Rising Interest Rates and the Housing Market: What Physicians Like You Need to Know Before Buying a Home with Richard Ricci

Daniel: Rich, what's up dude? Richard Ricci: How are you? Daniel: I am doing well. We were just catching up before we started. It's been a while since I've seen you. It's actually been since, when was that? Right In the middle of Covid. I think we talked about, Richard Ricci: I mean, it was, it was March or April of 2020. Daniel Wrenne: Yeah. Right in the thick of it. Richard Ricci: Right in the thick of it. Daniel Wrenne: Yeah. When everybody was, I mean, it, that was kind of a scary time, Richard Ricci: right, right. Yeah. Right in the middle of quarantine and everything, so, Daniel: Yeah. Richard Ricci: A lot has changed. Daniel: Yes, it has. It has. Well, I'm excited. We're gonna, we're gonna dig into mortgages and home buying and the market and talk a lot about what's going on there. Rich is a rockstar in the world of mortgage mortgage loan lending and works with Truist, which was SunTrust truist Bank and primarily works with physician loans and. He knows all there is to know about physician loans and has lots of experience working in that area. So we're gonna dig into all that and I'm excited to kind of go through all that sort of stuff. And a lot of stuff we were just talking about too has changed since Covid and as you all know, like interest rates have gotten crazy and they just have shot up really quickly. And so that's a big factor. And then there's banks that have collapsed and it's just kind of a little bit of a weird market right now. So, we're gonna dig into all that stuff. If you're listening in the live show, let us know if you have questions throw those out there and we'll address those as we go. You know, any questions are welcome and we can dig into that. But maybe we can start out with the, just this current state of the market. It's Morgan. I think when we talked. The average mortgage rate was probably like three and a half percent or something for a 30 year, I'm guessing. Richard Ricci: I mean, it was lower because, Daniel: was it It was like three. Richard Ricci: Yeah, because I Daniel: I mean, Richard Ricci: it was, it was in the twos because we were doing investment property rates at three and a quarter, 3.5, Daniel: which is insanes, so like That's crazy. Primary residents Richard Ricci: were in the, in the twos when we talked last. Daniel: Yeah. That's crazy. That must have been like the Daniel W: the bottom, Daniel: bottom. Yes. Daniel W: And so Daniel: a lot's changed there. What's the average 30 year mortgage rate right now? Richard Ricci: So we're, it's, it's vacillates between the high sixes and mid sixes for a conventional rate. And that's pretty much started going up, you know, this year. And just to kind of back up to give you some, you know, Daniel: history of. Richard Ricci: Why we were so low before is once we, you know, in oh eight when we hit the great recession Daniel: we Richard Ricci: pumped a lot of stimulus into the market. And what controls interest rates are, is the bond market. So the Fed pumped money into the bond market, bought up a bunch of, mortgage back mor mortgage back securities. And that artificially pushed interest rates way down to stimulate Daniel: the Richard Ricci: economy. Daniel: So fast forward, Richard Ricci: We hit c o v, Daniel: o Richard Ricci: And things start to go the other way. We think we're about to hit another collapse, but we don't, because we go through another round of stimulus. And that pushes rates even more low, you know, even lower. So that's what got us into the twos. At that, you know, one point, and then last year is when the Fed started weaning off of that. So they stopped pumping money into the, into mortgage backed securities and started something called quantitative easing, which means they didn't just turn off the faucet they slowed down. And that gradual that gradual slowdown. Raised rates a little bit but nothing really crazy. Then we started hitting inflation time, Daniel: right? Richard Ricci: So a lot of people think that when the Fed raises interest rates, when the Fed raises the fund feds rate, which they've raised, you know, almost every meeting this year. They think that is directly correlated to mortgage rates, but it's not. The Fed funds rate is for home equity lines, it's for credit cards, it's for commercial loans. But at the same time, we have inflation going way up. And inflation is the enemy of interest rates. So the higher inflation goes, the higher our interest rates go. And that is what kind of pushed us. The combination of the fed's actions and the inflation. You kind of pushed us up to this part, you know, this high level and a really short period of time. So now we're like, you know, in the high sixties for conventional loans and each time the Fed looks at the inflation numbers, the way they, where they look at 'em is they look at it. What the inflation number was last year in a particular month. And they compare it to what it is this year in that particular month. And if inflation was super high during that month back then, and it's a little bit lower this month, our rates will get better, right? If it's vice versa, if it was lower and it's a little bit higher this year, then our interest rates get worse. But what the Fed hasn't been doing is looking at how the graph goes up and down. So last year in April, you know, it was low this year it was higher, so rates went way up and then they pumped more money into the, you know, they raised their funds rate. But in May, for instance, it was lower last year than it was in April of last year. So this year it's probably gonna be Daniel: I mean, it Richard Ricci: was high last year rather, so this year it's probably gonna be a little lower. And a lot of the experts are thinking that we might get a little bit of a break in May. Daniel: From the increases. Richard Ricci: Yeah. Daniel: What's the best Daniel W: metric or what's the best, is it the 10 year Daniel: treasury is the best Daniel W: to look at, to Daniel: kind of get a rough idea of what Daniel W: mortgage rate, Daniel: because they kind of, I know the Fed funds rate is not a good no Daniel W: direct indicator of mortgage rates, but is it the 10 year Daniel: treasury? Yeah, Richard Ricci: the 10 year treasury is there's a whole bunch of different, you know, you can look at at the actual notes the 30 year notes and the 15 year notes and all that. But the 10 year treasury is a good indicator. It's not exact, but as it goes up and down, it's pretty, Daniel: it's pretty good point. Richard Ricci: But the main thing that people are really worried about right now, of course, is buying power, right? And the media is Really negative about, about buying power. And there is a reason for it because at the same time, our rates are going up. So is appreciation. And the reason houses are appreciating so fast, or they did last year anyway, is because there is no inventory. So when there's no inventory, there's no competition and rates go way up. Not rates Daniel: price. Price. Yep. Supply demand. Richard Ricci: Yeah. So at the same time, we have increase in price and increase in rates. So the number you'll hear thrown around by the media is that every 1% that an interest rate goes up, that decreases your buying power by 10%. So if you're looking at, let's just say, you know, we're comparing 3% to 7%, you know, that's 40% that, that decreases your buying power. But what they're not including, Is the raise of wages, you know, inflation, you know, the people are making more money on average. Daniel: Some, Richard Ricci: Some, yeah. But I mean, if you look at the data, Daniel: like, Richard Ricci: every, like we are Daniel W: The large Daniel: numbers. Yeah, yeah. Wages are, Richard Ricci: are going up. Even on, you know, middle class, like there Daniel: is Richard Ricci: some increase in wages. Daniel: So Richard Ricci: that cancels out some of that. Like, just looking at my Daniel: data Richard Ricci: I'm, I think it's probably decreased by about 20% Daniel: binder. Just, Richard Ricci: just, yeah, just looking at what I was able to qualify for people and what I am Daniel: now. Richard Ricci: That, that's, kind of what Daniel: I'm Yeah. And real quick, Richard Ricci: I gotta make a real quick disclaimer that I forgot to do in the beginning. Daniel: goodness. Richard Ricci: I work for Tru Daniel: Tru. But these Richard Ricci: thoughts and ideas are my own. They're not, you know, truist is not, Daniel: This is not advice. Richard Ricci: Yes, exactly. Daniel: This is for educational purposes only. Right. Daniel W: Consult Daniel: your advisors and everybody for advice. Yeah. Con Richard Ricci: consult. Daniel Daniel W: consult. Daniel: Yes. If you work with us, yeah. You don't then don't start working with us Daniel W: or Daniel: find your other advisor. Daniel W: Yes. And Daniel: we'll circle back to some scenarios too. Because really it depends on your situation. And the numbers can skew even more in certain situations. So, Daniel W: But yeah, so mortgage rates have gone way up on pretty much everything from like, whether it's a 30 year Daniel: an arm Daniel W: or 15 year, pretty Daniel: much all the products, the rates Daniel W: have gone up a lot. There's Daniel: not like a way around that. Daniel W: And the problem Daniel: with it is Daniel W: it's like prices have not gone down. Daniel: Like theoretically, they potentially should because Daniel W: like Daniel: you were saying Daniel W: with the Daniel: buying power, Daniel W: in Daniel: theory, if buying power goes down, prices should theoretically Daniel W: go Daniel: down on houses, Daniel W: but they haven't because the inventory's so Daniel: so low. So that's kind of a weird situation. Daniel W: It's like you're paying the same Daniel: price Daniel W: as before, Daniel: but paying a way higher interest rate. Right. That just crunches you even more. Daniel W: So it's kind of a Daniel: weird market. Is there any changes around like Daniel W: the arm versus 30 Daniel: year versus 15 year Daniel W: and then Daniel: the physician mortgage loan Daniel W: space? Like what's changed over the, I Daniel: know when we talked last, Daniel W: you had to put money down on some of these, like the banks got a little squirrely during Covid and we're Daniel: like, ah, we're not doing 0% anymore. Right, right, Richard Ricci: right, right. So right now that's gone. We're back to a hundred percent financing. And this varies from Daniel: bank Richard Ricci: to bank. Just a little bit of color. Conventional loans are Fannie Mae and Freddie Mac loans. So the guidelines, the interest rates, et cetera, come from Fannie Mae, Freddie Mac. The VA it comes from the va. F h a comes from the Federal Housing Administration. Daniel: But Richard Ricci: these doctor Daniel: loans are Richard Ricci: what we call and the industry portfolio loans. Daniel: So we Richard Ricci: hold the money on our portfolio. It's our money Daniel: and the bank. The bank, Richard Ricci: yes. So we service it, but we also hold the money on a conventional loan. The money goes to Fannie Mae. In the end, even, even though it's serviced, you know, by the bank. So because of that, there is more wiggle room and guidelines and in price. So the cool thing right now, historically, doctor Daniel: loans, Richard Ricci: at a Daniel: a hundred percent financing Richard Ricci: used to have a slightly higher interest rate than a conventional loan, right? But when you put 'em side by side, you're doing a a 5% down conventional loan. You're doing a hundred percent doctor loan. You have Daniel: pay pmi. Richard Ricci: With a conventional loan, you don't with a doctor loan. So even if the rate was a little Daniel: little bit higher, Richard Ricci: it still made sense to do. But now since interest rates have gone up, the doctor loans have stayed lower. So my rates for doctor are about a percent lower than conventional loans. So I'm like in the Daniel: the low Richard Ricci: sixes or high Daniel: fives. So it's like put less down, lower interest rate. Yeah. Because people, Richard Ricci: ask me all the time, they're like, well, what's the downside? And I'm like, there isn't one now. You know? There used Daniel: to be, used to be, Richard Ricci: yeah. There used to be like I could point to that, but now there's nothing like there, there's Daniel: no Richard Ricci: downside. If you can do a hundred percent loan at a percent lower interest tell me Daniel: where Richard Ricci: is, you know, but we'll do like a hundred percent financing up to a Daniel: million Richard Ricci: and then 5% down to 1.5 and then 10% down to 2 million. And then the other cool thing about the DR loan is you can close prior to your start date, so you can close up to 90 days prior to the contracted start date and still go off of the income for the future doc. Daniel: So normally you have to Daniel W: provide Daniel: like pay stubs or Yeah. Proof of income essentially. Daniel W: And with a typical loan, or conventional Daniel: loan Richard Ricci: typical loan, you're, they're gonna want, you're like, there are some variations Daniel: this, Richard Ricci: a typical loan you Daniel: usually have to provide Richard Ricci: your first pay stub, so you gotta start your Daniel W: Yeah. Any other big changes that I didn't Daniel: realize that about the rates being Daniel W: have Daniel: swung the other direction? Yeah, I Richard Ricci: mean, that, that is the Daniel: biggest one. And Richard Ricci: I have that conversation with clients every single day Daniel: because Richard Ricci: they call me and they're like, what? Like I was just got a quote for a conventional loan. It was 7% I'm like, yep, now. Daniel W: our arms Daniel: low. Are arms about the same rate as 15. Arms are pro, Richard Ricci: you know, they're lower than fixed rates. The spread isn't as much as it Daniel: was in the app. Yeah. Richard Ricci: Just because they don't wanna but an arm right now really isn't a terrible decision. Because most people are probably gonna refinance pretty soon anyway. experts are predicting that rate. Probably this is for conventional loans go down to like fives by the end Daniel: of the year at some point. Yeah. So if that happens Richard Ricci: then, you know, there might be Daniel: a lot of people Richard Ricci: that refinance. Daniel: Yeah. arms are fixed for just for those that, that aren't Daniel W: clear, like Daniel: for a certain period of time, and then they become variable interest rates. So yeah, a lot of times the interest rate's a little lower than fixed straight options. Right, right. But, Daniel W: Then, Daniel: you know, then they adjust trade off is, it goes variable. Daniel W: So if rates go higher, I mean, at Daniel: end of the day, we don't know for sure what rates, interest rates are gonna do in the future. Right. Richard Ricci: We have no idea. Daniel W: We like Daniel: Dak like we do and make predictions. Yeah. I mean, I'm watching the mar, Richard Ricci: I'm watching the market all day every day and I, you know, listen to updates all the time and I still like, nobody knows. You know, like, and everybody's been predicting that there'll be a, you know, a housing, like for the past four years it's been like we're at a bubble. We're about Daniel: to Recession's coming. Yeah. Recession's Richard Ricci: coming. Recession actually might be here right Daniel: now. I mean, it could be happening, but like Yes. Could not be too, I mean, it's for Rob, you know. Richard Ricci: Yeah. But as far as the housing bubble is concerned, the way inventory is, which is, you know, the issue you brought up. That, you know, the keeps the values from going down. That's also the thing that's gonna prevent housing Because there's no chance that we, you know, we decline when we have this inventory issue. Daniel: Cause those Richard Ricci: numbers are gonna keep, they're, and they've shown that they've slowed down, you know, appreciation has, but it is, you know, still increasing. There's no bubble or drastic drop like everybody's been Daniel: predicting. Yeah. Daniel W: Can Daniel: you have two mortgages? Can you buy, can you have two physician loans through Truist? Richard Ricci: Not through Truist. So through Daniel: the Richard Ricci: Truist guideline is you can have one at a time, okay? there is an exception where if you have over 20%, like let's say you bought one when Daniel: you're a resident, it's gone up Richard Ricci: and then it's gone up a bunch. If you have 20% equity, then you can get a second one. As an exception, as long as you can qualify and afford both of them. But Daniel: like Richard Ricci: crossover between banks, there's no no rule that says you can't have more than one. And there's also no rule that says Daniel: can't have multiple over Richard Ricci: your, Daniel: you know, Richard Ricci: your lifetime. Like a lot of people think that you can only get one and that's not Daniel: true. You're right. Right, right. Yeah. Daniel W: I, I Daniel: work with a lot of people and we got many over the years. Daniel W: So we got a Daniel: question from anonymous attendee Daniel W: and it's funny Daniel: that we Daniel W: just we're Daniel: talking about, this is Daniel W: right Daniel: we were talking about predicting future rates. They would like to, if we could give our best estimate hand wave about Daniel W: chances Daniel: will get back to the old days Daniel W: 10 plus Daniel: percent interest rates. I don't think Richard Ricci: think so. Daniel: Impossible. Daniel W: Not Richard Ricci: No, Daniel: Never. Impossible. Because it's happened before. Yeah. Yeah. Daniel W: Well, so in case, so this person obviously knows about the old days. A Daniel: lot of people don't even know about the old days. Correct? Yeah, yeah. Like Richard Ricci: a lot of the people that call me, Daniel: their Richard Ricci: only knowledge about interest rates is. since oh eight, where it's been, you know, four, three, 2%. Right. So everyone's like 6%. That's awful. I'm Like, the majority of my career was, Daniel: you know, Richard Ricci: like in the, was at six something percent. You know, like, it's not like Daniel: probably when you started it was Daniel W: six to Daniel: 7%, right? Like yeah, Richard Ricci: for sure. Yeah. So, I mean, it's not like right now we are not in an abnormal, you know, time. It's just we have to figure out that it's the new normal. Daniel W: I wonder what Daniel: would have to happen for it to get into the Daniel W: 10% range. I Daniel: think if inflation, if the inflation numbers keep staying steady Daniel W: at the rate, or Daniel: maybe even going a little higher, For whatever reason, and the Fed keeps raising their rates Daniel W: that Daniel: drive rates higher. Yeah. To the 10%. That's the scenario, I think short term, yeah. Richard Ricci: we, if inflation doesn't get inflation is the thing, like Daniel: the inflation Richard Ricci: is the key to all of it. So if what the Fed has been doing curbs inflation, it's not gonna Daniel: go to Richard Ricci: 10%. And also if we hit another recession, then rates are, they're gonna have to pump money on the, the Daniel W: it'll go Daniel: go down, way Richard Ricci: and we'll have Daniel: have lower rates. Richard Ricci: I don't think it's likely, but who knows, Daniel: you know, like, yeah. Those are the two outcomes I think is like, they overcorrection they would, you know, Daniel W: The Daniel: government intervention is driving a lot of this. So it's like either they overcorrect in terms of Daniel W: raising the rate too Daniel: high, too fast, Daniel W: which puts Daniel: us in a rece session, which probably ends up in really low interest rates in the next few years. On the other hand, if they. The opposite happens. Like they don't act, they don't realize how bad inflation really is, and it's not changing it or Daniel W: continuing and then they have to keep Daniel: phrasing it. And then that's the scenario where the 10% plus rates happen. Yes. And I mean, I think those are both possibilities. I think they're like Daniel W: low on both Daniel: ends potentially. think we're much closer Richard Ricci: to the Fed pushing us into a recession. Daniel: I would agree. Daniel W: But Daniel: it's hard to say. I've made Daniel W: so Daniel: many predictions that have been wrong over there. Daniel W: so, Daniel: I'm not a great fortune teller, so Daniel W: anyway what about all Daniel: the bank collapses and all that scary stuff going on with like, Daniel W: I mean, should Daniel: I be concerned about, especially if I'm buying a house and, you know, I'm saving up money for a down payment or I have, Daniel W: or Daniel: even just like which Daniel W: bank I choose, Daniel: like how important is it to have to be cons considering bank financial position when I'm doing all this stuff? Richard Ricci: I don't like, I think a lot of that was Daniel: because of the Richard Ricci: specific banks. So just to kind of, do you want me to give you some color on like what led to the Silicone Valley Bank Daniel W: Yeah, I mean, Daniel: I mean, I think that would be interesting. So, so Richard Ricci: basically the way that banks work is when you deposit money with a Daniel: bank, Richard Ricci: They're not just gonna let the money sit Daniel: there. Richard Ricci: You know, they need to make money. So they take your money and they invest it Daniel: Your cash. Richard Ricci: Yes. Yes. So any money that you know, you have held at the bank, they're investing and they typically don't invest it in risky stuff. You know, they're putting it in bonds or mortgage backed security, you know, bonds. And those are, you know, pretty safe investments. So Silicon Valley Bank is was, I don't know. I think they're Daniel: still going. Richard Ricci: Is they, they were a bank that specialized in like venture capitalists and startups and tech and like all this stuff. And during covid, like the, That just blew up like that sector. And they became the cool go-to bank for all that. So their deposits tripled? Like almost overnight, like in 2020. So what they did was they took, you know, they Daniel: all this money Richard Ricci: and Daniel: they Richard Ricci: put it into bonds, which were paying like 1.5% at Daniel: time. Oh. Richard Ricci: And at the time that was good because If Daniel: you Richard Ricci: remember on a savings account, Daniel: get like nothing Richard Ricci: point 0.1% Daniel: something on the best one. Yeah. Richard Ricci: So, fast forward I also should mention that they didn't have a risk officer for a long period Daniel: time. Also, also one of their executives was Daniel W: a prior executive at Lehman Daniel: Brothers, I think. Yeah. Yeah. So this, they had a few. Warnings. Richard Ricci: Yeah, there's some big time warnings, but essentially they started getting into the position when when the Fed raised the rates the interest rates on these bonds started going up, right? So they have these 1.5% bonds, and then all of a sudden bonds are trading elsewhere for three, 3%, 3.6%. Daniel: So Richard Ricci: if they try, so when they, they ran into some trouble and they needed some money, nobody wants to buy a 1.5% bond. So the bank is usually counting on, okay, we'll put it in this, this bond, and if we have pro problems, we'll sell 'em, right? But nobody wanted to sell it, so they wound up, and some, you know, going through some liquidity issues. So they, they sold like a ton of these bonds at Daniel: a Richard Ricci: big haircut, big loss. And then at the same time, there were some influencers, you know, that got a got a, got wind of this Daniel: information Oh my gosh. Richard Ricci: and kind of tweeted it out there. And then that started what they call a bank run. So Daniel: everyone, the old, Richard Ricci: I gotta get my money out right now, if that bank run didn't happen, they would've probably been fine. Like even if they lost money on the bond sales, they would've been fine. But they got to the point where they didn't have enough money, pay back all the Daniel: who were, then they had to make more sales and more losses. Yes. And then they hit a point. Richard Ricci: And then they hit a point Daniel: and then Richard Ricci: the Fed had to come in and essentially this time it wasn't taxpayers dollars that billed 'em out. it was other so a bunch of the bigger banks, you know, loaned them money to kind of pull 'em out of the weeds. But them, you know, the Daniel: Signature Bank and Richard Ricci: Silver Gate, I think one of them was in crypto. You know, like it they're different situations than the Daniel: normal bank. Richard Ricci: I'm not saying that this couldn't Daniel: happen Richard Ricci: to another bank because in this connected world we're in this, like, the fact that a bank run could happen over a seven day period and just put a bank out of business is kind of scary. Daniel W: Well, social media Daniel: pretty powerful. Yes. Richard Ricci: Very powerful. Daniel: But it spreads. Richard Ricci: But the, your regular, you know, bank and these, you know, larger banks out there, I'm not, you know, I'm not worried about it. It's Daniel: kind Richard Ricci: of like Daniel: one off. Yeah. Okay. Well so let's get into the home purchasing decision. So, Daniel W: I'd Daniel: love to talk a little bit about like the buy versus Daniel W: rent Daniel: situation. Yeah. Daniel W: And Daniel: we can talk about the, how much you can afford scenario as well. Cuz that's, Daniel W: both Daniel: of these I think Daniel W: have changed quite a bit Daniel: over time. Yeah. Daniel W: So buy versus Daniel: rent Daniel W: I think that renting kind of gets a bad Daniel: rap Daniel W: and it's Daniel: underappreciated Daniel W: and Daniel: I think Daniel W: in certain circumstances maybe Daniel: we could paint the picture of like a scenario where we would both Daniel W: agree that it's Daniel: like a, I mean like the Daniel W: classic rent scenario is like, you have no idea what Daniel: future looks like. Daniel W: Lots Daniel: of uncertainty. New area, Daniel W: like finances Daniel: are Daniel W: you're unsure about things Richard Ricci: yeah. Daniel W: You don't know what, Daniel: maybe you're new into Daniel W: practice in a new area of the Daniel: country and you don't ha you're, especially if Daniel W: maybe you're single and you don't have any family Daniel: there. Right, right. Daniel W: And you've never Daniel: lived in the city before and Daniel W: And you Daniel: don't have money for a down Daniel W: payment. So there's all Daniel: this like, risk potential if Daniel W: you were to Daniel: buy and cuz with, so renting is nice in the way that Daniel W: it is very, very flexible. Like low commitment. Low maintenance. Like, Daniel: you don't have to Daniel W: even, I mean, if you have a good deal, you Daniel: don't even have to like, fix things. Like Right. You don't, I mean maybe you have to plunge a toilet, Daniel W: but Daniel: like, you don't have to, you don't have to like fix the broken stuff. And those were the Richard Ricci: the days, man, Daniel W: I mean Daniel: there's Daniel W: a lot Daniel: a lot of appeal to renting. Richard Ricci: so, listen, I'm like, in my job, I'm supposed to say that renting is evil. Daniel: You know, Richard Ricci: renting is the worst thing you could do Daniel: ever Richard Ricci: your Daniel: your life. Richard Ricci: But, you know, I, I mean, obviously I think that there is Daniel: huge benefit, Richard Ricci: like if you compare the two, there's a huge benefit to owning. But depending upon the situation, like you said, if you aren't ready to buy, Daniel: don't, Richard Ricci: you know, like Daniel: when doubt Yeah. Richard Ricci: It's not something that you should do just because you think you should, you know? Daniel: If you're, Richard Ricci: if you're not entrenched in a city and, or you're young and you don't you, all the things you said, you know, those are all legitimate reasons to l rent, and I think young people should rent. You know, before they buy because There's a Daniel: a growing up to do. Richard Ricci: It's a, it's the same thing with everything. You gotta. You can't just throw yourself into owning a house. There's a lot to deal with. Daniel W: Right, right. Daniel: We had a question i, Daniel W: I overlooked here. Backtrack into Daniel: the primary residence and conventional loan and physician loan and that Daniel W: sort of Daniel: thing. And Daniel W: the Daniel: question is, Daniel W: Can I still get a physician loan for a new primary residence while keeping the current property and loan as Daniel: a rental property? Yes. Richard Ricci: So if the loan is with truist, our rule would be you have to have at least 20% equity on that property to get another one through us. Okay. If it's with somebody else or Daniel: with us Richard Ricci: during that under those circumstances, Daniel: you just Richard Ricci: need to be able to qualify for both. And a lot of people think that. Just the fact that they're planning on renting it Daniel: it out. Richard Ricci: be able to Daniel: count rental Richard Ricci: income to offset that mortgage. And that's not the case. If I'm gonna count rental income, you need to have a history of having rentals and, you know, show it on your tax returns and So as long as you qualify, like for instance, if you're a resident and you bought a house for 200 grand and you're about to start your attending job and you wanna level up, buy a $500,000 house and you wanna keep that one as a rental and you're making, you know, good money and your debt, to income ratio is low, no problem. Yeah, you can definitely, Daniel: Can, you Daniel W: you buy a rental Daniel: property with a physician loan? No. There might be a bank, there Richard Ricci: a bank out there that does them. I, I, Daniel: I dunno what happens when you buy a primary residence Daniel W: as under a Daniel: physician loan? And then it magically becomes a rental property within a month or two. Richard Ricci: That's fraud, Daniel: bro. That's fraud. Yeah, Richard Ricci: that's fraud. Like if they get Daniel: caught, I mean like if you're telling the Daniel W: truth and it's your Daniel: primary residence, Daniel W: that's kind Daniel: of what I'm like, if you've lived there a year and then it becomes a rental house, Richard Ricci: that's fine. Like things change. Like if you, if you bought the house, Daniel: you legitimately Richard Ricci: moved in and then a year later you got relocated or got a job in a different city and needed to, you know, move. Like Daniel: that's Richard Ricci: okay. like life happens. You can't force somebody to live in a house, but if they're lying then that's a completely Daniel: Yeah. So tell the Daniel W: the truth always. For Daniel: sure. Yeah, that's important Richard Ricci: for sure. Daniel: Isn't there something in the contracts that Daniel W: that says Daniel: like, Daniel W: it needs to Daniel: your primary resonance indefinitely. I don't know. Richard Ricci: I don't know. how the Daniel: don't know. All the mortgage reads. I Richard Ricci: mean, the main thing that, that they require on primary residences is you're supposed to move in within 60 days. Daniel: Okay. Richard Ricci: So, so that, that is to give you time to do renovations or whatever, but Daniel: they don't want Richard Ricci: you like, moving in next year, Daniel: you know? Yeah. Daniel W: So Daniel: renting Daniel W: has its benefits, but I Daniel: am Daniel W: like, all Daniel: that being said about renting, I think, Daniel W: you know, the lean for most Daniel: people listening is that Daniel W: eventually Daniel: you should buy and, you know, once you're, it's kinda like when you're getting settled. Once you're settled is the time to buy and Yeah. Because long periods of time, Daniel W: it's just a lot lower cost and it's your home and you get to own Daniel: it, and you get to make it your own and, You can Daniel W: start to build some Daniel: wealth in it. And Daniel W: I mean, like longer term Daniel: for sure, Daniel W: buying is the Daniel: ideal Daniel W: way to Daniel: go. Daniel W: You just Daniel: have to be, I've seen some sticky situations happen with. Daniel W: buying a little too soon. Daniel: Yeah. Daniel W: Typically as with a physician income, Daniel: you can Daniel W: meander, Daniel: manage through those sticky situations. Daniel W: But Daniel: I think a better question maybe is, so like, let's say you've Daniel W: kind of gotten to that point of like, it's time to buy or maybe you're upgrading to an a nicer Daniel: home. Daniel W: I'd Daniel: it if we Daniel W: kinda explore like, what's the Daniel: the right amount to be budgeting for on a house. Maybe we could start with like, the bank's cap. Yeah. Yeah. Oh, and Richard Ricci: real quick, I'll just go back to the rent versus own thing. So right now, a Daniel: people Richard Ricci: are saying, Hey, I'm gonna rent Daniel: until, Richard Ricci: I, you know, rates go down or, or prices go Daniel: down. The Richard Ricci: bad part about that is rent is also going up, right? So if you are continually, Daniel: paying higher Richard Ricci: and higher amounts of rent even if you could have, you know, even if the interest rates and stuff are higher right now, if you were to buy something right now, you can always refinance, right? Like, the average person only keeps a mortgage for five years. So, so there's a great chance that you're gonna refinance outta that higher rate and be in a much better situation than if you would've rented for a certain amount of time. Daniel W: I think with renting to like there's some other caveats Daniel: that are important. Got it. Some other important things about the rent Daniel W: decision. I have seen some really strange situations lately, the Daniel: past few years, where the rent rates are Daniel W: strangely low for the Daniel: price of the house. Daniel W: I think Daniel: it's especially common in like these high Daniel W: inflation or Daniel: where property values have appreciated really fast. Daniel W: I Daniel: think the rent rates have just not kept pace quite as fast and like Daniel W: tradi or Daniel: historically, like rent rates take longer to inflate than real estate prices, but you're starting to see rent rates go up now. Daniel W: And then Daniel: the other weird thing with renting is like some of these areas like that have a really high property tax rates. Daniel W: like Illinois, I think Daniel: the worst as far as property tax rates that I've ever seen. Maybe Daniel W: Texas has some bad areas, new Jersey's a Daniel: bad Daniel W: state for property Daniel: property tax rates that can like skew the equation a little bit. Like making, buying less appealing? Daniel W: Potentially Now in theory, like they're Daniel: gonna just. Daniel W: Pass Daniel: that cost right on through when you rent. Right. But it's worth looking at all that stuff too. Absolutely. So what's the most Daniel W: I Daniel: get a loan for if, Daniel W: if Daniel: I wanna, Richard Ricci: so, when somebody asks me that question, like, Daniel: because they always Richard Ricci: wanna know like, what is my max? Like, Daniel W: is that the Daniel: that the first question you normally get? Richard Ricci: Not the first, but like, when people are getting pre-approved, that's what they want to know. They want to know what's the max I can qualify for. I mean, not everybody, like, some people are budget Daniel W: They Daniel: better not be our clients. Just kidding. No, not your clients. Richard Ricci: Your clients Daniel: never say Richard Ricci: but when they when they ask that question, mine, mine is, well, you know, what's more important is what you're comfortable paying, Daniel: you know? Richard Ricci: And that's different for everybody. Like Daniel: it's important that Richard Ricci: you Are, you know enough about your finances to know what that number is, and I'm not the one, I'm not the one that's gonna tell you what that number is. I Daniel: I can, Richard Ricci: like, I can find out what your max Daniel: amount Richard Ricci: is, but that's doing, you know, favors if I'm trying to get you to do something that might not be in your best interest or might cause stress You know, later on in your Daniel: your life. And Richard Ricci: have enough stress, they don't need more because of their Daniel: mortgage, Daniel W: Yeah. Well, let's Daniel: just for funsies, what's the max? Richard Ricci: So the maximum, like Daniel W: if I'm making Daniel: 300,000, I have no debt. Richard Ricci: 300,000, no debt. Daniel W: No. Daniel: Outside, because they have to take Daniel W: consideration your student loans and other Daniel: debt payments, but like to simplify things, Daniel W: let's just assume Daniel: I have no debt. Richard Ricci: I mean, you're, you're, the sky's the limit. Daniel Daniel W: guys, the living, Daniel: you tell me what you Daniel W: need. Richard Ricci: wait 300,000 with no debt, you could pretty much choose. The way that the bank looks at it is Daniel: We, I mean, could I get a $2 million house? Yeah. Probably if we, with a $300,000 income. Richard Ricci: Yeah. If you have no debt, The max maximum income that you need is, or the debt to income ratio is 43%. Daniel: Mm-hmm. So Richard Ricci: that's the max. Daniel: Yeah. So Richard Ricci: you, if you take whatever your monthly income is, times 0.43, that'll tell you like the maximum you could pay per month. But that also include, Debt because there, there's usually no doctor that has no debt. You know? So you gotta factor in car loans you gotta Daniel: factor in. Credit cards you Richard Ricci: gotta factor in, you know, anything Daniel: you have Richard Ricci: a monthly payment on is gonna subtract from that. Daniel: Yeah. Daniel W: The problem Daniel: with that situation, I'm just thinking about the numbers in my head. Daniel W: If Daniel: I'm making 300,000 Daniel W: and Daniel: home pay Daniel W: and paying Daniel: that kind of house, Daniel W: I imagine like Daniel: if you, that Daniel W: a $2 million house, like the Daniel: mortgage Daniel W: itself is not gonna Daniel: cost this, but like I Daniel W: think the all in cost is gonna be in like the 10,000 a month maybe range. Daniel: Roughly maybe, maybe 10 to 14,000 a month, Daniel W: Range depending Daniel: on like what interest rate we use and what tax rates we use and that kind of thing. Yeah. So that like 10 to 14,000 a month, $2 million house, that's probably pushing like. Daniel W: leaving Daniel: like 4,000 a Daniel W: a month, maybe three Daniel: to 7,000 a month Daniel W: after the house. So in other Daniel: words, Daniel W: you have three to 7,000 a Daniel: month Daniel W: to spend on everything Daniel: else, including saving for your future. Yeah. Yeah. I mean, I, you can make, Daniel W: do, like, you could Daniel: probably afford it. And I think that's my point in bringing this up is I think that's what the bank is gonna look at. They wanna make Daniel W: sure Daniel: you're able to make the payment and they don't have the Daniel W: time to go Daniel: through your financial situation or that's not their job really to go through your fin financial situation. Yeah. They're just Daniel W: looking Daniel: at what you're gonna be able to afford, you know, Daniel W: assuming that's Daniel: all you have. And that's really, that's what House pore is, I think in my definition is Yeah. Richard Ricci: for sure. And, and it might not be 2 million, it might be like 1.5 or something like Daniel: A lot. Richard Ricci: Yeah, it's a lot. And, but it doesn't need, Daniel: you don't Richard Ricci: need that. You know, Daniel: I. Daniel W: You Daniel: may want that, you may Richard Ricci: want that, Daniel: but you know, I mean, and there's high cost living areas and that kind of thing, Richard Ricci: but I can't tell people, you know, it has to be their decision. I mean, I can, Daniel: I can, Richard Ricci: you know, say that all I want, but I still have people that are like, no, I want, Daniel: I want Richard Ricci: much Daniel: can. You're not the boss. Yeah, Richard Ricci: exactly. Daniel: Yeah. What's what's also Daniel W: interesting to me about the, how much can you Daniel: afford question is, Daniel W: a Daniel: lot of people have like rules Daniel W: thumb they talk Daniel: about, and Daniel W: that's, I mean, Daniel: it's okay to have a rule of thumb. It can be good in some cases, but like, they haven't really changed their rules of thumb Daniel W: as like some of Daniel: these huge things, like the interest rates for example, Daniel W: have a massive Daniel: effect on Daniel W: what you Daniel: can afford. Daniel W: But like, we're not really taking that into consideration necessarily. Or, I mean, the Daniel: question is, are you Daniel W: that Daniel: into consideration? If you're considering buying the Daniel W: fact Daniel: that it's a massively different. Daniel W: Cost breakdown. I was looking Daniel: the numbers for the Daniel W: million house Daniel: earlier. And if it's like, if I had a 10,000 a Daniel W: a month budget Daniel: all Daniel W: in house costs, it wouldn't, at Daniel: a 3% interest rate, I could afford $2 million Daniel W: house. 10,000 Daniel: a month, all in. Daniel W: But Daniel: it was 7%, it'd have to be 1.3 million. Right. So it's like $700,000 Daniel W: massive just because Daniel: the rate went up. Richard Ricci: Yeah. Yeah. So I mean, you can't, you can't look at it from a cost point of view. You have to look at it from a monthly, not like a, not a purchase price point of view. You have to look at it Daniel: fr from Richard Ricci: a monthly cost point of view. Daniel: Mm-hmm. Then figure out, I mean, that's why I asked that question. What is, what is your number? And then I can work backwards and figure out where they should be. Richard Ricci: You know, depending upon what the interest rate is, that could be different. But you need to look at it from a monthly payment point of view, not a purchase price point of view. once you know what your monthly payment is, then you can look at the purchase prices and see what's in that, you know, what's in that range and if those will suit your needs or not. Daniel W: Yeah. I think what it comes down, to is Having a Daniel: financial plan, which is what we do every day. That's like our day job in our world Daniel W: helping people Daniel: a Daniel W: plan. Basically Daniel: all a financial plan is, Daniel W: like a Daniel: plan for your money. So like Daniel W: how much is coming in, where's it going, what's most important to you? So, you know, what Daniel: happens with the house decision is a Daniel W: lot of times Daniel: are like, Daniel W: I want to travel. Family's important. I wanna retire soon. Daniel: A S A P Daniel W: p preferably and Daniel: I want the $2 million. Yeah. It's like, no, you can't do all that. Yeah. So then it's like, okay, well let's prioritize stuff. Daniel W: And it's Daniel: okay family's most important, then traveling, then maybe Daniel W: retiring Daniel: at a reasonable age, Daniel W: and Daniel: then maybe we find out that the house is maybe fourth on the list Daniel W: or something. Daniel: it's like what Daniel W: A lot of times the missing Daniel: exercise people Daniel W: fail to do when they don't have Daniel: a financial plan. Daniel W: Is Daniel: often they don't Daniel W: think through Daniel: it like that. They Daniel W: get emotionally Daniel: tied up in the decision of the house and they forget those really important other priorities and they don't like carve that money out. That's why they say save first, spend the rest. Daniel W: It's Daniel: like you gotta like carve out the Daniel W: long-term Daniel: savings. You gotta carve out the money to travel. Daniel W: You Daniel: gotta carve out all that like important stuff first and then see what's Daniel W: like left Daniel: over after like Daniel W: eating and lifestyle Daniel: and that kind of thing. And that's how you back into the house number. That's like the ideal way to do it is you kind of Daniel W: back Daniel: in to the house. Yes. Unless Daniel W: there's, I Daniel: I'm Daniel W: sure Daniel: there's some people Daniel W: maybe listening that are like, Daniel: actually, the house Daniel W: is Daniel: absolute most important to me. Like, Daniel W: and that's Daniel: all I care about. Richard Ricci: Yeah. If that's the case, then that's a different, you Daniel: know, story. Richard Ricci: For sure. Daniel W: In that case, it's Daniel: like, no, rich, like, show me the max. I Richard Ricci: mean, it, everybody has different priorities, but what you said was knowing your financial plan, like that's the whole thing. Because that, that way you can set your priorities and figure out what is most important. But if you don't know your numbers, if you don't know, like, I mean, you need to know what everything is gonna cost. Utilities, you know? internet cable, like you need to know what that groceries, you need to know what those, that whole package is Daniel: gonna Richard Ricci: be like. And I will say this, like any of the people that come to me from you, they always. Have a plan and And a lot of Daniel: lot of times Richard Ricci: They were like, Hey, I want my, I want Daniel or my financial planner to look at my stuff. You know, I want them to give me, you know, their opinion. And to me, like some mortgage guys don't like it when there's a financial planner Daniel: dictating Richard Ricci: things, but I love it, man. Like, because Daniel: I, Richard Ricci: They're coming into it Daniel: knowing, Richard Ricci: you know, what they should know and with somebody who has their best interests Daniel W: Yeah. So if you Daniel: work with us and we don't, and you don't feel confident in those numbers, we're just let us know and we can help you Daniel W: crunch those numbers, especially Daniel: if you're approaching a decision around this. and if you're a DIYer Daniel W: and you don't Daniel: a plan this is just like a reminder or incentive, I guess. Like you want to For sure. Do that before you, I guess really the time to do it is to have it, have a Daniel W: plan before you set your budget, Daniel: because. Daniel W: You know, that's the hard question. It's Daniel: like, how much are you gonna spend? And you definitely don't wanna start Daniel W: The temptation Daniel: is to look at houses before you have a budget. No. Richard Ricci: Yeah, that's a problem. And Daniel: I, and that, I get Richard Ricci: that all the time where people fall in love with the house and then I've already made an offer and it was Daniel: accepted. Oh. You know, and Richard Ricci: then I get, then I get the application. I'm like, you don't qualify for that. Like, Daniel W: oh, Daniel: and you always will. I mean, Daniel W: if you look Daniel: at a million dollar house versus $2 million, Daniel W: mean, the Daniel: nicer, the more expensive the house, it's nicer. Daniel W: Like, Daniel: you're gonna like it. Yes. Yes. You're going to want Richard Ricci: want that house. Daniel: Yeah. It's not, it's not. But you know, just having that plan too, it kind of keeps your head level when you're Daniel W: getting into Daniel: that emotional, Daniel W: Decision making. Daniel: Absolutely. So, Daniel W: Other Daniel: than that, like, Daniel W: having a plan Daniel: is important, but let's say you got the budget and you are getting into the decision making phase, Daniel W: What I Daniel: know credit's important Daniel W: in terms of like getting the best deal. What Daniel: is the idea what credit score do you have to have to get like the best terms and everything? So Richard Ricci: usually, and this will vary from bank to bank too, but usually seven 40 is the magic number. Like we'll get the best interest rate if you have over seven 40. Daniel: Yeah, yeah. Richard Ricci: There are different tiers in our program. Like if you have, you need a seven 20 to be able to do a hundred percent financing. If you're between seven hundred and six ninety nine, you gotta do 5% down. If you're between six 80 and 6 99, You're 10% Daniel W: Does the right go Daniel: up? Richard Ricci: Yeah. Yeah, the rate goes up, but there's also, it's kind of offset because. There's a difference in the rate if you put money down. So a hundred percent financing, like for instance today it was like 6% 5% down is a 10th off of that, and then 10% down is a 10th off of that. Daniel: Yeah. We got a question. I think Daniel W: Hue, Daniel: I apologize if I'm mispronouncing your name says no extra cookie for Daniel W: credit Daniel: above 800. No congrats on credit above 800 Richard Ricci: I mean, that's amazing. Yeah, it's amazing. The other thing I would like to point out about credit is people don't realize a lot of times that what you see at home is not what we see. So when you're pulling your credit, you, it's Credit Karma or any of those credit bureaus. You have a, you know, a credit monitoring plan with your bank. Those numbers are going to be lower than what I see. And the reason for that is every, there are so many different scoring models. So what you're looking at at home is like the credit card model. But there's also a car loan model And a mortgage model and, and you know, Daniel: ev Richard Ricci: unsecured loan model. So they all have different ways they look at scores and you can't really find the mortgage model at home. So the majority of the scores that people see at home are, vastly different than what I see. One like tip that I'll share is my fico.com has. Daniel: If Richard Ricci: you google my ico.com Daniel: mortgage Richard Ricci: scoring model, you can Daniel: can find, Richard Ricci: A way to, to get those scores that the bank will see. The mortgage Daniel: mortgage bank. Richard Ricci: Just a word of warning. I think they make you sign up for like a 30 day, you know, 30 day free, Daniel: free trial. Yeah. And they'll Richard Ricci: charge you if you don't cancel it. So make sure to cancel Daniel W: put it on your Daniel: calendar. Richard Ricci: Yeah. But a lot of Daniel: of times Richard Ricci: I'll pull somebody's credit and they'll Daniel: be like, Richard Ricci: oh my God, this is way, way lower than what I saw. And then I'll explain it to 'em and tell 'em what they need to do to get their scores up and have 'em go look at their mortgage scores on my FCO before they come back to me so that I'm not, you know, repoing credit Daniel: too much. How often do you see physicians with below the seven Daniel W: 40? I guess that's the Richard Ricci: I mean, a lot. it's probably less than the rest of the population in my opinion. Like, I don't know. Daniel: But I, Richard Ricci: especially residents, or younger doctors who don't, haven't established a lot of credit yet. Daniel: That's Richard Ricci: the thing that I see the most Daniel: is like Richard Ricci: doctors coming right out of Daniel: medical Richard Ricci: school, going into residency. They'll have nothing in their name Daniel: because Richard Ricci: mom and dad, you know, paid for everything. And Daniel: that's something that's Richard Ricci: advice that I would give is just make sure that you have. Three trade lines, three accounts, like credit cards, car loans, unsecured loans, Daniel W: some dead. Richard Ricci: We wanna see three of those. And I'm not saying Daniel: like, Richard Ricci: get some debt and charge it all the way up and be in the hole. Daniel: Be responsible with the debt. Yeah. Richard Ricci: Use it for paying gas and pay it off but establish your own credit so that you're not, because I have a lot of residents that come to me and they have no trade lines. They might have a good credit score, but I need to see that they have three trade lines like that they've been paying on for 12 months. If they don't, I can build non-traditional trade lines through like cell phone bill or utilities. But a lot of times those are in dad's or mom's Daniel: name too. Richard Ricci: So if I don't have any of that, then I gotta say, Hey go work on it and come back later. So that's something that I would recommend is, you know, establishing credit early. Daniel W: Yeah, Daniel: it's worth. Under understanding what your credit is. I think, you know, sounds like the number is sometimes difficult to get, Daniel W: like and converting it between Daniel: your score and that score or whatever. Yeah, yeah. But there's all, there's some easy things you can do to Daniel W: increase your credit. Like, I have, Seen people have trouble with like the debt ratio. Like they say they just Daniel: one credit card and they use it for everything. And like the balance on it is like Daniel W: high, but they pay it Daniel: off every month. But like, it looks like Daniel W: it's 90% utilized or something like Daniel: that, that, which Daniel W: hurts their credit score. But it's like kind of dumb that it does that, but that's just part of the formula thing. Daniel: Right. Daniel W: But you can easily, like either increase the credit limit or pay it Daniel: off faster or whatever. Right? Right. Richard Ricci: So what people don't realize is that the credit the creditor reports to the credit bureau once a month. So if American Express reports Daniel: the credit bureau Richard Ricci: on the 15th, because that's when they're, you know, the payment is due, they usually report on the same day that the payment's due. And y Daniel: it's, Richard Ricci: your balance is up there. When they report it, you pay it off the next day. Well, it's not gonna show that it's paid off for another 30 days. And, you know, it's gonna show that it's way charged up, like you said. So it's best to keep those numbers below 30% of the limit. That's kind of the rule of thumb. Daniel W: When's the Daniel: best time Daniel W: for people Daniel: to be reaching Daniel W: out to, like, Daniel: lenders, Richard Ricci: like during the month Daniel W: in Daniel: relation to the Daniel W: time that they're gonna buy, like 30 days before they Daniel: buy? 60 days before they buy, or, yeah, before they Richard Ricci: buy. Daniel: So a Richard Ricci: preapproval, a preapproval is good for like 120 days. So like your credit report is only good for 120 days. But what I tell people is just come to me before you start looking, before you start falling Daniel W: before you make Daniel: an offer. For sure. Yes. Before, Richard Ricci: yeah. So j you know, it only takes us a couple days to do a pre-approval. Daniel: but Richard Ricci: if you fall in love with the house and you need it yesterday, and then, you know, we gotta put you to the top of the list and then, you know, maybe it's not an easy pre-approval and then it just turns into a, you know, fire drill. But yeah, I mean, Daniel: really Richard Ricci: whenever. you are About to start looking in earnest, you know, that's when I get pre-approved, You know, just get pre-approved and then, then, then you're off to the races. Daniel W: So get Daniel: fi, Daniel W: have a financial plan, then talk to Daniel: lender, talk to Rich. How often do people like sh how often are people shopping rates? Like, do you get Daniel W: get that a lot Daniel: with the physician? Are they normally just like, you're my guy? It's Richard Ricci: a little of both. You know, I have, I get a lot of referral business from, you know, realtors and I'm a preferred lender for a couple builders. Like, usually when I get something from them, they're not shopping me, you know, but I get a lot of business from other sources where they're getting tons and Daniel: tons of quotes, you know? Yeah. Richard Ricci: Or they, you know, they read that they needed Daniel: get Richard Ricci: three quotes and that's what they're gonna do, and there's nothing wrong with that. One thing I would recommend, Daniel: When you're shopping, Richard Ricci: you know, for a mortgage is that you find out two things. You find out what their interest rate is, of course. Like that's the first thing. Everyone knows that. But the second is what their lender fees are. Because that can change Daniel: immensely. Richard Ricci: If somebody has way higher fees and that's why they have a lower rate. Like that's not comparing Daniel: Apple. Right? Richard Ricci: So, so lender fees are the ti the part of the closing cost that goes directly to the bank. One of those is the origination fee. So you may have heard the term points, that's like one point is 1% origination fee. And you really wanna know that, cause that can add up quick, especially on your $2 million loan. Daniel: So Richard Ricci: you wanna know if they charge points. Typically in my quotes, I'm not charging any points. The only time I charge points are is if somebody wants to buy down the rate pay you to get a lower rate. And then the other lender fees are like what the bank charges on every loan. Like we have a processing fee is what Daniel: we call Richard Ricci: it. Appraisal fee. Credit report Daniel: fee. Yeah. There's a bunch of them. Tax service fee. So, and they should break it down. Richard Ricci: Yeah. So Daniel: And you should be able to ask for Daniel W: too. Like a lot of, we Daniel: it with a lot of Daniel W: people. Daniel: They, the classic is they're like talking to three, they heard that you ought to talk to Daniel W: lenders and they go to one and they're Daniel: they're like, Hey Bob, Gimme some pricing. And they're like, Daniel W: six percentage che. Daniel: che, Daniel W: and then that's all that the Daniel: says or whatever the communication, yeah. Yeah. And then the other one, Daniel W: like Daniel: 6% and a thousand closing in the email. Daniel W: And then Daniel: the third one sends the full cost breakdown, which is more in line with what you're talking about. And then they, they send it to us and they're like, Daniel W: And maybe Daniel: the full cost breakdown Daniel W: is Daniel: six and a half percent, which is higher than the other two. Daniel W: And they're like, well, I Daniel: think I should go with the 6% interest rate Daniel W: because it's a lower rate. Daniel: But the problem is like, Daniel W: we Daniel: have no idea what the first two, right. like you have to have the full breakdown to know what you're even looking at. And I would not even Daniel W: go further with someone until Daniel: I saw that full breakdown just to, yeah. I mean, that's good. Even if you're gonna use one lender, it's just good Daniel W: practice Daniel: to like look at the full Richard Ricci: Yeah. You, I mean, you should know what your costs are. But also with the full breakdown, you need to discern. What the lender fees are from the rest of it, Because the city and state taxes, the escrows, The title fees, those are gonna wind up being exactly the same no matter who you go with. Daniel W: Well, they Daniel: they should be. Richard Ricci: They, well, they will be, Daniel: but they will eventually. But Richard Ricci: what the person estimates upfront may not be. Right. So I run into this a lot because I over disclose. I want, you know, I want the person to go to closing and pay less than what they thought, what So when I put all of the fees on there the way they're supposed to be, And then the other guy doesn't, you know, like, he like really low balls all or forgets to put a title fee on there or something. Even though my, you know, Daniel: Len, my Richard Ricci: lender costs are lower, his overall costs look lower. But they're not, because in the end those fees are gonna be exactly the same no matter what. The only fees that are gonna change are gonna be the lender fees. Daniel W: Yeah. Yeah. Daniel: That's confusing. To look at. We've looked Daniel W: at Daniel: a lot, but, this is all good stuff. Daniel W: I Daniel: think we could go on and on. I know we're Daniel W: close to time, so Daniel: I wanted Daniel W: to kind of start to Daniel: wrap up and and talk about some follow up Daniel W: actions to think about. Daniel: First of all, I've already thrown it out there, like Daniel W: our team is Daniel: always happy to help with financial planning, Daniel W: the financial planning aspect, Daniel: which I think is important, and establishing that plan. You know, especially if you work with us. For Daniel W: sure, keep us in the loop. If you're Daniel: not working with us, we're happy Daniel W: to do Daniel: like a 30 minute Daniel W: call Daniel: to talk Daniel W: about like, pressing questions or look at like a loan breakdown for you if you want. Daniel: Like, we can do stuff like that in that Daniel W: 30 Daniel: minute intro call, which is no cost. So make Daniel W: sure Daniel: in, in Daniel W: look into that, Daniel: or if you're doing it yourself, like, you know, Daniel W: have that Daniel: plan in place. And then Rich is a great resource. Daniel W: What's Daniel: awesome about Rich Daniel W: is he's Daniel: already Daniel W: Said Daniel: this himself, but I'll say it Daniel W: too, to reinforce that Daniel: like he's very Objective even. I mean, of course he has incentive to recommend certain Daniel W: things to you, Daniel: but like, he's a pretty objective guy. Like he's gonna tell you if he thinks that you should, Daniel W: you know, be renting or if you're spending too much or whatnot. So he's a Daniel: great Daniel W: resource to reach Daniel: out to. Rich, can you throw out some, like, ways Daniel W: for people Daniel: to get in touch with you and a little bit more about how to find you? Richard Ricci: Yeah, Richard dot Richie, R I c c I. At truist.com? Yes. My name is Rich Richie. If I've heard Richie Rich maybe once or twice in my lifetime. And then you're gonna put my contact info in Daniel: Yeah. Richard Ricci: Description, I assume. That's my email address. My website is Daniel: www.truist.com/richard.richie. Richard Ricci: So there's kind of how you can, you know, get in Daniel: Awesome. Daniel W: Well, Daniel: it's been fun. And Daniel W: I'm gonna put, I'll throw in a link to this Daniel: all in calculator that we have. That's really helpful to kind of look at cost breakdowns as well. Any other resources or Daniel W: suggestions you can think Daniel: of, rich, that we didn't hit on? Eh, no. I mean, talk to a professional is my, yeah. Daniel W: And talk early and Daniel: rich is not aggressive either. Like he's not, that's partly why we, I mean, I like Rich as a, Daniel W: friend, but Daniel: You know, I professionally appreciate his non-aggressive approach. Like, some of these lenders get hyper aggressive and I do not like that. So I mean, I've, Richard Ricci: I've told you, you've sent me other, you know, another estimate and I'm, Daniel: know, Richard Ricci: I've told you their deal's better than mine, you Daniel: know? Yeah. Richard Ricci: I don't like, and, and this is not bragging, but Daniel: I Richard Ricci: do enough business where I don't, I don't need to scratch and crawl, claw for it, Daniel: you know? Richard Ricci: And I don't need to, to coerce people into doing business with me. it's a luxury to have Daniel: Yeah. It's a good spot to be in. Richard Ricci: Yeah, Daniel W: Well, it's been fun, Daniel: rich. I appreciate you coming on and, Daniel W: keep Daniel: the good work. Richard Ricci: You too, my Daniel: friend. Richard Ricci: Good, good to talk to you under better circumstances than Daniel: 2020. Yeah, that was a, Daniel W: we made Daniel: the best of it. Yeah, we did. Richard Ricci: We did.