New Changes To Lending Limits Agents Need To Know About! • Learning With A Lender • Joel Schaub

Welcome to the October episode of Learn with a Lender with Joel Schaub of Guaranteed Rate!

In this episode Joel discusses the changes happening in the lending world and also shares strategies for listing agents to get the most out of the changes in the loan limits. Next, Joel discusses why this is a great time to buy. Joel also shares his thoughts about the upcoming market.

Sign for Joel’s newspaper by sending an email at joel@rate.com writing “newsletter” in the subject line.

If you’d prefer to watch this interview, click here to view on YouTube!

Joel can be reached at joel@rate.com and 773.654.2049.

This episode is brought to you by Real Geeks.

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Transcript

D.J. Paris 0:00
Did you know there have been changes to the loan limits for jumbo loans versus conventional loans? Or we’re going to talk about that today and show you some creative solutions to get around high interest rate environments. Stay tuned. This episode of Keeping it real is brought to you by real geeks. How many homes are you going to sell this year? Do you have the right tools? Is your website turning soft leads and interested buyers? Are you spending money on leads that aren’t converting? Well real geeks is your solution. Find out why agents across the country choose real geeks as their technology partner. Real geeks was created by an agent for agents. They pride themselves on delivering a sales and marketing solution so that you can easily generate more business. Their agent websites are fast and built for lead conversion with a smooth search experience for your visitors. Real geeks also includes an easy to use agent CRM. So once a lead signs up on your website, you can track their interest and have great follow up conversations. Real geeks is loaded with a ton of marketing tools to nurture your leads and increase brand awareness visit real geeks.com forward slash keeping it real pod and find out why Realtors come to real geeks to generate more business again, visit real geeks.com forward slash keeping it real pod. And now on to our show.

Welcome to another episode of Keeping it real the largest podcast made by real estate agents and for real estate agents. My name is DJ Parris, I’m your guide and host through the show today, once again, is our monthly series learn with a lender with Joel shop from guaranteed rate. Now, Joel is the vice president of lending at guaranteed rate. And he’s been doing loans at a high level since 2003. And he got to that level because of what he does specifically for agents, which is that he gives back part of his commission to the buyer on every transaction. So last year alone, Joe gave back over $300,000 in closing costs to buyers who worked with them. And that puts Joe’s volume in the top 1/10 of 1% of loan officers nationwide. fact there’s 400,000 loan officers in the country and Joel is currently ranked number 137. Even in this down market. Joel has closed transactions this year for 102 million. So if you are looking for a loan officer, we cannot more highly recommend Jolie’s the very best we’ve ever worked with Joel can be reached at joel@rate.com. Again, Joel at jll@rate.com. You can also shoot him a text message or call him at 773-654-2049. Let’s say hello to the biggest Cubs fan. I know Joel sharp. Welcome back.

Joel Schaub 2:55
Hey, thanks so much for having me on. We have so many things going on in the market right now. These are usually my favorite time of month getting on here. Giving back and talking about things that really can help agents grow their business.

D.J. Paris 3:10
Yeah, thanks. We love having you. And even when you are either in your office or working Mobley you always make time for our show. And we absolutely appreciate that. So yeah, let’s talk about some changes that have been happening in the lending world. I’ve been hearing a lot about loan limits that have changed. Um, can you shed us some light to our audience of what is that and what do agents need to understand about it?

Joel Schaub 3:40
Yes, unless you’ve been living under a rock, you’ve been seeing multiple posts from everybody talking about the Fannie Mae and Freddie Mac loan limits have gone up, instead of just talking about it. How does that help me as an agent what was not able to get a loan above the new limits before? Right? So the numbers, if you haven’t heard are up to $766,550 a mouthful, right? So the bottom line for this is that you’ve always been able DJ to get loans above it before but they were considered jumbo mortgages, right? So if you’re in the jumbo category, they were with higher interest rates, they were with more downpayment and typically a lot harder to get underwritten and approved. So now, Fannie Mae and Freddie Mac have said that loan amounts that go up to 766 550 now fall under their category, which means a lot more advantages for first time homebuyers, for example. So

D.J. Paris 4:44
now we’re we’re what used to be classified as possibly jumbo is could potentially be non jumbo at this moment.

Joel Schaub 4:54
And so think of it last year if you were buying an $800,000 home you couldn’t put down On 5%, if you were buying an $800,000 home, you are well over that number, that 5% down would have put you into a jumbo category. Well, now you’d go out and buy an $800,000. Home with $40,000 down. And now the loan amount there of 760 falls under the jumbo limit. So there’s some big advantages for first time buyers here. And that’s why I always like to, like get into the weeds with this, it’s not so much seeing the data and hearing the numbers. But if I’m an agent, how do I go out and market to my database right now to get one more buyer or one more seller. So think of this right? A lot of times, you’re right on the cusp of pricing a property, right, we’d ever want to price ourselves into a jumbo loan, if you can, right meaning now knowing that first time homebuyers can bind with 5% down in most of the Fannie Mae conforming limits. Think of that as a strategy in terms of how you would price the home, maybe you wouldn’t price it at 825, maybe price it down at 805. Knowing that a first time homebuyer would qualify. And that’s where they will be setting their limits themselves.

D.J. Paris 6:14
That’s an interesting strategy. So actually listing agents may want to consider if they have a home that is within these sort of like, if they have a home that’s 800,000 or above, this would be a great thing to consider when pricing.

Joel Schaub 6:32
Yeah, take it to the next step, what would have put somebody out of jumbo before, okay, so the jumbo limit last year was 726,000. That means if you had a listing that was over 907, everybody was 20%, Down, Right? You had to otherwise, you were in a jumbo without 20% down, and I won’t get into how that would really affect the rates being higher and mortgage insurance. But now that $907,000 listing is easily under the 766 number. So taking a little bit of time doing the math to see where you should price your homes. And then knowing this gives you a lot of talking points when you’re out getting a new listing or helping a buyer. Yeah,

D.J. Paris 7:18
you know, I’m thinking as, as what an agent might want to consider talking to their buyers about is maybe now is a good time to buy because number one, a lot less competition, a lot less buyers are flooding the market. So prices are relatively stable at this point. We know when there’s lots of buyers that flood the market, of course, supply and demand the pricing goes up. So what you can always do is possibly refinance your rate, but you can’t refinance. You know what you spent, what you bought the property for. So this may be a good time. So what you know, but at the on the other side of it is the public goes but rates are at seven plus or you know, maybe even higher. And yes, money is a little more expensive to borrow at this time. But with a lot less competition, you’re not going to be likely to overpay. And so to me, I think this end with these loan limit increases as well. This is what I would be educating buyers on if I was an agent working today I’d be talking about I know it seems like it’s not the right time, because everyone else wants a three to 4% You know, loan but those days those days have passed. And the good news is less competition and probably lower pricing.

Joel Schaub 8:37
I think you’re exactly right DJ with the rates this year. It’s been sixes sevens and even eights as of this month and buyers are still calling 80 to 100 a month, I’m actually overwhelmed by the number of people, especially where I live in Chicago, that the rents DJ are just so much where they’re still looking to buy even though the rates are high.

D.J. Paris 9:02
Yeah, and again, just remember to guys competition, right? We want to talk to our buyers about competition and when we have lots of buyers flooding the market, we know that influences prices, and you know your job as an agent is your fiduciary. So you are to do what is best for the client’s financial interests. So having these conversations with buyers about Yes, it’s a slightly more expensive time to borrow than it was in previous years. But I would much rather borrow at a higher rate for temporarily for to get a lower price on the home I want to I want to buy so we’ve seen you know prices are stable right now. So now’s the time to get the buyers off the fence and can you know encourage them to consider not waiting for those rates to come down.

Joel Schaub 9:51
You know I had an agent the other day asked me so they know what I do in terms of even in this down market doing $10 million a month and They say I want to get to $10 million a year. Howard, how is it possible that you’re doing it? So I shared one of the two, one rate buydown techniques that I talked to a lot of buyers about. And when there’s no competition out there when you’re actually submitting an offer, because rates are high, and you can ask the seller to fund a to one buy down, I like to tell them that, if you don’t ask, you’re not going to get all right. So if you’re not familiar with a way to do it, if you’re an agent, connect with your lender, ask them do you facilitate to one by downs, almost every lending partner out there, we’ll do this for you. And on a $400,000 loan, just asking the seller to give a 10 to $12,000 credit DJ will lower that client’s payment by almost $500 a month. Versus if they were just getting 10 to 12 grand off the price barely changes their payment by $88. Wow, writing. Yeah.

D.J. Paris 11:01
So this is a great a great option for sellers to even consider as maybe putting that in as part of their offering. Without waiting to have it as for say I am willing to work with you on your loan. And if a if a buyer down would make sense to get this deal closed, we will do it. And so it really becomes I think a marketing tool for both sides, obviously at the buy side, but it’s also something that listing agents should be aware of. So they could consider if that would make some of these these offers more attractive.

Joel Schaub 11:37
Instead of doing a price reduction, right, a $10,000 price reduction is probably not going to move the needle and we certainly don’t want to do a $25,000 price reduction on a four or $500,000 home. Therefore, if we could just give up 10 to 12 grand in price, and give it to the buyer that’s gonna make that buyer in that price point, make that home look so much better than the neighbor’s house, right? It’s about payment. For a lot of the first time homebuyers. Almost everyone asked me, not how much am I approved for but what are my payments if I buy this home? And so that’s the big deal if I’m a listing agent, and I know that it’s overpriced, and I don’t want to ask the seller and come back with that damn conversation about they can sign for another price reduction. How about we do a marketing blitz and show right now that with rates down there in the low 70s, I even today was able to lock in a 30 year fixed with the buy down where for the first year the rate was 4.99%. In year number two was 5.9. And then fixed for the 30 years, we were back to 6.99%. And that was all because the seller gave a 3% credit to our buyer. So we use that to drive the rate down and then use a two one buy down strategy to further give the client savings.

D.J. Paris 12:59
And these are the kinds of strategies that really do separate the top agents from the rest that agents who are willing to understand there are these creative solutions that 99% of agents aren’t that familiar with that this is how you get to become a specialist. And this is where why we have these these episodes with Joel because he of course is. And he teaches all of you the same stuff. So you know, just as a quick plug for Joel, he’s been coming on our show for five plus years, providing incredible value to everyone. So please, if you don’t have a loan officer that is bringing you these kinds of ideas, reach out to Joel, he would love to chat with you about that as well. Joel, I would also love to talk about your sort of thoughts about the upcoming market. So we know it gets a little slow in the winter months. And of course, spring is not far away. So do you have any thoughts about what we might be thinking what we might be seeing? I know it’s no one’s got a crystal ball, but what what are your best thoughts for for this upcoming spring?

Joel Schaub 14:06
Well, I have a hot take, okay, this is it might not be what everybody’s expecting. But this is gonna be an earlier spring market than ever. Okay, rates really did just come down in the last two weeks. Okay. And by all indications, we’re probably about a 48% chance that the Fed cuts rates and QE number one, meaning buyers are going to be out there hot and heavy. They don’t want to miss out and it’s strange, but it’s true. There’s going to be multiple offers if the properties are priced right. And I’m not talking March, April, May, I’m talking January, the start of the new year we’re going to start seeing rates, they might be down into the mid sixes. And if we see that we’re going to have buyers coming out of the woodwork that say finally, rates are no longer in the eighth they’re not in the sevens I can easily get into the six says, and then still use a buy down strategy to get a rate maybe at four and a half or five and a half for the next two years. There’s gonna be a lot of activity early. And we’re going to look back on this episode saying to him, Joel, you were right.

D.J. Paris 15:16
You know, I still just think there’s so much opportunity right now to convince buyers are not convinced, of course, they should do what’s best for them, but to encourage them to really consider the implications of if the Fed did drop. If tomorrow if the Fed decides, you know what, early Christmas present for everybody, we’re going to drop 200 basis points, we’re going to drop 2% of the rate on a rate. Can you imagine what would flood the market as far as buyers? Everybody who is on the sidelines right now, would jump back in because of course, it’s such a huge event. And this would be really, it would be a good and a bad thing for buyers. It’s good because it gets them off the sidelines bad, because now they’re all competing with each other.

Joel Schaub 16:00
You’re exactly right. This is the we’re gonna see early, but I think towards the q4. So it’s gonna be this kind of like a camel shaped recovery next year, I think we’re gonna see it really shoot up in q1, when feds are talking about rates, summer is going to be a little bit slower, but the feds are going to cut again. And so when we get into the fall market, there’s going to be rates considerably lower multiple offers, getting back to the tougher situations as agents that you better be ready for. And so TJ is exactly right. Knowing that this is coming, like they’ve outlined to the feds are cutting rates, why wouldn’t we try to go out and buy now when there is less competition, because once we own the home, the client can refinance that loan, and get the better interest rate down the line. We should

D.J. Paris 16:51
also mention too, that these types of strategies, you know, this goes back to sort of the stock market ideas. Buying when a stock is undervalued or underperforming, doesn’t feel as encouraging at the time of purchase. If you are, you know, just getting into the stock market, or like oh my gosh, this company’s down, I want to buy them when they’re not doing well. Well, yeah. Because then when they when they rebound, of course, you’ll you’ll receive all the upside benefit. So you have to I think, as an agent, really think about how do I start conditioning my clients that even though that rate feels a little yucky at the moment, don’t worry, it’s yes, it feels yucky. But here’s why it’s still a really good idea. I think if if if agents can start having these conversations with some of these bullet points that you share every single month on our show, they would get more transactions right now, I am absolutely confident of that. Because everybody talks about the rate and rate rate rate rates are high. Yes, yes, we all know that. And here’s why it’s still a great time. And having those conversations is is really doing the right thing for your client. And it’s doing the best thing for them from a fiduciary perspective, making sure that they know what everyone else doesn’t that it’s actually a great time to consider borrowing right now, even though that rate is higher than anyone would like, of course, rates are always going to be higher than anyone would like Right. Of course, that’s always the case. But we know that the Fed has Joel said is outlining an opportunity in the next year or longer to decrease rates to a more palatable time. You don’t want to wait for that time. Because by the time that happens, everyone’s going to be in the market.

Joel Schaub 18:28
If we can afford the monthly payment with the higher rate, think what happens. Okay, so now we’re buying a piece of real estate today, when it’s uncomfortable, right? Let’s be clear, like rates in the low 70s. Even if you get them down into the six, that’s still a lot of uncomfortability for a lot of folks when rates were in the twos and threes during COVID. Okay, but stick with me here and think of like in my market of Chicago, it’s not crazy million dollar homes. My my average client, most of them hundreds a year are four or $500,000 homes. And if you bought a $400,000 home right now when nobody else was buying, because rates were in the sevens, and rates get down to five and a half, you better believe that $400,000 home is worth more buyers are going to start paying more for homes when rates go down. So why wouldn’t we go buy something now when rates are high, only if we can afford it, we don’t want to get in over our head. We don’t want to buy a piece of real estate and it’s going to cost us too much money. But if we can comfortably afford it, and we know that rates are coming down, you know your home is going to be worth more and then you’ll reap the benefit when you refinance the loan.

D.J. Paris 19:42
I love that it’s so true. And we’re gonna keep banging the drum on this because once rates do start to really come down, this is all going to be a lot more obvious. And so we want to try to get you in on on the ground floor so to speak, so that you can do not only do what’s right for your client, but also To begin to, you know, really show your value as an agent, right value as an agent, why are they paying you as much as they are to help them buy or sell a home? It’s because of ideas like this. So thank you, Joel, for that I also Joel, Joel is what a lot of people who listen who might not know this about about Joel and his team, is they are exceptional at client appreciation events. Really, Joel and his team, it’s the best I’ve ever seen in this industry, with the amount of giving back that Joel does it he and his team. And I’m just curious to know, because you are always so on top of this. You know, it’s the holiday season agents are probably thinking about what they may want to do for their their clients in it, whether or not it’s you know, something for this holiday season or the future. What might you suggest because you always have amazing ideas for your own clients.

Joel Schaub 20:57
Well, I’m already looking ahead. Unfortunately, the December months have been booked and planned since July, right. So right now, as of this taping, what we’re talking about, we just did it with my team this morning, Valentine’s Day and St. Patrick’s Day, all right, and sending sending gifts on these off days. So it’s not just the events that we do if you’re an agent, trying to come up with ways to touch your database on off days, like Valentine’s Day, St. Patrick’s Day, I do Presidents Day, I do National Pizza Day, I do all of these little cute things. Because if it’s Christmas or New Year, you’re lumped into the mix, there’s so many gifts, I stopped doing birthday gifts as well, everyone gets a birthday gift. And I know that boo, you don’t send out birthday gifts, I don’t I want to stand out you as an agent want to stand out, no matter how good your gift is to a client. Something better, right? You’re gonna send but when they’re not expecting a gift, when they’re not expecting something boy, they say that that came from my realtor, that realtor sent me this gift. So I encourage you to think of these off days where you can send out small tokens of value where you look different. And I know DJ, you were talking about events. And I just went on the tangent because I was just doing you know,

D.J. Paris 22:19
I really I really meant all sorts of marketing appreciation that you do, which whether it’s events or product, or you know, gifts. And I really miss it was my Miss misspoke. But But yeah, so of events are obviously always great as well. I was thinking more about the the actual gifts. So you were you were saying you were saying what I didn’t say. So thank you for that. And yeah, so maybe not focusing so much on the December holidays. As much as it’s kind of like this, we do the same thing for our holiday parties. I don’t know, if guaranteed rate does the same thing as we stopped planning them for December because we’re like, Everyone’s so busy, nobody so hard. Like we’re we just do it in January now. And we do that because number one, it’s kind of fun to have a party in January when no one’s expecting to have a party. So Joel is basically saying the same idea whether you’re doing a client appreciation event, or just a gift, you know, find a fun, cute thing that is on an off day where people wouldn’t be expecting those kinds of things.

Joel Schaub 23:24
I had a I did a kind of a pipeline review with an agent today. And so this was an agent that is in the city of Chicago has a big database. And they do a lot of volume. And I looked to see who their preferred lender was. And I noticed that they were only capturing about 5% of their business. And so during the presentation, I was sharing with them that they did last year to the tune of about 310 deals, but their person, their their person that they were so loyal to only captured about 5% of the business. And I shared with them that they’re leaving money on the table because out of the last 15 transactions. There are 14 different mortgage lenders on that list. And I said whether you decide to partner with my team, and I showed him everything that we do, and I said this is worth money, literally there’s RESPA compliant ways that lenders would pay to be your preferred lender. And on that example, it was about $48,000 A year is what I shared that I’d be willing to step up in a heartbeat and write them a check for 48 grand a year to apply to RESPA compliant things like silho and their events. And it kind of blew them away. They I knew we were valuable. And I knew that my preferred lender that they liked it was a high school buddy and he’s like, I know about grown to them and I really did need to you know they connected with me. They wanted to hear what I was doing with other agents. And the reason I bring this up is if you are listening to this and you do a lot of business, connect with a lender. literally doesn’t, you want somebody that’s local that you really like that wants to spend money with you? Okay? And this is where all realtors they’re afraid to go ask but don’t lenders will step up DJ, how often do you hear me talk about this

D.J. Paris 25:14
every single time and I love that you’re you’re you banging the drum about this is hold lenders accountable for helping you grow your business, they want more of your transactions? Of course they do. And as a result that that is worth something and of course staying within RESPA and and you know whatever association rules apply making sure you’re doing it the right way. But making sure you’re not undervaluing your business as an agent. You know, if you’re doing however many deals a year, and on the buy side, think about how many different lenders did I work with? And on those those lenders? What did they do to help me further my business? And what are they doing currently to help me further my business? And did they send me any referrals, and you know what, and that now it’s time to start interviewing loan officers.

Joel Schaub 26:04
So if you’re listening here, and you’re doing over $20 million of annual production per year, reach out to me for sure, I’ll show you what you should be doing. And how you can go back to your lending partners there and say, there’s somebody else out of state that’s willing to do this for me, can we even come up with something close to it. And if you’re doing less than $20 million, reach out to me and get on my newsletter. This is where I share with you the simple tips, tricks, and things that will make you sound smarter. Make you have real talking points in digestible little bites. So it’s just an email to me, it’s joel@great.com JO el@rate.com. And in the subject line, you can write a newsletter. And then that’s it. There’s nothing you don’t need to write me three paragraphs unless you want to tell me how much you love us. But it’s easy to sign up for the newsletter, you can unsubscribe anytime, and it’ll be action packed with things that you can actually use to grow your business to the next level.

D.J. Paris 27:08
Yeah, I really echo that get on Joel’s mailing list every Wednesday or so they are sent a sends out this great, super easy to read and understand and actionable bullet points about here’s what’s going on in the market. Here’s as an agent, what you should be talking to your clients about. You don’t have to wait for Joel to come on these episodes, although we hope that you continue to listen to our show as well. But don’t wait even for this, you want to know weekly what’s going on. So get on his mailing list, send him an email joel@rate.com There’s 1000s of people on this on this email list. Now it’s grown hugely popular, and it’s a nice service that Joel provides for our listeners. So thank you, Joel. And also again, if your loan officer is just not really helping you do more production, or come up with creative solutions for your clients in this market. Now’s the time to again, find the really good loan officers and guess what Joel is one of them. So reach out to him and if he can’t assist you, He will give you some great ideas of where you could possibly go but he and guaranteed rate they’re licensed in all 50 states they can of course help you as well. So Joel up, everyone emailed Joel get on his mailing list joel@rate.com If you are, you know doing more than 20 million also say, hey, I want to do a review of my business with you and see what Joel can and his team can put together for you as well. So Joel, another wonderful episode, it’s our last episode of the year for learn with a lender. So Joel, thank you so much for another year of service to not only me personally, and my team, but also every single listener, we had the most number of downloads to date. In our entire history. This year, we were up about 30%. So we are super grateful because it’s people like you that come on and give us this valuable information that keeps people coming back. So thank you to our audience too. You guys are the greatest this may be the final episode of the year. So I would be remiss to say thank you to everyone who’s been with us, either whether you’re new or that you’ve been with us since the beginning but we appreciate you please tell a friend tell a friend and by the way if you know another agent that’s like that, you know, their their preferred loan officer isn’t doing a good job for them. Send them a link to this episode. You know, it would do them a service as well. And just keep keep the love going let other agents know about our show. But on the in the interest of wrapping up this year, we will say goodbye to Joel and hello to Joel in January for a whole new year of content. So thank you to Joel and his team at guaranteed rate again, email him joel@rate.com guys he’s really that good. And I wouldn’t say that if I didn’t believe it. It he really is and he’s earned my business so he should he has let them have the opportunity to earn your business. as well, Joel, I need to become your pitch, man, maybe we can, we can work out, I could start doing commercials for you, I’ll be the I’ll be as your biggest fan, I’ll be your pitch tomorrow big

Joel Schaub 30:10
fan and everyone that. Remember, like the sky is not falling rates have already come down. So take away with this next year. If you’re in this business now stay in the business. If you’re new to the business, stick with it, there is so much that you’re going to be able to do when other people leave. So keep positive, know that rates are coming down. And know that no matter where rates are at if you work your sphere, work, the people that you know, and then do a great job. This business is for you, you’re going to do great now

D.J. Paris 30:43
is that now’s the time really that the good agents do even better. So this is the time because they take market share away from the agents that are falling behind. Don’t let that happen to you. Keep listening to our show, reach out to Joel he will give you ideas about how to keep moving your business forward. And please keep coming back and listening. So Joel, on behalf of everyone. Thank you on behalf of Joel and myself to the audience. We love you. Thank you for a great year, and we will see everyone in 2024 Thanks Joel.