Sami Etienne: Welcome back to Talking Cents. I'm Sami.

Cierra Ziliak: And I'm Cierra.

Sami Etienne: And today we have Courtney Brock. She is our Mortgage Sales Manager here at Heritage. And we're going to talk about mortgages and the home buying market and the ups and downs of it, and what's the inside scoop like, what's going on? So, I do want Courtney to explain a little bit like about her role here at Heritage. What do you do?

Courtney Brock: Hello. Thank you for having me. I am the Mortgage Sales Manager, as Sami said. I lead our mortgage loan originator team. So all things in the home buying process start with those originators and figuring out to what we can do to get you qualified.

Cierra Ziliak: Wonderful. So I'm actually in the process of buying a new home and selling a home right now. So as we know the housing market, it changes so frequently, and there's a lot of steps involved and you forget so easily because I'm coming back to this and I'm like, wow, a lot going on here. Lots of papers to sign. Can you share with our listeners some of those steps that people can expect when they're going into buying a home?

Courtney Brock: Yeah, so the biggest one and probably, the most important to get done upfront is really to meet with a mortgage loan officer and understand what your budget is. So understand what you're looking for in terms of the price of a home and what that looks like, at the bottom line. So what is your monthly payment going to be? Is it sustainable for the lifestyle in which you live? From there then it's the fun part. Meeting with a realtor, understanding your wants and needs, finding homes in the area, as to what you're looking to, whether that is your current area, moving to a different part of the community.

Moving communities altogether, whatever that may be. And they'll really guide you through that process. The realtors are there to work for you and work alongside you, guide you through that process and find you available homes on the market, within those parameters.

Sami Etienne: So having a good realtor is very important. I remember buying my first home, having a connection with a realtor and they pointed me in the direction of my mortgage loan officer, which was interesting. I kind of did mine backwards. So I think just having those connections in the community is important. And I know that like our mortgage loan officers or originators, which is what you said, they're really good about having connections in the community and having connections with realtors.

So can you explain what the role of a mortgage loan officer, what do they play in the home buying process?

Courtney Brock: So they are going to be your lending side. So when it comes down to the numbers in terms of how much you're pre-qualified for, your payments, getting the mortgage done, which also involves, through that process, getting the appraisal ordered on the home that you're looking to purchase or refinance, the title work, so the deed to the home and making sure that it's free and clear of any existing liens or anything of that nature from either previous owners or sellers currently. And then just getting that closed.

So it's officially yours whenever you hand over the monies, the monies portion of the transaction.

Cierra Ziliak: Is there any benefit to having your mortgage loan officer be local?

Courtney Brock: There's a ton of benefit. Obviously they know, partners in the industry, so, mortgage loan officers and realtors, title companies, appraisers, they all work hand in hand because we all have the same interest at heart.

We want to make sure that you, as our member and the buyer are getting into the home in which you want. So getting the deal closed at the end of the day is what everybody's wanting, right? So there's a huge benefit to that because they can point you into referrals, getting an inspection done, the appraisal is ordered through a third party company, so there's not really a whole lot of partnership in that. But if you need work done to your home, maybe there's something small that needs to be fixed, they can give you some local contractors that would be able to help you and assist you. So it's really all about referrals. It's all about partnership.

Sami Etienne: That's good to know.

Cierra Ziliak: That is good to know. Because I feel like a hot topic, a buzz right now is going online, and I'm not going to name the names of these, like online mortgage lenders, but you hear their names a lot. Yes. Like these online mortgage places.

But that's what they're missing is the referrals and the connections and meeting people and having the connections for like what you said, if you needed work done to your house and things like that. They're missing out on that. Right.

Courtney Brock: And it is more than just a number. So that's the big thing with keeping local. You can get a mortgage online, you can get it through brokers, all of those places. And it's all about the fee. So we as a credit union are very small in our fees. And so there's a benefit to working local and working with a credit union in particular, because we're a non-for-profit, so we don't have all these drastic fees.

And then on this backend of that, once your mortgage is closed, we service all of our mortgages. So you'll always make your payment with Heritage, any of our branch locations, on your mobile app, all of the services that we offer. Whereas some of the other ones, we will continuously make your payment to somebody different because it's just continuing to change hands.

Cierra Ziliak: Yeah. That's happened before, previously with me no longer have my mortgage there, but it was like it would get sold. Yes. And then I was like, oh, I don't know where to make my mortgage payment now. So it's good that we don't have that issue here.

Courtney Brock: Yeah, for sure.

Sami Etienne: Can we talk about mortgage rates? What are some of the factors that go into mortgage rates?

Courtney Brock: So, mortgage rates are very dynamic. They change on the daily, on the hourly. It is all based on the market, right? So the stock market is continuously changing throughout the day, and that's what mortgages are backed off of. So they're sold on that secondary market. So it just depends on how that paper is being traded.

As rates change and are very fluid, so do mortgage rates. Individually, what goes into the rate in which one person will receive or be offered and there's going to be options, in terms of term, 30 years, 20 years, 10 years, 15 years. Adjustable rate mortgages are becoming a little bit more popular.

They were really frowned upon in the early two thousands just because of the way they were done, but that's coming back around. So there's a ton of different options when you come to lending. And those rates are really dependent on a couple of key things. So it is the purchase of the property, the purchase price, and the monies that you're putting down. That equates to a term we call loan to value.

And then you have your credit score, so the credit score of the borrowers, and it is usually the median score of the two borrowers. So the lowest to median credit score when you pull all three credit bureaus. And then you get into some other secondary classifications. The type of property could make an impact.

So if you're buying a condo, that's a little bit more of a risk. If you're buying a manufactured home. If that carries a little bit more risk, and so your rate is adjusted for those things.

Cierra Ziliak: Okay. So it's just a variable of a lot of different things. Yes. Yes. And is it possible to lock in your rate? So if you're in the process of buying a home, but you haven't quite got there yet, is it possible for a buyer to try and like lock the rate in?

Courtney Brock: Yes, you can lock in the mortgage interest rate once you have a purchase contract executed. So you've got the property, you've signed on the initial dotted line, and you're going through that process, so that mortgage rate can be locked. We lock our mortgage rates for 45 days. So from the time that we begin origination and you have that purchase contract, that rate is good for 45 days.

And so it is yours. It will not change, unless something on the mortgage and on the loan changes. So you decide to bring more money to the table or the property value doesn't come in, as expected, that can change things slightly. You can also float your mortgage rate through the process. So if you're one who follows the market and is a little bit more strategic or is a gambler maybe, you can, choose to float that rate.

And all that means is it's just going to stay fluid through your process. It does have to be locked right before final approval. So usually anywhere between a week or so out from your expected closing.

Sami Etienne: That's interesting. And I did not know you could do that, and I know why you just asked that question because you're going through that process.

 And you ended up locking your right, didn't you?

Cierra Ziliak: Yeah. Yeah. Okay. So it's it's locked in. Yeah.

Sami Etienne: Yeah. Yeah. Courtney, you mentioned something that I want you to elaborate on. What is an adjustable rate mortgage?

Courtney Brock: So an adjustable rate mortgage is, there are usually two numbers. So, the first number is the number of years that it is fixed for, and then the second number is the months in which it will adjust. So the current popular one, and I say popular very lightly, is what's called a seven-six adjustable rate mortgage. So it is locked for the first seven years. The interest rate in which you lock during the origination will not change for those seven years. After that, on the seventh year, that anniversary date, the date of the note, it will start to adjust every six months.

So that adjustment is based on where rates are in the market at that point in time, and it can adjust up or down 2% given on where it's at. So there's some more parameters to that, but that's the very basics.

Sami Etienne: So just 2% is all, it can go from your first.

Courtney Brock: Your initial rate, uhhuh, it'll adjust up or down. So if rates are lower than what you have currently, you know what you initially originated at, in that seven years, it can go down or it could go up and it's only going to go up no more than 2%. So if the market hasn't moved, but say a 10th, it's only going to go up a 10th, but that will then be your new rate for the next six months and it will readjust in the next six months. So adjustable rate mortgages are great for those who are buying properties and they know or they don't plan to stay in that home longer than that fixed rate term.

Sami Etienne: Interesting. I know we have those on our website, but I wasn't exactly sure what they meant, so thank you for clarifying. Kind of as another part to that question, so I know you said that they're getting more popular, so are they doing that now because of they think the rates are gonna go down in seven years?

Courtney Brock: Correct. Yeah. So, rates are historically a little higher than what they have been on average. And so the adjustable rate mortgage is a little bit more advantageous in terms of the number is a little lower. So you might save a percent, a percent and a half just depending on where it's at at the given day.

But they're really for those savvy consumers who keep with the market and they know. And if you're willing to do that, save yourself a little money on the front end, and then obviously you can refinance at any point in time during that term. So, whether you keep the home, sell the home, whatever the case may be, you can refinance that mortgage and get yourself into a better situation.

Sami Etienne: That was going to be my next question, if you could refinance it before. Yes. Okay. So there's, there's not really a risk. I mean, I guess there is a risk because you're not locking in that rate for 30 years, the length of the loan.

Courtney Brock: Right.

Sami Etienne: Okay.

Cierra Ziliak: Something I want to talk about is social media. You see, you scroll on TikTok and one message is, it's a great time to buy a house, and then you scroll a few more videos and the next one's like, don't buy a house. Do you have any tips or tricks for young people who are on social media and seeing this? What message should they be listening to or should they just block it all out entirely?

Courtney Brock: That is really hard because, um, the mixed messaging of social media is totally relevant. I tell most people, it's about you and it's your season of life. So what is going to be right timing for me in my season of life now might not be right for you, but you're going through the buying process and selling process, and obviously growing a family.

So there is a need there, right? But in all things, it's all about where are you and investing in real estate is never a bad choice as long as it makes financial sense for you. So if you can afford it, run the numbers, you can sustain the property. There's a lot of maintenance that comes with home ownership. Then it could be a great time for you. And so it's just about getting something that fits and fits where the person is right then.

Cierra Ziliak: That's great advice. So it's, don't listen so much to here's where rates are, or here's what we think you should do, and just focus on your personal goals in your life.

Courtney Brock: Correct. Yes.

Sami Etienne: What information should a first time home buyer know before they're going to buy a house?

Courtney Brock: Oh, goodness. The biggest thing, and I will always push it, is your budget. So, you've got to make sure that you have stable income monthly. So whether that's a job or something of that nature where it is consistent, it's stable, and it's been consistent for two years.

So we look for a two year history in most things. And then, if you have money to put into it, maybe you're getting a gift from someone, a family member, can you still sustain that mortgage, the utilities, all the things that come with home ownership after that. And then really it's just a matter of finding something that fits what you need.

So, the properties are always different. Location makes a big difference. So, it's just really making sure that you're having educated conversations and knowing that questions are how you're going to learn. So ask away.

Sami Etienne: I love that. Like don't be afraid to ask, especially your mortgage loan officer. Because they're going to be happy to answer anything that you throw with them. So I feel like as a first time home buyer, when you're going through that process, things that are going to come up is like your credit score, right? Yes. Like maybe you've never bought a home before. Maybe you've just financed one vehicle. Um does Heritage do anything to help them and set them up for success?

Courtney Brock: Yeah, so our initial conversation with most buyers, especially first time buyers, is always an education based conversation. So, really understanding, getting the member to understand where are they on all aspects. So where is their credit? How, if they need to, how do they build additional credit? How do they save? So really, we don't get into a full budget conversation unless that's absolutely necessary or needed, that borrower wants that education, but really trying to help them create a budget so that they're not overextending themselves. And having to change like their lifestyle completely. Like it's a big thing if you are used to getting a coffee every day and now you're buying a house and you can't get a coffee every day. We still want you to be able to live. And then really just finding partners and people that you trust and will guide you through the process.

Sami Etienne: Right. You don't want someone who's just going to like, they just want to sell you a house.

Courtney Brock: Exactly.

Sami Etienne: Like they want to make sure that that house is right for you. You can afford it. And it's going to last.

Courtney Brock: Yes. Yes.

Sami Etienne: Also first time home buyers. We have a first time home buyer program, right?

Courtney Brock: We do.

Sami Etienne: Do you want to explain that real quick?

Courtney Brock: Yeah. So, there's a couple of different perks, to the first time home buyer and it really is dependent on, kind of the budget or your income. So we have a program that is what we call our a hundred percent mortgage. It is, the a hundred percent of the purchase price, you don't have to bring but 2% to the table in terms of closing. And a lot of times, you know, depending on where that purchase price is, that's covered in some of the fees that you will already have in terms of the appraisal or closing cost. And so it's really a great program for members to have the ability to get into a small home, an affordable home, and get them started.

There are some other programs as little as three and a half percent down we can go. FHA, there's a number of different things, so I always caution people just because you don't have large lump sums of money to put towards a purchase doesn't mean that you're not going to qualify for something.

Cierra Ziliak: That's good to know. Because I think that's a roadblock for some first time home buyers is that initial down payment seems so intimidating.

Courtney Brock: Yes.

Cierra Ziliak: And this is such a good resource for them.

Sami Etienne: Yeah, for sure. I remember when I bought my first home, I actually didn't get a first time home buyer's loan, but I got a rural development loan.

Courtney Brock: Yeah.

Sami Etienne: Which was, I don't know, maybe in my terms, similar. I didn't have to have any money down. My husband and I didn't, and we lived in that house for five plus years and when we sold it, we made enough money to have a down payment on our next home. It truly is like a set you up for success type of program. And we couldn't value without that.

Courtney Brock: That is the whole idea to get somebody into a starter home, a smaller home, something that's affordable. Let them get established and then investing in real estate's never a bad thing. Property values typically are not declining. They're increasing and so you're going to earn equity.

Cierra Ziliak: Which you can then use for your next down payment if you need to. Do you have any tips for someone, probably a first time home buyer who's trying to figure out how much they can afford monthly? Is there a certain percentage they can kind of keep in mind?

Courtney Brock: Yeah, so we, in terms of a budget and what we call debt to income, we really would like for somebody to be 40 to 45% of your gross monthly income. So the gross amount that you bring home, that's before all of your deductions, your healthcare, your taxes, all of that; round number, you're looking at anywhere between 40 to 45% is really where you should be in terms of a mortgage payment.

So we've got great calculators on our website. So if you just want to play with numbers and kind of see what you can afford, I always suggest go out and play with the calculator. It does make a lot more sense when you can, type it in and see where you would be.

Sami Etienne: Yeah. Visualize it.

Courtney Brock: Yes.

Sami Etienne: We've talked about some of these already, but can you just list off the different types of home loans that Heritage offers?

Courtney Brock: Yes. So, I might not get all of them, so I would always say, please go to our, to our website, take a look for yourself. But in terms of purchases, we do as little as 0% down and obviously your down payment can go anywhere up to, you know, that percentage. It is not a requirement. One of the big things that a lot of people believe is that you have to have 20% down in order to buy a house. That is not the case anymore. So there's many programs out there for less than 20% down.

So it's really funny what's right for you. So don't let that scare you away. We do have a refinance program. You can refinance just your rate and your terms, so no money out to you. We do a cash out option, a cash out refinance, so you're taking the equity out of your home to do what whatever you choose.

That's been very popular just from a debt consolidation purpose and getting expenses down, monthly expenses down, getting people more comfortable in just where they are in their budget. We also have a construction loan. So if you're looking to build a new home, we do offer a nine month construction loan. And there's some great benefits to that. We have a physician mortgage, that is for doctors and dentists. And so if, you're looking to buy or build, that could be a great product. We have a lot loan, so if you're looking to bill or buy land, you don't really want to build on it anytime soon, we will finance the land only. I mentioned our a hundred percent product. And then we do have a couple of government loans. So FHA, like I said, is a minimum of 3.5% down. USDA is that rural development that Sami was talking about. It's the USDA and that's based on property.

So not necessarily qualifications of the buyer, but depending on where the property is located and if it qualifies for that type of loan. And then if you are a veteran, we do have a VA loan that we offer to veterans active and retired.

Sami Etienne: Great. That's a lot of loan types, so I feel like we have whatever type of loan you need to cover, whatever type of situation you're in. And we have some really good mortgage loan officers here. We have five now?

Courtney Brock: Five in the local Evansville area. And then we do have a mortgage loan officer in our new Jeffersonville market.

Sami Etienne: So you can find any of them on our website. It's an easy click to contact them, text them if you're in the market. Hit us up. Courtney, is there anything else you want to add?

Courtney Brock: I don't think so. I think the big, the only other takeaway that I'll add, especially for first time home buyers is don't be afraid of getting your inspection. The more you know on the property that you are purchasing, the better. That does not mean that it's a bad thing or that there's things that are in fixable, but just really doing your due diligence on that property, before you get to the closing table, will set you up for success.

Cierra Ziliak: That's really great advice.

Sami Etienne: Really good.

Cierra Ziliak: Yeah.

Sami Etienne: You're going through that right now?

Cierra Ziliak: I am going through inspections right now, so yeah.

Sami Etienne: I don't envy you. But kind of a little bit like I want a new home.

Courtney Brock: It's yeah, the mortgage process, it can be scary. Yeah. Um, it's super exciting at the same time and it can be overwhelming, so do know that everybody is working for you. And at the end of the day, like I said, we all want you to get into the home in which you want. And the member, the buyer is wanting to get into. So, if you need to take a pause because you're becoming overwhelmed and you just need like a day to mentally take a break, by all means, communicate that so that we know that you're still in it. You just need a minute to get your mind in order.

Cierra Ziliak: It's stressful, but it's worth it.

Courtney Brock: Absolutely, yes.

Sami Etienne: Well I feel like we just scratched the surface because I feel like there's so many more terms, like deep within like what's PMI, all of these things. But, we'll wrap it up for now and maybe we'll do another episode later and talk about the real nitty gritty details of buying a home once Cierra is like through her home buying process and everything's like fresh on our mind.

Cierra Ziliak: Right. I'll report back.

Sami Etienne: She'll report back. Yeah. So thank you guys for listening and thank you so much for Courtney for being here. You're such a wealth of knowledge.

Courtney Brock: Thank you so much for having me.

Sami Etienne: Until next time.

Scott Webb (Announcer): This podcast is for general information purposes only. The views and opinions expressed in this podcast are those of the speakers and do not necessarily reflect the views or positions of Heritage Federal Credit Union. Heritage Federal Credit Union is federally insured by the National Credit Union Administration.

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