Episode 3: Managing Your Mortgage Options

Isaac Wright: Welcome back to Wright Money Tips. A lot of you have talked to me over the years. Of course, we’ve had a lot of people talk about the low interest rate environment we’re in and when it comes to your home, when it comes to a mortgage or refinancing. Or some of you have moved and trying to figure out what the stages and steps are towards managing those finances.

We wanted to have a nice little program today regarding managing your mortgage options. And with that being said, I want to bring in my guest of the day, Ryan Charles. Ryan Charles is a partner and loan officer at Alcoba Mortgage. Last year he closed a 230 plus loans, 70 million. So the guy knows what he’s doing, but from a standpoint of also understanding the economic environment.

He has a weekly show on a social media channel that he manages, that talks a little bit about whether or not you’re making good decisions when it comes to mortgage planning. So, Ryan, we’re going to talk a lot about mortgages and options around that today.

But I really loved the fact, a little known fact about you that you led in division one basketball. I think the early stages of, I don’t remember what season, but you played for Radford and in the first four or five games of the year, you were the number one leading scorer in the nation. Now I know you didn’t wind up that way, but I just thought that was so cool.

I’ve seen a couple of videos with you through YouTube with you playing on Radford; made it to the NCAA tournament. I just think that’s a great. I just always thought that was a pretty cool. I’m sure that was a great experience for you.

Ryan Charles: Yeah, I was a big fish in a small pond, but it was a lot of fun. My life has been a few different chapters. It was a whole different chapter in my life back then. And here we are now.

Isaac Wright: Yeah. Well, let me just say this man. I mean, you’ve been a great guy to get to know and I think today, talking to the folks that we’re going to be talking to.

When it comes to the environment around 2021, especially what we saw in 2020 with interest rates being basically zero, when it comes to bank savings and so forth. We’ve also seen ultra low mortgage rates. And when it comes to the mortgage rate environment. Let’s just start off for 2021. What do you kind of see out there?

What are some of the things that people need to pay attention to, specifically when it comes to let’s say refinancing a mortgage?

Ryan Charles: We’re coming off a year with record volume. So last year was actually the highest record volume in history in mortgages. And this year it’s going to be more of the same.

And the main reason are the interest rates. They are so low and they’re expected to stay low. Refinancing is making up about 70% of all mortgage transactions right now. And it’s a very busy purchase market as well. So it just goes to show how busy we are right now.

Isaac Wright: I was going to say, to me, looking at the real estate market, and again, not as experienced as you, but just looking, it’s very low inventory. It’s actually really hard to even buy a home. A lot of people are refinancing and just figuring out how to use that money, maybe to improve their lifestyle with all that’s gone on in 2020. Am I saying that correctly?

Ryan Charles: You are. It’s an extremely hard time to buy a house. It’s a great time to buy a house, but it’s a tough time.

The main reason, that’s just all supply and demand. It’s such a sellers market. So, if you have been thinking about selling your house, now is a really good time to do it. You know, top dollar, just not enough homes for sale, it’s all inventory. It takes you back to your early business course; the supply and demand, you can’t get away from that dynamic though.

Isaac Wright: Awesome. Well, listen, I had a couple of just Q and A’s that I want to kind of bounce off you a little bit. These are questions that I’ve taken. These are questions that I do see come up. But let me just say maybe the number one question is this. When considering a refinance, 30 or 15 year, what is maybe a general rule of thumb of when to finance based on the interest rates you have today, versus maybe what the interest rate you purchased your home for, you know, however many years ago versus interest rates today. When is a good time to consider refinancing?

Ryan Charles: Well, sometimes life takes precedence, right? And so sometimes refinances are necessary other times it’s just a matter of convenience with the market being as low as it is.

You know, I tell my clients, if you can save at least three quarters of a percent, that you really should look into doing it.
Isaac Wright: And whether you need money or not from a refinance, is that three quarters of a percent is kind of a general rule of thumb.

Ryan Charles: Correct. There’s two different types of refinances. The rate and term refinance, which is what we’re talking about, the discretionary or financed either shorten your term or to cut your rate. And then there’s cash out, which is also very popular right now.

So if you have other debts and I see it all the time, I hate to say it, but the financial literacy in our country really needs work. I’ll look at someone’s profile and they’ll be sitting on good equity in their house, because that’s another reason why we’re so busy right now. We were actually at all time highs on our equity stakes.

So if you have other debts and your interest rate is anything above three point something, you really should look at a cash out refinance. So that way you can get yourself back on track. Credit card debt is toxic. So, you really got to get rid of that just as soon as you possibly can.

Isaac Wright: Gotcha. Let me ask this. In the refinancing world, completing that transaction if you will, what are some gotchas that you see that you would want somebody to know?

Everything from, let’s say ,their good faith estimate all the way down to the closing table. I always find that you’ve been a extremely trustworthy person to talk to. What are some of the gotchas, I guess where people sometimes don’t know and don’t realize that they don’t know until the last minute.

Ryan Charles: Yep. That’s a great question. And the reason that’s so good is you don’t know until the mistake has made. You get halfway through the transaction and then you realize something’s not the way it should be. The biggest piece of advice I have for people is, work with someone local, someone reputable, someone that you’ve been referred to, do a little diligence on the front end.

I will tell you this. It’s such a busy time in the industry. You know, conventional wisdom is, “Oh, I’m going to talk to three people, compare three estimates and choose the best one.” That is not the right thing to do right now. Anyone who is anybody in this business, doesn’t have time to compile estimates right now. Similar to what you mentioned earlier with everyone doing all the home improvements.

It’s very difficult to stack up those contractor estimates because they’re all so busy. They don’t have time to do that. So, instead work with someone local, reputable, who you’ve heard of or you’ve done business with in the past. Reach out to a realtor who you trust and have them refer you to someone or a financial advisor, someone who has a viewpoint into the business.

And if you do that, it’s a very commoditized business ever since the crash back in 2008. The business isn’t that busy anymore. I mean, there’s only so many products, right? So, it’s very important, you know. It’s such a commoditized business to work with somebody who you trust and then trust them to get the job done.

Isaac Wright: I was going to say the turnaround time on completing the task is probably something people don’t realize until they go through it as well. Last question I had, just kind of looking at the rates of where they’re at today, fixed versus variable. With rates where they are at today, does variable even makes sense?

I’d like to get your take on that.

Ryan Charles: Well, you said in the beginning that I wrote 230 loans and some change. Not one of them was a variable. Right? It really doesn’t it. And in some days the rates don’t deviate at all. I’ve actually seen days where the variable rates higher than the fixed rate.

And then on the other days, when there is a small deviation, it’s such a small difference that, you’d almost be crazy to give away the fixed option for the variable rate.

Isaac Wright: Well, I really just want to take the time to say thank you for coming in today. For most of you out there today, if you have any questions related to your mortgage interest rates, all the above, feel free to reach out to us.

If you have any concerns or questions, you can visit wrightmoneytips.com to request some time on our calendar. Or please subscribe when visiting wrightmoneytips.com to receive notifications on new episodes, our newsletter and even upcoming events.
And also, let me just say this. If anybody wants to reach out to Ryan directly, you can go to alcova.com/midlothian.

That’s going to be Ryan’s landing page. You can put in some general information there. He’ll be willing to help you through any of your mortgage questions as well. But let me just say overall great Q & A today. I just wanted to have you in here for 15 minutes, just to kind of have chat about where we’re at with the mortgage landscape through 2021.
So it’s been a pleasure.

Ryan Charles: Thank you very much for having me.

And look forward to having you here next time on Wright Money Tips.