Transcription (Tulsa Mortgage)
Steve Currington: This is stevecurrington.com and the Steve N Tyler show episode number 68.
Soundboard: Welcome to the Steve and Tyler show, with stevecurrington.com and TylerWhyburn.com
Steve: Who negotiated a contract for you?
Tyler: A realtor.
Steve: That was pretty smart. Good for you man.
Narrator: They’re talking about everything you need to know about mortgages, home loans and more. Nobody knows mortgages like these two. Get ready because here’s Steve N’ Tyler.
Steve: Tyler what’s up?
Tyler: Good morning.
Steve: Tyler are you awake? Wake up Tyler. I’m going to start every show with your, “Are you awake, wake up Tyler.” This might be a good way to get it started too.
Steve: Come on Tyler, Get into it buddy. Embrace it. So I woke up this morning bright and early at 5:00, and I get ready to come to the podcast. Today we’re talking about “How long should I wait to recover closing costs?” That’s right. How long do I wait? This is a great question which can only be answered by you, the person getting their refinance. There’s not a blanket answer. I like that, “Let it whip, let it whip.” I had a nice thing happen today.
Steve: Nate, you have to listen to this. As I’m getting into my car, I open the garage door to go in and my car is right there in the garage. There is a piece of construction paper that’s folded, standing up like a letter on top of my car. I’m like, “Did I get a love letter?” It was from my son.
He wrote me the nicest- he made me cry this morning. He took a piece of construction paper and he wrote on the inside, like 17 year old’s write real small, and bad [unintelligible 00:02:11] because they type everything now. Ethan wrote me a really nice thing saying how much he appreciated me and all that. Isn’t that cool?
That’s a good way to start your five o’clock morning. It’s actually about 5.45 before I saw that but it was a good start to the day.
We’re talking about recovering closing costs. Whether you’re doing a refinance or maybe you’re purchasing a home and you’re looking at paying some discount points or paying something extra to get a lower rate. The question becomes, how long is too long to recover closing costs?
Tyler I’m going to tell you this, if you’re doing a 30 year mortgage, and it’s longer than 30 years to recover it, then that’s probably too long.
Tyler: Yes, way too long.
Steve: But, if you’re doing a 30 year mortgage and you’re going to live in the house for 30 years and you want to pay some discount points, it’s probably going to pay for itself. You just have to do the math right?
Steve: Do the math and figure it out. Every single person is going to have a different opinion of whether they should pay X closing costs, pay additional closing costs and what that’s going to mean for their long term goals of what they’re paying.
Everybody’s different. The reason I say that is because, you might be planning to buy a house because you’re going to live in Tulsa, you’re going to do a Tulsa mortgage and you’re going to live here for two years. In that case you’d want to make your closing costs and limit them as much as possible, maybe take a higher interest rate. Right?
Steve: Have a less cost. You’re moving. You’re going to own this house for two years and you’re gone. Anything that you put in to get a lower rate, to do whatever, is probably going to be wasted. You got to figure out what your break even is. Just like we talked about on a previous episode Tyler, about refinancing and paying points, it’s the same deal.
If I can get a 4% rate and pay no cost or get a 3.75% rate and pay a thousand bucks, it’s all relative to how long I’m going to live in the house.
Steve: How long am I going to live in the house Tulsa mortgage.
Steve: Tyler, how long have you lived in your house?
Tyler: It’s been about three years.
Steve: Me as well. Do you remember your closing date?
Tyler: February something Tulsa mortgage.
Steve: Of 2013?
Steve: Literally guys, if you were here you would see me take my fingers and count three years. I also closed in April of 2013, so I’ve been in my house for three years Tulsa mortgage.
The reason this is relevant is because it may or may not have been valuable for Tyler or I to pay some discount points to get a lower rate.
Steve: When I did Tyler’s loan, because I did Tyler’s loan, Tyler pulled a lot of points. I call it a nuisance fee, because when someone works with you and you running a mortgage company and you’re doing their loan, it can be stressful. Yes Tyler?
Tyler: Yes, it definitely can.
Steve: You are doing your own loan. You are right in the middle. Right now we’re doing Casey’s loan. She works for us, and we’re doing her loan. I told her, “I’m not putting you on any emails about your loan. You’re cut off because you’re going to get stressed out.”
In Tyler’s case, he’s been there for three years so the easy way to do the math with Tyler would be, “Tyler do you want to pay a thousand bucks in discount points? It’s going to save you fifty dollars a month.” Is it going to be worth it? It’s really easy to figure out.
That’s going to take 25 months for it to pay off and so if you are in year three, then it was worth it. Now every single month you’re saving money. You’re saving 50 bucks, and that’s where everybody really gets a little crazy because they want to brag to their buddy on the back porch about what their rate is and they are not really concerned about necessarily what the cost to that rate is.
Just be aware of that. It’s all about cost man. You know, when Fannie and Freddie issue rates, they’re low. I think right now where three and a quarter or something is like the raw par rate if you want to pay points and get all the way down.
You can get there, it’s just a matter of the cost. You don’t want the cost to be too high or you might get evicted by the Koala.
Steve: That’s the loud koala gets evicted sound. [laughs]
Soundboard: Broadcasting live from the Koala studios in Tulsa, Oklahoma you’re listening to the Steve N Tyler show.
Steve: Tyler, here is a fair question. If you applied the refinanced test solely to owning a home longer than it takes to recover the fees, then it might be a little stupid if your recovery time is 10 years.
You understand that, so if you went and did this math and you said, “Well if I figured that most people live in their house for 10 years, and this is what it’s going to take for me to recover my cost to do a refinance or on a purchase to recover my cost to get a little interest rate paid points down, it really doesn’t matter if you’re not going to live there for 10 years. You can’t really use what they call conventional wisdom. “Well most people live in their house for seven years.”
Everybody’s situation’s different. You just don’t know, you don’t know what your goals are. Are you going to keep the house? If you buy another house, are you going to keep it? I kept my first house. I still have it. It’s a rental. If I had paid points way back in 2003, when I refinanced that house, it’s 2016, I guarantee you it would’ve paid for itself by now. It just would have. It wouldn’t have if I had sold it in 2009, six years later maybe, but now that it’s been 12, what is that? I can’t do math remember? It’s 13 years?
Tyler: Yes, 13 years.
Steve: Yes see 13 years? May of 2003 I did a refinance on the house, and that made sense but you can’t really just do like a blanket. “Well 10 years is what it takes.” It’s not 10 years what it takes. I think we’ve talked about this before. Does anybody remember, by show of hands in the studio, the first time home buyer tax credit?
Soundboard: For more information go to getkoalified.com that’s G-E-T-K-O-A-L-I-F-I-E-D.com
Steve: Remember that Tyler, when we were doing the first time home buyer tax credit?
Tyler: Yes I do.
Steve: 8500 doll hairs is what they were giving people just to buy a house. “Buy a house, we’ll give you 8500 bucks. You have to live in it for three years.” If you don’t live in it for three years then you have to pay the money back on your taxes and a lot of stuff. People were literally buying houses so they could get the tax credit. I had this couple, and they were like, “Look, we know we’re getting the tax credit, so we just want to use that $8,500 to pay discount points.” You hear this Nate? They’re like, I want to pay points. $8,500 just to get a lower rate because– it’s free money, so why not? I’m like, well they were buying a $160,000 house and they had good credit, they were putting a reasonable amount of money down. It made sense right? Here’s what I told them. I said, “Hey, I’ll do that for you. If that’s what you want but here’s the savings.” It cost them X and their interest rate was going to go down by this amount and it was going to save them 67 bucks a month or whatever. Their break even, break even like they’d make their 8500 bucks back, was at five years, six years, something like that. Something crazy. They’re like, “Ah, we’re going to live here forever.” Guess who called me 24 months later? Hey, I did their loan, look I’m not beating them up, it’s not about that. It’s just about common sense. It was a waste of money. It was literally like they took $6,000 and lit on fire. On fire, just like our Tulsa Mortgage Company is right now. Which by the way, I don’t know if I told you guys but we do home loans. Tulsa Mortgage Home Loans, and Tyler, you got to remind me because we don’t say Tulsa Mortgage enough in our podcast.
Tyler: Seems that way.
Steve: I didn’t say Tulsa Mortgage one time in the last podcast we recorded two weeks ago. We’re on number 68 I think, we’ve been recording one podcast a week for 68 weeks. Do you know how many weeks are in a year? 52 weeks. That means we’ve been recording podcasts for over a year. Time that up. I mean, wow. That’s crazy dudes. It’s crazy. Here’s what it comes down to, how long should I wait to recover closing cost? Everybody’s situation is different. That’s like going to your doctor and asking about anything. What pertains to Tyler, doesn’t pertain to Steve. Tyler’s doctor might tell him something because he’s not the same specimen of a man as I am. Tyler’s doctor might say, “Well, Tyler, you need to eat right. You need to do this, you need to do that.” My doctor might say, “Man, you just keep doing what you’re doing Currington. I mean, dang bro. You look good.” [laughs] Guess what?
Soundboard: For more information, go to getkoalified.com. That’s G-E-T-K-O-A-L-I-F-I-E-D.com.
Steve: I’m going to tell you something about Tulsa Mortgage, Total Lending Concepts, we have fun. Maybe you’re out there, you don’t know anything about the mortgage process. Maybe you’re a first time buyer. Maybe you’re a 15th time buyer and you just don’t know what the heck you’re doing. Well neither do we.
Steve: Just kidding. Hey but seriously, we’re pretty smart cats man. The government comes in and changes the rules on us about every freaking year.
Tyler: Yes, no kidding.
Steve: We got to figure it out. If we can do that, I think we can make the loan process fun for you and we do know what we’re doing. I’m just going to tell you. Listen to this one, this is a good one.
Soundboard: This is stevecurrington.com and The Steve N’ Tyler Show. Go to getkoalified.com.
Steve: The point is, we are handing out koala’s everywhere. If you’re listening to this right now, and you haven’t been to our website, go to getkoalified.com and look tulsa mortgage at our communication koala. You know what? I think we need to change that. You know what our communication koala doesn’t look like our actual koala’s. He doesn’t have a green jacket on him.
Steve: I think we need to put clothes on our tulsa mortgage koala. That’s like a complete rebound. Because our koala’s that we hand out, which by the way, one of them I found in the hood of the Bentley, it got crushed. He literally was like, can you imagine holding on to the thing that raises the car up and keeps it up, that pressure deal? I don’t know what it’s called.
Steve: He was holding onto that and so when the hood closed, he was smashed in between that and the closing of the hood. So it was like he was gripping onto it but he’s completely flat. [laughs] We lost a koala, that’s what I’m saying. But listen, go to getkoalified.com, fill out a thing and listen, just send us a note and say, “Hey, here’s my address, send me a koala or five.” We have so many koala’s. We’re going to redo the koala’s and we have to order these things 3,000 of them at a time, we’ve had them for four months or something? Five months?
Steve: I think we’ve already given tulsa mortgage out somewhere in the neighborhood of about 2,000 koala’s just in your Tulsa Mortgage area. We’ve given a few out in Columbia and our Colorado Springs offices and Pueblo and Alamo so there doing the same thing too. But Steve N’ Tyler are on fire with the koala giving. Go to getkoalified.com, register, go in there and fill out a form, you can do an application if you want to. We’ll get you qualified for a loan but more importantly, ask for a koala. I had a guy, Jacob, that came in two weeks ago just to come get some koala’s. Remember that? Were you there when he came in? Anyway, that’s all we got for today. I’m SteveCurrington.com.
Soundboard: Broadcasting live from the Koala Studios in Tulsa, Oklahoma, you’re listening to The Steve N’ Tyler Show.
Steve: That’s right guys, we’re out. Have a good one tulsa mortgage.