To Buy Now or To Buy Later...That is the question.

Rick Ripma  0:00  

To buy or not to buy? That is the question. So should you be looking for a home now? Or should you be waiting? What are the mortgage rates going to do? What is happening to our economy? Find out what the experts say today on India's real estate gurus.

Announcer  0:15  

Advisors Mortgage Group is proud to present Indys Real Estate Gurus hosted by Rick Ripma, the hard working mortgage guy, please contact Rick for all of your mortgage needs at HardWorkingMortgageGuy.com. That's HardWorkingMortgageGuy.com. Now, here's the hard working mortgage guy, Rick Ripma.

Rick Ripma  0:48  

Welcome, and thank you so much for joining us today. We appreciate it very much. This is India's real estate gurus. And I'm Rick Ripma, your hard work and mortgage guy.

Ian Arnold  0:55  

And I'm Ian Arnold, Advisors Mortgage Group. And again, we

Rick Ripma  0:59  

do appreciate you joining us today we're going to talk about whether it doesn't make sense to buy now or or buy later. We want to talk about just a variety of things where mortgage rates going to go, you know, what's happening in our economy, find out what the experts have to say we're going to talk about that. And first, we're going to start with our numbers. Yes, I think this is important. And it's actually, man, it's it's a it's an interesting time right now, the jobless claims. You know, one of the things that people don't understand, especially the media doesn't understand is what all these economic numbers actually mean. I've heard it said I think it was the governor of New York or somebody I can't remember who said, Well, how can we have a recession or going into recession, look at our job, you know, look at our job, jobless claims, look at what's going on there. What he doesn't understand, or anybody who says that doesn't understand is that the jobless claims, the recession starts after the after jobs hit the bottom for the lowest level good. And then turn the other way. And that's when we're, that's generally when you see that's just another indicator that we're going into a recession along with all the other indicators we're seeing. So jobless claims were up this week, they were the four week average was 241,000. This week, we were 251,000. Last week, we were 246 or something like that, I can't remember the exact number. But that's increased. The, the continuing claims has also increased, it's at 1.384 million. And last year, or last month, it was last week, it was uh, I don't remember, it was quite a bit less than that it was 1.35 or something like that. I just can't remember, I don't remember the exact number. The other part of this of the unemployment situation as we look at it, there's, there's something called a household survey. And when they when they put out these numbers, it's it's there's two ways that they they get these numbers, they look at what their what, you know, the these respondents say, and then they actually talk to people. And it's called the household survey and the household survey actually showed that we had a 350,000 increase in loss of jobs. However, we had 353,000 people who left the labor force

Ian Arnold  3:37  

and for people who don't realize what that means is that means after a month of you stop working, you have not applied for another job. Right. So if and this is what we saw through the recession, I mean, I just saw it what happened. I met my friends, half of our friends in laws halfway between us, which is Kokomo. Well, we went to go to Pizza Hut. We're like go sit down Pizza Hut. We'll order pizzas and, and visit for a little bit. We will walk through the first door, sign on the door only drive through and carry out not enough. Not enough help. Are you kidding me? Your Pizza Hut. Luckily, there was another one and they opened up. But you know how many people we saw the lady who helped us was actually making pizzas. But she did the smart thing is people want to sit just say, hey, look, we're short handed. We'll be with you. Just keep in mind that if you have questions, let us know. And it made it easy. But you could tell how short is it is I mean, you talked about yesterday or last week about you walked into BestBuy and could not get help. I mean, so when you're looking at the job claims, it's not just to look at that, but that's the one number they don't bring up is how many job vacancies there are still out there. And everything like that. They like to say oh, yeah, but that again only includes the last month as long as you're applying for jobs. In a month,

Rick Ripma  5:01  

yeah, it's it. It's crazy. And that's why these numbers, we I believe that the that the numbers are even worse Oh easily. And I know that they're seeing we're seeing less and less companies looking to hire people, there's more and more layoffs that are starting to happen. So it is going to get tighter. And maybe that will maybe that will actually help the restaurants and things like that people will lose their jobs and other types of industries and they can still get jobs in the restaurant. I don't know, I don't know where it's going. But I can tell you that it is certainly an indicator that we're going into a recession, along with a wide variety of other other pieces. The when the when the federal funds rate goes up, when we see the inflation where it's at all these numbers we're seeing, they're all indicating inflation. But how is that affecting our homes, our home values? This is this is one of the hardest ones or actually, I don't know if it's the hardest one. It's just there's so much information out there that seems to be contradictory to what the numbers actually show. So let's talk about and this is this is, this is the US so the existing home sales in June 2022. We were down 5.4% month over month, and we their annual pace, we had five 5,000,005.2 1 million homes, annual pays for sales year over year. That's That's down 14.2%. But remember, last year, what was going on last year?

Ian Arnold  6:42  

I mean, in most places. I mean, one you had the interest rates that were super low. So that helped out dramatically.

Rick Ripma  6:49  

Yeah. And we had the year before we had were nobody was buying anything. Their houses weren't on the market. You couldn't even go look at them all that very slow. Everybody was scared. Nobody wanted you in their house. It's all the pent up demand. So last year was a huge year. Yes. Right. So we're still we're still very busy. Medium home prices still up. It was up year over year. 13%. The 415,000 That's that's, that's nationwide. first time homebuyers represented 30% of the homebuyers. Okay, they were 31% Last year, so almost identical. And they were only 27% last month. So first time homebuyers are out in force, which is, which was a worry, because prices were going up, but it doesn't seem to be affecting that. No,

Ian Arnold  7:34  

I mean, income has gone up, right. I mean, that's that, like we talked about before, but income is offset that because you're having to pay employees more to offset some of that stuff. So guess what, it's not really gonna affect too much. Yep.

Rick Ripma  7:48  

And this is what I don't like cash buyers are up 25% They were at 23%. Last year. Well, you know, I be cash buyers are great. And a lot a lot of times I'll buy with cash, and then they'll refinance and and get some of their money back. And the investors. Another one that this is, you know, investors are 16%, up from 14 last year. So they're up also. So there's more investors buying

Ian Arnold  8:13  

the cash buyers is still shocked me too much because people still live in at home and are working from home. The investors ones, that's the one that shocks me a little bit more, I understood when the rates were super low. But now the rates have gotten quite a bit higher than what they were. So the investor one does shock me a little more,

Rick Ripma  8:31  

you know, though, the rate rents are up so much. If you look at what rents are doing, I don't think I brought that material on that. But I was I was one of the people that I listened to was talking about the rats and how it even with the increase in mortgage rates, even with the increase in the value of properties. rents are going up faster than that. And so I mean, that's, but again, I don't have the statistics in front of me, but that's what they were showing it was pretty incredible. Now let's talk about the inventory of existing homes. Inventory. 1.2 6 million, that's up from 2.4. That's up 2.4% from last year. It's up 10% from last month. Okay, so what does that mean? That means that our inventory supply is up, we have three months supply, our normal market would be six months and 14 days on the market. It was a record low. But let's go back to the home. Every year. At this time. We see an increase in inventory. Every year. If you look we're looking at a chart and you can see every year same time the market turns the media is not talking about that this is a normal situation over the last 10 years on the chart I'm looking at every year it happened every single year. So it is what happens. Why because people are wanting to get their kids in school so they put their houses on the market and time to sell them and being in the next time that they want to be in before school starts.

Ian Arnold  10:04  

Yep. So you can get those kids enrolled, you know, you know where they're going. They know they're where their friends are that type of

Rick Ripma  10:09  

stuff. Yes. And then if you also look at those numbers, so we're talking about the existing homes, there was a on the initial homes. And I don't have the number for but I think it was of those of those 1.2 6 million units 600 And something 1000 of them are already sold. They're not actually on the market. They just haven't closed yet. So the reality, we have about 650,000 homes on the market that are available in the entire US. That's not very many home. No, that's just not very many. So that is a, you know, that's something that you have to remember, there's not as many homes as they're showing. Now, the active active existing homes listings in the US, we talked about that there. I'm sorry, it was 619,000. Because 51% were under contract. I knew I had that number somewhere. Here it is. And, and so with that, you're there's really not that many homes on the market. Now what about new home supply? Because I think this one is very interesting. And you've probably seen this, the new home supply, housing starts completed, there's one 1,370,000 Housing Starts completed for the year. That's what that's what we're looking at. Destroyed annually, we lose 100,000 homes annually to being destroyed, taken, you know, demolished, burned, whatever it is. So the total new supply of homes is one million 270,000. Household formations. So these are new households household formations, is 1,400,000. That means we have a deficit of new home construction of 130,000 homes.

Ian Arnold  12:01  

And but this is not new. This has been going on since oh eight where new houses new homes have not been keeping up.

Rick Ripma  12:09  

Exactly. It's why we have the situation that we're in. It's why we're seeing houses sell so quickly, while they're going up while they're appreciating so fast. Because we have a lack. We didn't build enough. So we're short on inventory. Yep. It's a it's a very, I believe it's gonna it's why no matter what the media says, there's all these these things add up to me that we are not in a bubble. We are not going to see a depreciation, which is what they're talking about. That for some reason. Well, fear sells. Does it not know it every time? What's the easiest thing in the world to sell? I think fear here.

Ian Arnold  12:53  

Newspapers even before news without newspapers been doing that long time

Rick Ripma  12:58  

ago. Yeah, they figured out long before I did. That's that's newspapers, the media, everything. That's what they want to talk about. It's always negative, negative, negative. So it's a very easy thing to sell. The reality is if you look at all this stuff, and you look and you actually look at it, we're not. We aren't as it isn't as bad as what they're making it out to be at least in the housing market. You know, we're

Ian Arnold  13:21  

not, let's not talk about that, because we're not

Rick Ripma  13:24  

talking about the rest. We're just talking about the housing market. Yes, interest rates are up. Yes, there's there's a, there's somewhat of a slowdown in the in the sales and more houses coming on the market. But the real estate agents I talked to, I mean, they're not seeing that not in Indiana. In fact, in three weeks, we're going to have a real estate agent on who's going to talk about that Jeremy Page with Carpenter Realtors. He's out of the Zionsville office phenomenal guy knows the market been in it forever. He's one of the managers there. And he's going to talk to us about actually what is going on. So so he's gonna educate us too. He is, oh, he's a boots on the ground. You and I do mortgages, right? Yeah. So we have an idea of the market, we have a pretty good idea. We talked to enough people, we have a pretty good idea, but we want to talk to somebody who actually is there doing that all day, every day. So after the break, since I used up all that time on the numbers because I love the numbers. After the break. We're going to talk about you know, should you be looking for a house right now or should you be waiting? Advisors, mortgage

Unknown Speaker  14:25  

brokers licensed by Indiana Department of Financial Institution equal housing opportunity. NMLS 33041 Rick Ripma NMLS 664589

Rick Ripma  14:33  

Hi, I'm Rick Ripma. With the hard work and mortgage guys and advisors Mortgage Group where we believe delivering the best mortgage for you is why we exist and it's how we all succeed. We believe

Unknown Speaker  14:43  

honesty, kindness and hard work are how we honor each client

Ian Arnold  14:47  

and hardworking mortgage guys, we believe in custom tailored loans, not the one size fits all approach.

Unknown Speaker  14:52  

We believe in always presenting you with all your options. So you get the loan you want the way you want it.

Unknown Speaker  14:57  

We believe in continually monitoring have rules rates and market trends. So you don't have to we believe

Unknown Speaker  15:03  

in working hard to meet your closing date so that your entire plan isn't upended.

Unknown Speaker  15:08  

We believe in offering the same quick online process that the bookstore mortgage companies brag about whether you're refinancing or buying your first home,

Rick Ripma  15:16  

we believe there is the best mortgage for you. And we believe we are the team to deliver it find us online at hardworking mortgage guys.com.

Announcer  15:29  

Brought to you by advisors Mortgage Group, where we believe the more you know about financing a home, the less stressful buying and refinancing will be.

Rick Ripma  15:42  

Welcome back, and thank you so much for joining us today. We appreciate it.

Ian Arnold  15:45  

I'm Rick Ripma, your hard work and mortgage guy and I'm Ian Arnold with Advisors Mortgage Group. And

Rick Ripma  15:50  

this is Indy's Real Estate Gurus, where we talk about everything related to real estate here in Indiana, and nationwide. And again, we appreciate you joining us.

Ian Arnold  16:00  

Yeah, so again, if you did miss our first 15 minutes again, you can catch us on our of our podcasts, or we load upload them on all of our podcasts in Indys Real Estate Gurus.

Rick Ripma  16:12  

And that's pretty much every podcast, we can get on

Ian Arnold  16:16  

or you can look under a Rick Ripma or Ian Arnold makes it quick and easy. So let's do the question of the week. Okay. Now it's time for questions with the gurus. The question of the week is brought to you by renovation loans is actually what we do is we allow if you find a home that needs a little bit of work, we allow you to get that work done and get your house at the same time, which is nice, easy, especially in this day in market to print the prime houses, they don't need work, guess what they're off right away. Sometimes the ones that need a little bit work, they sit around a little longer allows you to haggle a little bit more and allows you to put a great offer in

Rick Ripma  17:00  

you can build some additional equity by what they call, you know, I'll call it sweat equity, but it's really not sweat equity because you can't do the work yourself under these programs. However, if you buy you tend to be able to buy at a lower price. But it does allow you if there's not carpet and houses and things people don't understand if there's not, I'm just using carpet as an example. There's no flooring in the house. And all it is is the underlayment or there's the sinks or toilets aren't in the showers aren't in, they aren't working. Somebody stole the HVAC or any of that. You can't finance it under normal financing. This is the only way that you can finance it under a mortgage is through this type of loan or renovation loan. Yep.

Ian Arnold  17:38  

All right. So the question last week was, what can you put in a bucket to make it way less? A hole? Yeah, that's true. All right. So the question this week, a red house is on a white street, a blue house is on a red street? Where is the White House? All right. All right. So we're going through and should should you buy now or buy later? So let's start with this. Rick, let's go through how would you even qualify for a home. So I have an idea. I know we went through this a couple times or whatnot, let's do it a little different. I'm going to act like I'm gonna call you up. Okay, and act like a customer. And basically, this is almost scripted what a customer we just had a couple of days ago. So I'm just going to use his Change Name Change numbers make it nice and easy. So Ring Ring

Rick Ripma  18:38  

Thank you for calling. This is Rick Ripma, your hard work and mortgage guy? Hey, this

Ian Arnold  18:41  

is my name is Kenny and I heard your radio ad about trying to get a mortgage. I'm just trying to my wife and I we've been discussing it, what do I need to do?

Rick Ripma  18:51  

Well, I'm glad you called I appreciate it very much. And there's quite a few steps. But let's just kind of get the basic information. First, the first thing you're going to or one of the first things you're going to want to do is we're going to want to get a full application. So we can run credit. And we can make sure that we have all the right information to be able to issue a pre approval letter, which allows you then to go out and look at homes. It isn't it isn't mandatory. But what we found, especially in this market, but really in every market, if you don't have a pre approval letter, the seller just doesn't take your offer seriously. So we want to get to that point. So the first thing we want to do is talk about your situation and and how much you know, all that type of information. So, you know, do you have a price range in mind?

Ian Arnold  19:39  

We've looked at some houses online, and I mean, it's hard to tell because we're just looking at pictures and stuff. But I would say between 250 Maybe 300 is what we're looking at All right,

Rick Ripma  19:50  

perfect. And have you picked out an area you're just like Northern

Ian Arnold  19:55  

Indianapolis area Carmel fishers Noblesville, that type of area.

Rick Ripma  20:00  

Okay, and how much are you looking to put down?

Ian Arnold  20:03  

That's the other question, how much? I'm kind of curious how much we would need to put down. I mean, I have we have some saved up. But I'd rather not put it all towards the house. But I think there are different programs. I've been roughly heard, I just don't know how much to put down.

Rick Ripma  20:20  

Okay, well, it's gonna depend on a couple of different things and what's going to be best in your situation. So we will, we're going to need to talk about that. So before we get into that, do you have an idea of what your credit score might

Ian Arnold  20:31  

look like? Yeah, about 750. Okay,

Rick Ripma  20:34  

that's phenomenal. And, and so with that, and it sounds like you're looking in a neighborhood, in a normal area, not out in the country? No, no. Okay. Okay. So what what is probably going to be your best bet is going under a conventional mortgage. Now, have you bought a home before? No, I have not. Okay. So on a first time homebuyer, one of the programs that's available is called a first time homebuyer program. And it's 3% Down Under conventional financing. So with the 3% down, that allows you to, you know, so a $300,000. House, it's $9,000. Do you have

Ian Arnold  21:11  

we have roughly about 20 saved? Okay, so but so if I were to, I don't want to use all of it, because what if I want to do something to my house or something like, right, but so what if I don't put what if I only put down, let's say 15%?

Rick Ripma  21:25  

Yeah, well, what I would recommend is we run those numbers, okay, but you've got your down payment. But then you also have closing cost, you have what's called prepaid items, this is a prepaid interest from the day you close till the end of the month on a purchase, you have, you have to have homeowners insurance, you have to have 12 month homeowners insurance, and then you have to have three months that that you pay into the mortgage on an escrow. Okay, so that we can pay it when it comes due again next year, you have to have a certain amount in for the property taxes, depending on what month you're going to close depends on how much we need to collect for that, if you have less than 20% down, there's going to be mortgage insurance, we're going to collect some for that a couple of months. And then there could be you know, there's, there's some other things that could come up, for instance, you could have, if you're in a neighborhood, it could have homeowners associations, there could be buy ins to the homeowners association, there could be a proration, with with the seller to you. So there could be some other things, what we'd want to do, if you have $20,000, and you want to hold some back, I think we should start and look at you know, three or 5%, down. And then and depending on the price range you buy, we can look at the different numbers, it's not going to change your interest rate, okay, the interest rate pretty much, it's going to be the same until you get to 20% down, then interest rate might actually go up a little bit. So so we're just gonna look at that, and then we'll figure out what's gonna, you know, we'll run through those numbers, we'll also look at FHA, because FHA may be the better option for you. I'm gonna guess with your high credit scores, it's probably not but FHA is really good with with lower credit scores. It's also really good if we need debt to income ratio issues, if there's something there, that it's really helpful, but it requires three and a half percent down.

Ian Arnold  23:15  

So you're gonna show me multiple options is what you're saying, you're going to show me if I went conventional, or if I went FHA?

Rick Ripma  23:21  

Correct, I'm going to I'm going to talk about it, we're going to get all that information. Once we have your application and all of that, then we'll put together a, a report so that you can look at it. And you can really make a decision based off of the options that are available to you. I just want to educate you and make sure you understand, answer all your questions and then give you the information so you can make the right decision for you and your family.

Ian Arnold  23:45  

That's awesome. So how long does an application take?

Rick Ripma  23:49  

Well, an application to actually take the application is going to take somewhere around 30 minutes could take a little longer could take a little less. We prefer to take the application, manually, not online, we do have a very secure online application, which is also very simple. Some people prefer that because of timing, things like that. But we find that it's really better. Most people are much more comfortable having somebody take the application making sure we're getting all the right information as quickly as possible saves you time and saves you a lot of you know how it is you're filling out a form you've never filled out before and it asks a question you're looking at you go I don't know what they want,

Ian Arnold  24:24  

right? I can see that quite a bit. Yeah, yeah, it happens. Right?

Rick Ripma  24:27  

So that's what you got to do.

Ian Arnold  24:29  

Alright, so that's good, because I didn't know if I should wait till I had 20% down to buy a house anyways, because a lot of people say, to have 20% down so well,

Rick Ripma  24:40  

again, everything ever. All right, but on the surface, let's introduce home values went up by 19%. Last year in Indiana, they're up they're up 17% Currently, right. So if they're up that much and And let's say that they just go up 10%. And you wait. If it's two years, and it goes up 10% Each year, up 20%, you're I mean, you're you're losing ground, I would say you're much better off, especially with high credit scores. But with anybody, you're better off going ahead and moving forward today. If everything works out, if there's no issues, because you're buying at the probably the lowest price, I don't see, I don't, I don't agree with the media, I think prices are going up not going down. Like they're not going to continue at 20%. That's why we just said 10%. But I do believe they're going up interest rates, if they happen, if you get a house, they go down, we just refinance it. And if the house goes up, if it increases at let's say you put 5% down, it increases at 10% A year and a year and a half for two years we refinance out of it if rates went down and you get out of your mortgage insurance and get a lower rate.

Ian Arnold  25:54  

That's awesome. So this basically ends up but this is the type of conversation that Rick and I have with customers all the time. I mean it, I want to say it goes for Batum like that, but it's pretty close to it, especially for new new buyers. Sometimes people who've bought houses before, we you skipped over some of the some of the things that are easier. And they already understand because they've been through the process.

Rick Ripma  26:19  

Yeah, there's certain things we can't even talk about underwriting Correct. Okay, you have to have all these disclaimers and everything else. So we just don't talk about it. So that's that's part of it.

Ian Arnold  26:27  

But it doesn't take too long for. So basically, it takes like a 15 minute conversation and that wasn't even that long, then takes about a maybe 15 to 30 minutes to have an application and then you can literally have a pre approval in your hand. That's how quick and easy it is.

Rick Ripma  26:43  

Yes, it's very quick, it's very easy. That's why I think it makes a big difference. I think, you know, having the application taken by a person is so much easier and so much better. But there are people who it's not some people, like I said, there's nothing. My problem is is that I hate the talking. Okay, this is the way it is because it changes,

Ian Arnold  27:03  

it depends. And it all depends on some people. So if you're busy at work all the time, and you can't you and you can't really take a phone call or something like that. Well guess what? In my online might be quick and easy for you to do not I mean, I've had countless people do them online. But I've also had countless people call us and we do it over the phone. Because sometimes it's just easy for me to say, hey, how much do you make? How much does your wife make? All right? What's this? What's that? It makes it nice and easy. And it's a little bit, let's be honest, is a little bit more personable. Because I it's a conversation we're having. Right, right. But look, everybody's schedule is different. So hey, whatever works for you. We'll make it work for us.

Rick Ripma  27:42  

Yeah, I agree. I think it's, I think it's the best way. But you always have to do it, whatever is going to work for somebody, sometimes people are really busy. And they're only available late at night and on the weekend. And they're very computer literate. They much prefer other times you talk to somebody who they can barely turn on a computer. Right? And if that's the case, then it's much easier for them for sure for us to do that. I know we're running out of time. So I think I forgotten through the whole show. But if you would like to get a hold of us, if you have any mortgage questions, you want to talk to us have any ideas of what you'd like to hear on the radio, go to HardWorkingMortgageGuy.com That's HardWorkingMortgageGuy.com. And we'll be able to just put your information or give us a call and we'll be able to answer your questions.

Ian Arnold  28:27  

And next week we'll be talking about how, how can you get can you get a mortgage without a credit score? Also, how much can you afford for a home?

Rick Ripma  28:39  

Great, I think they're great things to go over. Thanks again. Have a great weekend.

Announcer  28:44  

Brent NMLS number 33041. Recruitment NMLS number 664589. Ian Arnold's NMLS number is 1995469 equal housing opportunity, some restrictions apply?

Unknown Speaker  28:54  

Well, first off, thank you for joining us, Danielle. I appreciate it. And I just was curious, how did you come to find out about Rick Ripma and advisors mortgage? Well, I

Unknown Speaker  29:02  

was looking for a mortgage for myself for a brand new home that I was building. And I wasn't sure the direction to go. I didn't have anybody in mind. So I kind of just spoke to whoever I could speak to. I got their number and everything seemed to be exactly what I was looking for. So I went with them. The thing I liked the most about Rick and his advisors mortgage is that I could go and upload things online. And I didn't have to always be on the phone with them or sending them documents or trying to look for certain things that I needed to get the process going. Which was really great for me. I had a processor named Mark Coleman who really helped me out in making sure I had everything I needed because I I didn't know the first thing about having a mortgage so it was awesome to have so much help. I think probably what I've benefited from the most is really just the understanding that sometimes I would get busy and maybe I forgot To upload a document or I forgot to do a certain part of the process in a timely manner, and they would get right back to me and it wasn't like a, hey, we really need this right now. It was always, Hey, just wanted to make sure you still remember that we need this.

Unknown Speaker  30:14  

Well, you don't get that too much in this day and age, it seems like most people are either, you know, very demanding of something they need from you, and they need it right now. And, and I agree, I've seen that in Rick's attitude with us over over the last 10 years that he's very patient, but also helpful to get the right things he needs. So, exactly. In conclusion is Rick Ripma and advisors mortgage, somebody that you would use in the future and or tell your friends and family about?

Unknown Speaker  30:40  

Absolutely. And I just want to thank them for all the effort they put in to help me find my dream home.

Announcer  30:45  

Ranch NMLS number 33041 Recruitment NMLS number 664589 equal housing opportunity, some restrictions apply.

Rick Ripma  30:51  

I'm Rick Ripma You can go to hard work your mortgage guys.com