.com or visit www.HomeAndRanchTeam.com

Check out premium content and watch Paul discuss how to recognize and fix outdated fixtures onYouTube.

Got five minutes? Please rate, review, and subscribe wherever you get your favorite podcasts! It’s quick, it’s easy, and it goes a long way in helping listeners discover the Farm Talk with Paul Ward Farm Talk.

A special THANK YOU to our sponsors! Farm Talk with Paul Ward would not be possible without the support of our sponsors, May Alcala from Escrow Hub and Karly Rosalez from The Money Store. Supporting our sponsors ensures Farm Talk can provide listeners with the best possible episodes.

Show Transcript

Paul Ward (00:13):

Hi everyone, it’s Paul Ward here and welcome to 15 minutes with a realtor. I am your host, Paul Ward. I have a very special guest today, Karly Rosalez with The Money Store. Karly, welcome to our show.

Karly Rosalez (00:28):

Hi. Thank you for having me.

Paul Ward (00:30):

Absolutely. So the big talk, of course, are the rising interest rates and that they’ve gone up several times in the last few months. I just heard this morning that they are the highest they have been since 1998. So you can imagine everyone that the demand for housing is still out there, but the number of folks that are applying for home loans has dropped dramatically. So I wanted to have Karly on today to talk about options. You know, what are your options when rates continue to go up and even talk still about another rate rise. So there’s gotta be some creative solutions for folks that still wanna buy a home in the near future. So glad to have you on Karly as an expert to help our folks out for a few minutes.

Karly Rosalez (01:28):

Yeah, thank you. Thank you again for having me. And yes, absolutely, you are correct in regards to all the stats and the increased interest rate, the projected interest rates increasing as well. A couple of ideas and what we’ve done to help our buyers is a couple options. First, an attractive program that we have introduced to our buyers is called the “2-1 Buydown.”

Paul Ward (01:54):

Okay?

Karly Rosalez (01:54):

The “2-1 Buydown” is a great program that helps the buyers with the initial payment shock or the quote -unquote “Higher interest rates.” It can be used on any program that is non-jumbo; conventional loans, high balance and all the government programs. How that works is a buyer can get an interest rate temporarily 2% below today’s current base interest rate. So let’s use an example, a $700,000 purchase price, 10% down, $630K loan amount. Today’s base rate at 7% a buyer get an interest rate of 5% for the first year.

Paul Ward (02:38):

Okay.

Karly Rosalez (02:39):

In our example, that’s an $809 monthly savings for the first year. Then year two they will get an interest rate 1% below today’s base rate. And in our example that is 6% with the monthly savings of $414 on a monthly basis.

Paul Ward (03:01):

So that’s year two?

Karly Rosalez (03:02):

That’s year two, yes. So how this works is with a seller or builder participation ultimately would come in a form of a credit on average. Again, depending on loan size, it can be anywhere from 1.5% to possibly 2% of the purchase price to help pay and subsidize these monthly payments, right? So it really depends because each program allows a seller credit anywhere from 3% to 6% depending on the loan program used.

Paul Ward (03:37):

Okay.

Karly Rosalez (03:38):

So what the seller credit and/or builder credit pays for is hat difference in monthly payment. That also helps the seller at the same time incentivize the buyers to purchase possibly their home versus the home down the street, right? .

Paul Ward (03:56):

I’s getting harder to sell. I mean, homes ,of course during Covid, were flying off the shelf with multiple offers and offers above asking, and now it’s almost completely the opposite where. You can’t even give the home away So what kind of incentive is an incentive for a seller to create for buyers to consider their home.

Karly Rosalez (04:18):

Yes. Because you, as a seller, instead keep doing a price reduction over price reduction. If you’re able to incentivize a buyer with a lower monthly payment to purchase your home with the difference of maybe a $15,000 seller credit, that’s gonna go a long ways with that seller in comparison to the price reduction. Right. And everybody’s happy. Right? So it’s just another option. Another option that we have talked to buyers about a lot is if you are getting a seller credit from the home or the seller, instead of using it for this “Two-One Buy Down,” you can use it towards a permanent buydown.

Paul Ward (05:00):

Okay. How is that? How would that work?

Karly Rosalez (05:02):

So again, let’s say back to our example of $700,000 purchase price, 10% down $630k loan amount. If you were at a base rate of 7% at zero points and you got let’s say $15,000 to work towards buying down a rate, let’s say two points, you can get an interest rate, on average, again, depending on the day of 6.25, Right? So that payment difference is $312 a month in our example. But again, that is over the life of the loan. It’s not a break just for the first two years. It’s really for a permanent interest rate reduction for the next 30 years.

Paul Ward (05:42):

So on a 30 year fixed,

Karly Rosalez (05:44):

It’s all on a 30 year fixed. Yes. Therefore it really depends in my opinion on the plan for this home, for the mortgage, what is the buyer looking for? Right? So everyone’s situation’s a little bit different, but that’s when I sit down with them and talk to them about their plans short term and long term so then we can fit them in the right program and utilize the funds the best way.

Paul Ward (06:12):

Gotcha. Now on the “2-1 Buydown”, at the end of the second year, the rate does go up to the current rate, correct?

Karly Rosalez (06:24):

Yes.

Paul Ward (06:25):

What’s that? So what’s the thinking on that? Why, I mean, I know you’re saving money, good money, for a couple years, but then all of a sudden you’re jumping up dramatically. What’s kind of the theory behind this?

Karly Rosalez (06:37):

Well, it’s again, a “2-1 Buydown” or “Temporary Buydown,” is what it’s also called. Because it’s temporarily giving you that break for the first two years. But the good thing is on year three and for the rest of the term of the loan, it will still be at that base 7% rate based on the example and fixed Right. It’s not an adjustable rate, it’s not a fixed arm. It’s, you know, what you’re gonna be getting on a monthly basis. Sometimes it’s best to utilize this if, for instance, somebody has this scenario: A car payment. Car payment are not 30 years, maybe five, six or seven years. They know that that car payment is going to be gone maybe in a couple of years. So that difference in the monthly can then help them with their monthly output in those two years. Or someone’s going to work towards a certain job position or they see that they’re getting an increase in pay maybe one or two years out, therefore they know their financial circumstance might be better in a year or two, right? Again, sitting down with the client and really seeing what their plan is, what their future looks like to kind of see what works best for them.

Paul Ward (07:54):

Gotcha. Well, you know, it’s such a new environment, where we have to think so creatively out of the box because, you know, when the government wants to slow things down, they certainly know how to do it. And they’ve done a very good job at that. (But) that has not slowed the demand for housing at all. I know we’re trying to get inflation, under control. That”s what this is all about. That doesn’t stop the need for everybody to have a roof over the house to live in. And the American dream is still alive and well. Everybody wants to be a homeowner or most people do. So just some creative ideas and how would people get a hold of you? I know for folks that are watching, they can see your information on the screen, but for folks that are listening out there, how best to reach you?

Karly Rosalez (08:45):

Best way to reach me is my cell phone. My cell phone is available via phone or text anytime at (805) 302-8224.

Paul Ward (08:57):

And you cover all of California, right?

Karly Rosalez (09:00):

Yep, correct. Licensed in all California. And we do obviously have those that might be looking to go outta state or purchase a second home out of state. I do have an in-house interstate lending team that I work with that can help as well.

Paul Ward (09:13):

Because The Money Store is pretty broad reaching.

Karly Rosalez (09:17):

Yes, Nationwide. You got it.

Paul Ward (09:19):

Well, Karly, I thank you so much for joining this 15 minutes with a realtor and we greatly appreciate it and I’m sure we’ll be talking to you again soon.

Karly Rosalez (09:27):

Thank you.