The Agency Texas has kicked off a new Podcast and we're excited to bring you our first episode packed full of mortgage and loan insights from Brad Cullipher, CEO of Home Vantage.
Mortgages... are exciting? We think saving the most money and time is, yes! Brad dishes out exactly why he was in the top 1% of mortgage lenders in the US, and his insights are valuable for any potential home buyer or investor.
Randall Scott White
Welcome to Real Talk at the Agency Texas - I’m Randall Scott White. Here today with Brad Cullipher, CEO of Home Vantage, he’s been in the mortgage lending business since 2003, he’s seen all the ups and downs and has helped over twenty-five thousand people secure loans, Brad, thank you for taking the time today.
Absolutely, thanks so much Randall.
So it seems to me that a lot of people home shopping start out looking at some kind of search portal, find their dream home and then go to try to get it, find an agent and then get prequalified and it's completely backwards right now when they really should be doing pre-qualifications first, Right?
I completely agree with that. Yes. Because what you want more than anything, you know, as agents and as realtors, getting in the car with somebody and showing somebody five, ten houses that they don't qualify for and B, maybe they qualify for it, but maybe quite frankly, what we see a lot of times is someone may be looking at a $500,000 house and they can qualify for it however, they're only comfortable with what would generally afford them to be in the $300,000 to $350,000 range.
So it's an explorative exercise up front where everyone gets comfortable and makes sure that the expectations are what they need and want upfront from down payment, to payment, to time frames, etc. Um, so I completely agree with you. I believe that everyone should get pre-qualified first, not only just because of that, but B, we pull credit and you've got a late payment or maybe a collection that you didn't even know about from an insurance company three years ago that missed a $45 payment.
If we have 30 days to address that, that could save you literally a half a percent in interest rate, which over the life of loan could be $75,000 to $100,000 simply because prepitorally, we went into it from a strategic standpoint. Instead of walking in blind. You walk in blind and you find the house first, and now you're scrambling just looking for a lender. At this point you're under contract and you only have 30 days to close so you can't fix any issues that need to be fixed or kind of addressing the issues that need to be addressed. So absolutely. I completely agree with you in that.
The Internet is full of contradicting information about modern mortgage lending and people are often unknowingly given false information by friends and family. It's the wild wild west out there. A couple of questions for you that can really help people understand the mortgage process in 2018… First question is what do you see as the biggest points of confusion or lack of knowledge people have when it comes to shopping and qualifying for a home mortgage?
Sometimes what we see as the biggest points of confusion or lack of knowledge are, and more importantly to everybody in the transaction is the difference between a pre-qual and an actual pre-approval. You've got agents out showing clients homes, clients out viewing houses with the agent, and tying houses up under contract and starting to spend money and to be quite frank with you, a considerable amount of the time they don't even qualify and so it, it's kind of a waste of time and a big source of frustration for clients and agents when it comes to clients not really being fully prequalified A.
B the other thing that we see is just people chasing rate, meaning every mortgage company out there, their advertising gab is “the lowest rate period, the lowest rate period”. Well, with the lowest rate usually comes with the highest fees. And so our approach to it is to make sure that we get the right loan for you, for the client.
So, tell me what somebody applying with Home Vantage goes through, start-to-finish.
Start-to-finish, we identify, we basically chat, we find out wants and needs, we get information up front, then you're out shopping for a home with an agent. Once you find that house and you go under contract, then it's simply, that's kind of when we go to work and then that's when we order the appraisal, submit your loan to underwriting, get clear to close and we send money to the title company and then we have happy homeowners and happy agents.
Speaking of happy home owners and happy agents, this is a happy moment for Home Vantage with the launch of home vantage advantage and an automation of all that process. Tell us about this... this is the fastest as far as we know, fastest pre-approval process in the us?
In my opinion, it is. I mean we, we speak to a lot of people and we've had a lot of systems that we've kind of test driven and so you can click on our site, you can click on ‘Apply Now’ and realistically it's about a five-minute interview style application. It's not your grandmother's application that takes forty-five minutes where you've got to break out account numbers and everything else. It's a pretty simple intuitive style application. Once you actually complete that, it will email you a link that basically gives you almost like a Dropbox-type portal along with the documentation that's needed to get your actual pre-qualification. So there's no waiting on a loan officer, there's no, “I, uh, called them and they haven't called back”.
You can literally go on the website, go to “Apply Now”, fill out the application in your email, there's going to be a link and it's going to say we need two years W2's, two years’ tax returns, two pay stubs, and a bank statement. You can upload those from your phone if that's easier or you can upload them from your desktop. Once you do that, quite frankly we've got everything we need to evaluate and issue a pre-qualification letter and sometimes this can be done in as quick as twenty minutes. There's a lot of traditional banks that can take three to five days to issue that and we do have the ability in certain instances to do this in an actual twenty-minute time frame. So - unbelievable.
There's a fear out there that credit checks are going to make somebody take a hit against their credit score, but that the mortgage industry doesn't actually have an impact. Is that true or false?
Having a credit pool when you've got, you know, not good credit, but poor credit, could kind of hurt you. However, if, in my opinion, if there's a safe type of credit at this point the industry has created, it would be the mortgage industry. And the reason why I say that is you have to... There's something called qm and safe harbor and basically all mortgage companies now have to qualify. And it's the most, it's the most scrutinized in the industry in terms of lending. You can go get a credit card or you can go buy a car. And um, a lot of times you don't have to submit any income documentation. Well, you're not buying a house like that. And so you're, you've got an underwriter that's actually going through and making sure that you meet ratios, making sure that you can afford that payment and that you've got extra income monthly just for regular housing expenses.
So it's not viewed in terms of the way that it would be as if it were a car loan, A or a credit card B because it's actual, you know, it's an actual qualified debt. The other thing is as well, a lot of people say, I've already had somebody pull it. I don't want to have somebody else pull. It'll hurt my credit. Well, if you've had it pulled and they understand that you're going to shop for a mortgage, just like a car and you've got a permissible inquiry period. So again, yes, it's a hard hit, but the additional pulls won't impact your credit because it's falling under that permissible inquiry period.
In this market, for somebody who is already paying the equivalent of a mortgage in rent, is it possible to get a mortgage with zero down? Or if they don't have a lump sum to put down, what can the current market conditions offer buyers like that?
Fantastic question. And there, there's a, there's a multitude of loans that either have low or no down payment. Obviously there's a VA loan which is one of the best loans out there. And we, we support veterans. I'm a veteran myself, but that's a zero down home loan up to a certain amount. Obviously if you go into Jumbo territory, you've got to put a little bit down, but that's a zero down home when we're very, very favorable lending conditions. There's another loan that's, it's acronym as USDA and it's most of the time in rural or underdeveloped areas. And that's another zero down home loan. The other types of loans are conventional and FHA. FHA has as little as three and a half percent down. It's kind of went in and out of favor in terms of, you know, you've been able in the past to buy a previous FHA foreclosure for as little as $100 down as well.
FHA and conventional now you could not have the funds yourself, but they can actually be gifted to you, meaning given to you from a family member, etc. So you can technically still come with none of your actual money coming from you down to complete the transaction. A lot of times what we kind of look to people to show them as well as they may not physically have it, but they may have an, an, a 401K or a retirement account and they can borrow from that. And sometimes just disclaimer, I'm not a CPA, obviously, so verify with your accountant, but a lot of times you're actually able to borrow or withdraw from that. A lot of times you can borrow from it with no penalty. You just pay your 401K back, the money obviously. But a lot of times you can actually withdraw, I believe it's up to $10,000 if it's your first house or you haven't bought a new home in the last two years, a penalty free. So would still pay your taxes on it, but it would be penalty free in that particular instance.
And in particular, our company, The Agency Texas, we appreciate doing business with Home Vantage because of the fact that you seem to be an anomaly where you're checking on clients to make sure that they're taken care of and if it’s late at night, and our agents are so appreciative. Are you an anomaly in the market, and what is the importance between a brokerage or a real estate firm and their lender?
Unfortunately, I do feel like, you know, that's one of the things that set us apart. I was last year even originating prior to me becoming the CEO of this company, I was in the top one percent of the nation. But it wasn't because of anything special by any means. It's just that to me it's customer service and it's understanding who your client is. And to us, our client is obviously the client is buying the home, but it's also the agent, our agents or our partners. And what I mean by that is we don't share profits or anything, but we're in business together and we all, if you're in business together with someone, most of the time you want to be aligned with the best of the best and you want to be aligned with people that share your specific beliefs in business, which to us is it's honesty and it's accuracy, and it's blessing others, and it's, it's giving, and it's over communicating and it's proactively communicating, not reactively communicating.
And it's understanding how, how big of a deal than it is to the average person to buy a home. And we understand that it's the largest financial transaction most people ever make in their entire life. And most people only buy a house every seven to ten years. And so we don't take that lightly. I think in our industry, realtors and loan officers a lot of times get a little jaded because we do this for a business, we do this for business, we do this so often that 30 to 50 transactions a month. I mean, it's just another closing. To us, it's not another closing, it's another relationship. It's another family help. That's another changing of guard for a neighborhood. It's a, it's a generational thing and I, we don't want to just do the loan for you. We want to, we're going to be here doing the same thing with the same phone number five, ten years from now when your kids are buying homes and when your child is twenty-five years old and he's buying his investment property and we helped build his investment portfolio and when you start to age and you're looking at doing a reverse mortgage and maybe taking some cash out or maybe sending kids through college or maybe you've got a brother, a sister in another state.
That's what we're here for. We're here for the relationship. We're here for the long term and not just specifically this transaction. To answer the question about the importance of a strong relationship between a lender and a real estate company, more than anything, it's trust. It's not anything other than it's a team. You build a team and successful teams don't switch sides very often. You don't see in general people winning the championships in anything in the NFL and basketball with someone changing teams every year. You develop relationships with people that you can trust and that you can lean on when you need to get an approval letter at 11:00 at night and it's Friday, but you've got a multiple offer situation and you know, a lender that understands that and is willing to do what needs to be done to get the client into the house A, B, the relationship is strong also because the lender has to be able to get that client to closing on time as agreed, or again, they're putting everybody in jeopardy. You're putting the client in jeopardy of losing their earnest money. You're putting the client in jeopardy of, we see lawsuits where people don't close, and you know, they're sued for specific performance and at the end of the day, our job is to protect people or jobs, it’s customer service. It's to give passionate advice, passionate service, and to be able to help people along the way so the relationship is crucial just in terms of trust and continuity throughout the transaction.
So if I've been paying attention in our conversation, it should start out with someone going to home vantage, filling out their quick one stop, one button Home Vantage Advantage, pre qualification, and you're also going to give them a thousand dollars to start that trust relationship? This pretty awesome Brad.
It is. We're blessed and we just want to, we want to help. We want to help other people. So we're very excited. If there's anything that we can do to assist, we want to be there and we want to be an integral partner for agents, for our builders, and most importantly for the client. So, we're here to serve.
RSW:Brad Cullipher, CEO of Home Vantage, thank you for taking the time today. I certainly understand the mortgage industry a lot more. Appreciate your time.
Thanks Randall, it was a pleasure.
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