20. HOME LOAN 101 – GETTING STARTED AND PRE-APPROVAL

SUMMARY KEYWORDS

people, pay, loan, transaction, buy, loan officer, Adrian, house, home, money, payment, lender, afford, clients, absolutely, rent, debt, pre-approval, month, lending

SPEAKERS

Rob, Intro, Adrian

Intro  00:02

Welcome to the get rich, slow podcast. This is the stuff we and our expert guests wish we knew a decade ago to get the most out of our financial life will provide you with insight into wealth building activities and practices that can expand your net worth exponentially. get insight from top professionals who will reveal how to build wealth the long way, work smarter, not harder and identify your financial blind spots. With over 25 plus years of experience as licensed real estate professionals and a long track record of winning for their clients. Robin Adrian will teach you what it takes to be an everyday real estate millionaire.

Adrian  00:44

Hello, future millionaires and welcome back to the get rich low podcast. I’m your co host, Adrian Shermer, joined by Robert Delavan. Rob, how you doing this morning?

Rob  00:51

Wonderful, good morning.

Adrian  00:54

And today we’re going to talk about something near and dear to my heart. I cannot we were just talking about I can’t believe it’s taken this long. But let’s talk about home lending. Let’s talk about it from a core novice perspective. And then I want to work our way into the more complicated stuff. We’ve talked a lot on this about I mean everything vacation rentals, how to leverage equity in your house. But let’s get down to the basics. What are you saying?

Rob  01:19

Yeah, so this is a fun one for me, because we run into this all the time. And what happens is, people generally come to a realtor first. Right? And then I’m referring, or my team is referring Adrian as the lender. And the reason we’re doing that is okay, we could go out and show you, you know, 20 homes based on you know, home snap realtor.com, or there’s a whole bunch of others. And because you’ve been shopping, you know, window shopping, whatever, Ooh, I like this house. It’s 400,000. I like this house, it’s 550. You know, there’s a big range, right, based on income and qualifications. And we’re like, Okay, well, we’re not gonna look at $400,000 homes if your taste is 550. But and that’s what you need for your family. But we’re also not going to look at 550 If you’re only qualified for 400. So, enter stage left, Mr. SHERMER? Absolutely. And that’s where we’re like, okay, you got to talk to a lender that number one we trust. We’ve talked about that in other episodes, but let’s just assume that that, you know, all parties are, you know, the best, top notch in their fields. And it’s like, okay, Adrian, do your thing. Well, what we want is a pre-approval letter, what we actually are talking about the approval letter, pre-approval letter is just a product saying you can afford up to x. What really goes into that preapproval letter is what we wanted to talk about today. And kind of more like unpacking the why. And it comes back to what kind of income do you make? What can you afford? And there’s all of these little boxes that we are there’s a box that we have to basically put the client into? Yeah, so yeah, so start us there, I’ve referred you, Adrian, you’re going to do your, you know, typical new client, introduction, presentation, that sort of thing. So, start a start down that process.

Adrian  03:27

Absolutely. And I’m just going to skip the song and dance of this. Because there’s a lot of maybe ism out there. When you look up this data, you need a pre-approval, you cannot make a real offer on a house without a pre-approval, right? Of course, there’s going to be exceptions to what I’m saying. But realistically, for most people, if you don’t go to the bank, you don’t get your preapproval, there is an aspect of wasting your time. Now if you want to go shopping, you want to figure out how much did does the house that I want to sell for? And is that even, you know, just to have an idea, but sometimes people come to me with budgets, where they’re like, I want to spend 300 or 4000? No, you probably don’t, it probably genuinely matters very, very little what the house is worth what matters to most people more than anything is the monthly payment, and how it fits in with their lifestyle. You’ve got to make the decision, but you’re gonna really from that backwards because cash flow is important. We talked about it, you know, everything from budgeting to retirement savings, etc. You’ve got to decide what chunk of your money is going to go into this and it’s different than rent. The same thing a lot of people go on paying 15 under for rent now. So, I want to pay 1500 on the other end. That is a good strategy. Obviously, you’re gonna be able to live at the same comfort level, but you’re also taking a step forward in life and a lot of people will end up spending more once they start having the conversation because the game inequity and the fact that it’s gonna go up a little bit taxes and insurance are part of your payment they’re gonna go up right, but those are just a portion of the payment and that amount of rays per year is traditionally a lot less than how much rent goes up. So even if You start paying more than you would have paid to rent the place, which is more common in metro areas less common in rural areas. That curve of rent is going to climb up over and then wonder you can be that person who says, Yeah, we got our house 20 years ago for what people now make a year on average. And our payment is, you know, 1/3 of what rent is right now. So

Rob  05:21

to throw some numbers in there, yeah, typical rent, you know, for a little two-bedroom place in the Portland metro area, maybe not in the nicest, trendiest walkable neighborhood, but just, you know, a typical, an average of over 15 1600 bucks a month is pretty typical for a nice two bedroom, right? Yep. That’s run of the mill. That’s just typical. So oh, man, I’m going to buy a 400,000 Our house, and the payment is going to be you know, including taxes and insurance, fixed payments. And let’s just assume for this conversation, we’re doing fixed payments. Oh, man, the payments gonna be 2200 bucks a month, right? So be it. Five years later, that $1,500 place may be renting for 2200. And for 400,000, you bought a three bedroom, two bath house. Yeah. So, and because I know what the rent was when I got here 10 years ago, so. But what happens is, is 10 years later, that payment of 2200. Now the rents 20 520 years later, the rent for that same place is 3500. And people are like what you live in this house for, you know, 2200 bucks a month, like, oh, my gosh, this is crazy. And there’s that crossover. So

Adrian  06:36

yep, that’s another factor here, too, that I don’t want to spend too much time on packing. But I will give an aside is that people also have to factor if you don’t have any money down, or you’ve got very little money down, you’re doing the 3% down, you’re doing a program that’s going to give down payment assistance, you’re doing USDA 0%, down VA 0% down, you’re doing FHA three and a half percent down all these programs have very low down payments, but there’s usually a catch 22 to it, and it is that you’re going to pay something like mortgage insurance, which is going to bump your payment up. And it’s going to be a portion of your total payment. But that’s okay, because again, it’s that’s the short-term problem. And then you build that equity, and then you can drop mortgage insurance, on average, in at least our metro area, you know, people buying with even three to 5% down would have that 20% equity position where they can drop the mortgage insurance out of that payment within four and a half, maybe five years, that are not crazy. That’s not you know, using exceptional numbers, or great year. That’s just normal appreciation and paying down the balance at the same time. So very typical, we’ve crossed that bridge, what do you want to do when you want to go out shopping for a home? Again, interviewing realtors, figuring out who you want to work with, who’s going to be your realtor and your lender team is great. But the lender has to give you that preapproval letter for you to get out there shopping. And the process is it’s not as difficult as I feel like it may be made out to be it really is pretty much as easy as a lot of other lines of credit. You know, applying for a credit card takes filling out a form online, it’s pretty much the same thing with a home loan, we just go a little bit of an extra step. Let’s use someone who’s the W two wage earners an example. So, you get paid a salary or an hourly wage, you get paychecks you get w twos at the end of the year. Typically, we’re going to need one or two more often two years’ worth of W twos pay stubs covering the last 30 days’ worth of income. So, like if you’re paid by weekly, and that’s a couple paychecks you’re paid weekly, that’s for and then copy of your photo ID and a couple of your most recent bank statements for any account that’s going to be used as a source of funds for the transaction. And that and the same thing as a credit card application is all we need. Right and tax returns, right? You mentioned don’t need tax returns if you’re a W two wage earner treated Oh, gotcha. Okay, that’s right, we understand where I’m coming at this verify. So on one layer deep, which is self-employed, but again, not the craziest thing, if you’re self-employed, you’ve got this data, right, you got to have this data, you’ve done your stuff, you’ve gotten to a CPA, you’ve either got personal tax returns, in which your business is already in there, because you’re your sole proprietor or something along those lines, or you’ve got yours and your business returns. You know what you cycle through, like as an S Corp or LLC, whatever it is, you’re paying yourself out of it, or you’re just accepting the profit of the business. Either way, all we need is the federal we don’t care about the state, unless you owe money to the state. If you owe money to the government that’s like the same as owing money anywhere. And then we just take all that data, and we figure out what you can qualify for. And it’s kind of interesting, because I think this is because of the consumer level. It’s easier to digest. If I tell you, hey, the budgets 300k Go out there and put that as your filter top cap. But The reality is that what we as lenders are qualifying you for is a maximum payment. So, and the reason I say that is because I’ve had plenty of examples, same purchase price of a house, you know, a block from each other, but one is taxed at a higher rate than the other. And that comes down to county assessments, maybe one was built 20 years earlier. And, you know, it’s considered an older building, the assessor assessed it lower, there’s all kinds of crazy stuff, maybe one has a higher homeowner’s insurance, so the house has a pool, you can probably expect the homeowners insurance to be about double what it would have been if it didn’t, because now, you know, now there’s a there’s a risk on the property, you’ve got this body of water that someone can get hurt in. So, insurance is naturally going to be more expensive. My house, my insurance is insanely cheap. Because I can see an emergency room out right out that window, I happen to be close to emergency services, I’m on a main strip, it’s a brand new house, there’s very unlikely that I’m going to have an electrical fire, because this is brand new wiring, like current code, if you buy a house for 1920 that has, what’s that you got, you know, all the term knob and tube knobs to look at the knob. And to get an idea of just how crazy dangerous we used to do things,

Adrian  11:12

then it’s gonna be different. So, you know, we do this a lot in our podcasts here, right? Where we’re like, your results may vary. And this is true, but bear this in mind that if you find something that’s a little bit higher than your budget, but it’s got really cheap taxes, maybe you could squeeze to get that, right, it all boils down to debt to income ratio in that, you know, you may have heard the term three C’s of credit, so we’re looking at credit is one of the C’s collateral, it was just the building itself, we’re gonna appraise the property, that’s after you get in our contract. So that’s not really worry for you right now. And capacity to pay. And capacity to pay is about your debts as a portion of your income, how much money you owe, does not matter, except in the fact that it relatively has a payment. But that said, I had a gal who I think I used her as example before, $30 a month was the payment because she’s in deferment, income-based deferment on $60,000 worth of student loan debt. Right, we have a Best Buy card that has $100 balance, and they want a $35 payment on it, that’s hitting you harder in terms of qualifying for a loan than that $60,000 school loan. So, it’s about the minimum payments on the loan doesn’t matter. If you normally overpay or you pay it all off every month, we’re looking at the minimum payment, the credits very much a snapshot of where things are. And any good lenders should be able to work with you a little bit there. If you got a card that screwed up your debt-to-income ratio, but you can afford to pay it off, they might have you do that, in the process to clear up a little more room in the debt-to-income ratio. But that’s the big thing we’re doing. We’re looking at what is your qualifying income earned for self-employed folks, by the way, that’s your net income as you report it to the federal government. Right? Not what you pull in necessarily, there are a few lending products that generally have a higher interest rate but can look at cash flow instead of taxes. That’s a whole different episode or set of episodes. But for most people, 99 plus percent of the lending that happens on homes for individuals, we are fitting in government guidelines. And since the government, you know, effectively insures these loans in the back end. That’s what we have to do, we have to look at what you told the federal government that you made.

Rob  13:18

So let me break it down a little bit more or, or just, you know, pretend again, that I’m the moral, right. So just for math’s sake, let’s say the person that makes $10,000 a month, right? Versus the person that makes $5,000 a month. And the debt-to-income ratios, you know, at $10,000 a month is roughly in that low 50% number, right like 5557 Sometimes, so let’s just for simplicity, let’s just say yeah, 50%,

Adrian  13:52

don’t think this math yourself, by the way, is so much more to it. And there’s exceptions to rules that are absolutely, so don’t listen to this and go, oh, Adrian told me, I can just run the math myself and I can’t afford a house. So, if you know, don’t do that, the rules change all the time, they’ll probably be different. By the time this episode hits, there’s continuous micro changes that slowly changed the scope of all of this stuff. So, you got to talk to someone who does lending doesn’t have to be me can be any of a number of awesome licensed people.

Rob  14:22

Right? So conceptually $10,000 a month. They can add, let’s say they have $2,000 a month in let’s say they have a couple of auto loans, a credit card and a student loan. Right? And the monthly payment on all those together is $2,000. And they’re renting somewhere. So, in theory, they can afford $3,000 a month to borrow yet which roughly for every $100,000 you borrow on a 30-year mortgage, right you can be about at like three and a quarter percent is like 454 75 a month, give or take, right? So, if I take, let’s say $500 a month, because I always like to round up, yeah. Then they could roughly borrow, let’s say $500,000. And then that leaves $500 a month for taxes and insurance, which would push them up to now they can afford a $3,000 month payment, which is probably about a 550 to $600,000. House, give or take. And I throw a bunch of numbers there. But the bottom line is, is that $10,000 A month income earner with $2,000? In already set monthly payments on auto in, you know, and what did I say auto student loans and say a credit card payment? Yep. Pretty, they’re gonna be able to buy roughly and be a pre-approved for roughly somewhere like a five to $600,000 home depending on how much they put down. Versus that $5,000 A month earner, right? We just went from $120,000 year to $60,000 a year, that 500- or $5,000-month earner is not necessarily going to be able to be like, oh, they can only afford a $300,000 house versus a $600,000 house, let’s say their payments are eating, let’s say they don’t have any dead. So, they could afford 2500 a month, you know, they’re completely debt free, they could probably afford a $450,000 house only 50k, less, maybe 100k, less, something like that, in a similar scenario. But if they’re loaded up on debt, and they have $2,000 in debt a month, just like the guy that’s making 10,000 a month. Now, they basically got to pay down all that debt or restructure it or do something absolutely, that afford anything at all. So that’s, that’s this concept of, you got to go through that application process with an Adrienne as a as a mortgage lender, for to figure out where you’re at, because we talk to people all the time. And if we can have a lead time of a year or two years or three years, and they’re that guy that’s making $5,000 a month? Well, they are, you know, not in a point at all that they could buy today. But they know that they could sock away and pay off that car, pay off that student loan debt, pay off that credit card, whatever. And, you know, say it’s 30 $40,000 in debt could totally free up over two or three years, maybe quicker. They could free up and they could buy that for $500,000 house if they get out of debt. So, you have to know this, and each individual situation is different. But it kind of comes back to the math doesn’t change. But the individual overall situation has an unlimited number of permutations. Yeah,

Adrian  18:03

absolutely. Absolutely. And everybody has a different I mean, there are so many little tendrils, I could dig into all the different types of situations, down payment down payments, one of the big ones, honestly down payments, probably one of the maybe the biggest thing that prevents people from even applying for homes and I’ve talked to so many people who go Oh, yeah, you’re right. I do have $10,000 in a 401k Right now; I hadn’t even really thought about that. But I’ve been slowly piling that in the background because I work at a desk job. Well, they said I can borrow up to 60% of that. If it’s for a home loan. Well now you borrowed $6,000 for yourself towards a down payment. That’s, you know,

Rob  18:43

3% down now you just bought a $200,000 home, you know, so and

Adrian  18:49

there’s this discouragement right now, right? Like, hey, I can’t afford you know, a four-bedroom house costs this much. And minimum wages are that much I see this online all the time. Don’t dive right into the forever home. That’s not how most people do it. That’s not how your grandparents did it. That’s not how your parents did it. Most people don’t do that most people don’t just buy and the very first home they have is the one they just stay in for the rest of their entire life. But

Rob  19:13

ADRIAN, I saw it on house hunters or HGTV and

Adrian  19:20

the bad guy sorry,

Rob  19:22

there’s just that element of, of, of, you know, Hollywood, if you will, right that, hey, I want it and I want it now. Well, guess what? You’re paying rent making somebody else rich versus you know, doing it yourself?

Adrian  19:34

Absolutely. And you know, there’s condos out there. People think it’s a sucker’s game sometimes I’ve heard people be really negative about cheaper homes like this. I got to pay a condo association do and on and on and on. But yeah, you do, but it’s still better than renting and you still build equity. And then I’ve watched those people sell those condos and now have that 50,000 $100,000 down that makes it so that they have the larger buying power. Now they’re putting 20% down on the property that they really want to spend the next 1015 20 years, and they want to raise their family in that home. So, we talked about getting started early. And that’s kind of one of the problems that I run into people with is they’ve already at that point, you know, they already had their first kid, the toddler age, maybe, but you know, now they’re like, you know, I don’t want to move into a condo with this. And that’s how you can get stuck renting because then you’re renting a whole house for your family now. And now you’re paying, what does it know it’s, you know, it’s 2000 a month plus, to rent a family home in at least our metro area. And while it’s cheaper out in rural areas, you know, there’s an income disparity too. So that’s how you can get funneled into that little pigeonhole where it’s really hard and it feels difficult to chew out. But like I said, down payments a solvable problem. And this is a very consultative process. What I always want to try to get back to you with this is the, you know, I don’t charge people anything to come into my office, and I don’t consider it a waste of time, when I talk to someone who’s not ready, no one is not ready in my book, they’re just not ready. Yet, everyone is an opportunity to grow you up to that point and have high, I have some clients that took two, three years, honestly, there’s some of the most rewarding transactions to me, oh, man, because we talk about credit. And we talk about changes that can be made. And we do check ins every three, six months. And then a few years go by, and we go holy cow. We’re really here. We really did it. For some of these people, that meant getting better jobs. And you know, but you don’t if you don’t have the metric out there, you don’t know I need to make more than $20 an hour. And then I can’t afford that house that I want. You’re selling yourself short. You got to have what’s the Michael Jordan quote, you miss 100% of the shots you don’t take you don’t get out there and even ask the info. You know, there’s a lot of people out on the internet right now. Who are they just seem hell bent on convincing people that no one can afford a home. And they’re liars. Man, they’re, they’re lying. They’re lying to people. And it’s just such an acceptable lie. Because it’s you to absorb that and just go Yeah, I might as well not even try.

Rob  22:05

Right. And it’s my heart. Well, what we’re talking about here is we’re removing the natural human instinct of fear. The unknown is, you know, as soon as it becomes no longer an unknown, then it’s something that you can plan and goal set for. Right. And versus just ah, you know, yeah, real estate’s been crazy, hasn’t it? Oh, man, my rank keeps going up. Oh, life just sucks, right? I’m never gonna be there. And you know, oh, you know, that’s what rich people do? Well, yeah, that’s our audience. It’s literally right there. As you know, for my listening audience, I’m pointing to everyday real estate millionaires every day, you know, that’s what we’re trying to do. And it starts with one two months or 1234 years, talking to Adrian, you know, somebody who can say, hey, this is where you’re at, this is where you’re going to need to be. And in conjunction with real estate brokers, hell yeah. You know, we’ll take you out, we’ll, we’ll have you look at some property, we’re not going to look at 20 different properties before you’re pre-approved. But if you’re close, you’re gonna, I’m going to send you to have that conversation with Adrian immediately. And then we’re going to say, hey, based on where he has established that you’re at, let’s sit down and goal set and figure out, you know, the best steps. You know, we’re not trying to waste anybody’s time. In the, you know, we’re not going to go home, home shopping, hard core when we’re really tire kickers. And we’re not legitimate buyers yet. But it’s still helpful from just a human element of keeping you encouraged. Keep your eye on the ball. Yeah, go look at some open houses, go. Take a look at different things, start to do that homework in the neighborhoods that you’re interested in. All of those things, but it comes back to, you know, failing to plan is planning to fail, and you have to have that conversation with family.

Adrian  24:07

You’re too nice. I don’t even I don’t even I’m of the opinion at this point that you just, I even tell some of the real estate agents I work with, don’t take people who aren’t pre-approved shopping or there’s just there’s a seriousness that comes with it. You’re not serious if you’re not pre-approved, because you’re not running the numbers and I’ve had people argue with me about this. I’ve had clients fire me over this sure doesn’t bother me. It’s not it’s not worth anybody’s time and I’ve had to teach especially newer agents, hey, tell them it’s for their own good you know, I’ve watched people take buyers on tours and then you know, we find out the pre-approval was just $10,000 short so now you’ve wasted all this time and you could have been out there really looking at the properties that you could have afforded that have already sold to someone else you know, so it’s not I’m not this is not me, you know, sitting here with ego saying Don’t waste my time. Don’t waste your agents. Time, don’t waste everybody’s time get in. So that, you know, I need to make these changes to get up to where I want to be, or I need to set my expectations a little bit lower. Right. And it’s something that we are really happy and thrilled to do. It’s one of the most fun things about this industry is getting to help people realize their dreams, through practical work like that. Like I said, I don’t get paid anything upfront, I don’t I don’t charge people for this, we get paid at closing. That’s the way our industry works. I’ll always be transparent about how I get paid. And what I get paid, I don’t get paid differently based on what kind of loan you get conventional VA, USDA, FDA, FHA, you know, they all they pay, it’s it’s a percentage of the loan amount. That’s how all, generally, almost all loan officers get paid. So, it behooves us to get bigger transactions, and some of us may find ourselves gearing ourselves away from first time homebuyers, towards those who have more money because it’s simply more profitable per transaction. And so, I think that’s where people get a little dissuaded. You know, if you call up a banker, and you say, I want to spend 100,000, on a home, it’s, you know, you may be a small potato, I’ll be transparent about that part of the industry. There are some of us who look at it that way. I’m, you know, maybe it’s by virtue of being younger, but I plan to be doing this for a long time. So, I’m looking at the broader picture, I’m going to be able to work with someone many times throughout my career. So, this is just the first steppingstone off to that, right. Oh, how many plan for you?

Rob  26:30

How many times if we had to wear Yeah, yeah, how’s that we helped them buy, you know, became a rental, or we sold it depending on, you know, whatever their life takes them. And we help them do another one. You know, I mean, it’s just, it’s a steppingstone process.

Adrian  26:45

It starts with one, how do you come back? Wow, how to do that.

Rob  26:49

Right? Like, you know, eating an elephant, one bite at a time?

Adrian  26:53

Yeah, yeah, it seems impossible. It seems impossible. But yeah, that’s one step.

Rob  26:59

Moral of the story is that preapproval is a big step, we’re always gonna refer you over to that lender to do it, there’s a number of pieces that go into it. And there’s a whole bunch of different directions, we can go with it. But the bottom line is, we need to figure out that you’re a legitimate buyer that you’re a, you have the capacity to buy that it’s a decision that you’re good with. And the way you do that is get pre-approved, go through the process, and then run with it. And, you know, then we take over at that point and go from there. There’s a lot of other steps. We’ll explore those in future episodes. But hopefully, this dropped a little bit of knowledge on our future millionaire audience.

Adrian  27:43

Yeah, absolutely. And I’m gonna throw out one last little nugget of information in here, and I’m gonna talk about how my industry works. I, as a loan officer, do not deny loans, it’s not something I do ever, it’s not something I have the capacity of doing. In fact, there’s laws against me dissuading people from applying loans, I literally cannot stop someone from applying. To me, I can’t even say, hey, I’ve got too many clients right now, don’t apply, I am legally obligated to take applications. I am your representative in the process, look at your loan officer, almost like a lawyer normally pay a lawyer straight. So, this is a little different, obviously. But they’re representing you, in the case of you getting to get a house and we want you to like I said, we don’t get paid until the end. So, if a loan officer says to you, hey, you don’t qualify for this product yet. It’s not them saying, hey, this is my money, and I don’t want to lend it to you. To be perfectly frank, I’d love to just approve everything that rolled through my office if I could, that’s probably why I’m not an underwriter. The underwriter it’s their job to protect both the assets of the bank. And to ensure that these loans are, we can get into this in a future episode where we really tune into how the economics of this works. But, you know, when you, when you borrow money to buy a home, your debt gets bundled up and sold on a secondary market, there’s a whole thing we can give him mortgage-backed securities, but banks have to be able to rotate their stock, right? It’s just like a car dealership. If there’s a bunch of cars on the lot, and I sell one, I can get another one shipped in by Toyota. Now I get to sell that other car. Same kind of core concept here, there’s an amount of money on the table. And when we use it to fund loans, we sell that debt, we get the money back we a little piece of that. That’s the rotation that happens within the mortgage industry. But again, it’s key that you understand that the mortgage loan officer, we are highly motivated to be on your side, we want you to get this even if we didn’t like you. We have a financial motivation. That’s our jobs. The only way we get paid is if we close loans. And so, it behooves us it’s in our best interest to find that pathway for you. And to ensure that problems don’t trip you up. So, if I can leave you with something, it’s it, be honest, be upfront, ask these questions and present the issues that you’re afraid of. Because your loan officer is your best bet for shaping and painting those problems in such a way that you can get through underwriting sometimes the most to minor if changes can make a big difference. Deposits are a great example. If Rob’s feeling exceptionally generous, and he hands me $15,000 in an envelope, and I throw that into a bank account, and I try to go close a home loan, they’re gonna go, where did that money come from? And Rob’s not direct family in mind. So, I’m not allowed to use that. It’s cash that it was deposited. There’s no trail paper trail for this money, really, really tough to use that. But you let it set. And you get to bank statements after that money has been deposited. It doesn’t exist anymore. The deposit is no longer a concern of anyone’s. I mean, if you throw 15,000 cash in your bank might ask you a question or two for the IRS. But, you know, this is one of the things I’ve watched people take mattress money, literally their own cash and put it into their bank accounts, but too close to the transaction. And then we had to get a gift from grandma for the same amount because we could not source those funds. And literally one of the groups, the government that sniffs through everything I do is Homeland Security. Because believe it or not, we are the largest source of laundered funds in the United States is run through the real estate industry. I would have thought it was laundry mats or you know, I’m picturing Breaking Bad. There’s like some sort of right, carwash that’s funneling dirty cash. No, it’s real estate. So, there are parts of this process that can feel like you’re being investigated in the fairway, you are, you’re borrowing an incredibly large amount of money, more money than you’ve probably ever borrowed six figures almost certainly for most houses these days, right. So, you know, be ready for the investigation, but understand that the loan officer is on your side, and it’s in their best interest to help you, the more transparent you can be about problems you’re concerned about, the more we can address those and make sure that we have an excellent strategy when we move forward and make sure that they don’t bite you.

Rob  31:44

Yeah, this is just incredible information in the sense that at the end of the day, that mortgage lender is your advocate to get that loan closed. And it’s a win that loan means you successfully bought that house, and you’re well on your way. So, it’s just it’s there’s a reason why we refer to you. There’s a reason why every listener realtor is going to say, get that preapproval letter, go through the process, and make damn sure that you have you know, or that your lender has dotted all the i’s and cross the T’s. And you guys have explored those unknowns. And now, everything’s known and you’re on that path. So yeah, I love it

Adrian  32:30

worth mentioning too. If you have a realtor who’s pushing you towards a certain lender, it is illegal. If Rob sends me a client, it is a legal for me to compensate him, I cannot compensate him. Right. This is by design. So, if you have someone that’s aggressively pushing a lender, for example, there’s probably some purity in that, and that is that they have been burned before they’ve dealt with, you know, there’s especially some larger national lenders, right, who are a machine version of just, you know, pumping out loans. They’re not spending the individual time they have a real difficulty with anything that fits outside the box. You know, we had a transaction not too long ago, where agility was key and getting closed on time. There’s a there’s a reason that a lot of realtors and lenders end up pairing up. And that’s because they like working with people who are very good at what they do. So, it can be actually someone who’s pushing for one lender, it can be kind of a sign that that person knows what they’re doing. I would alright, because they have some skin in the game and making sure you’re working with someone who’s professional.

Rob  33:32

There’s, there’s a word for that, and that I’ve figured out to describe you. So yeah, that’s a partner. And what it is, is it’s anticipatory. And what it means is, you know, instead of you having to, you know, sit down and your waitstaff, right. Hey, could we get some ketchup and some hot sauce and some water over here for the table? It’s already there. You sit down, it’s done. You know, it’s supposed to happen anyways, why does that waitstaff have to take an extra trip, just make it happen. Anticipatory the lending process, the real estate process, there’s so many different places that can either become speed bumps, or literally holes in the road that you can fall into and never get out of. If you can anticipate them. You can make a transaction happen that otherwise wouldn’t. And it only comes through experience and being proactive.

Adrian  34:29

And if you’re really good at it, no one will know that you did anything. Exactly. And hey, that’s the kind of funny irony to it, isn’t it? Sometimes it’s the problems that make us look like real pros, but some of the best transactions where you really flex your knowledge, they would have no idea what next day could have fallen into.

Rob  34:45

Oh, and it’s in it’s a thing of beauty.

Adrian  34:47

It should look easy. If you’re it should if you’re really cooking, and there’s a there’s a luck factor. Don’t get me wrong. If you have a bad experience that does not necessarily mean that you’re the people that you’re working with failed, you. Same thing with a good experience. Fortunately, right? Which is why it’s important to get personal references, I think.

Rob  35:03

Exactly, exactly. I love it. Well, let’s

Adrian  35:07

surface. So, we’ll get pre-approved. If you’re listening to this and you haven’t gone through this process, fill out an application, I don’t care if you do it with the worst bank in the world, just do it to experience the process. There are some things I wouldn’t recommend if you fill out an online form that’s for one of these groups that advertises many different mortgage companies. Well, you better get ready for your phone rang, because you’re just gonna get blasted by people who buy those. And to me, personally, I don’t, I don’t buy leads. I’ve worked at places that did. I just, you know, it’s just genuine to me, I want the authentic personal connection. It doesn’t mean that that person is necessarily bad, but you just got to be aware they paid for your time at that point. And you may get a better level of service, if you have the opportunity to work with someone who a friend or personal references worked for, or that you’ve had some other way to vet, and we talked about

Rob  35:59

that. Another there’s a higher level of accountability there, too. Yeah, absolutely.

Adrian  36:03

Yeah, if I’m in a call center in Tennessee, probably doesn’t matter that much to me, if you’re, if your transaction is going sideways, I’m only going to send a finite amount of time on that. We talked about this, sometimes 10% of the transactions take up about 90% of the time, it’s true, you know, when an issue hits, it is much more time consuming than the majority of transactions that go pretty smooth. But, yeah, when you got people who have to work together on the next transaction to that’s a pretty big motivator to really put in the extra time to work on that Sunday evening to make sure that by Monday morning, all the ducks are in a row instead of going, they’ll probably figure it out tomorrow,

Rob  36:40

right? And we’ve you know, and what happens is, is you do 2030 or more transactions together every year, and are believed to have dollars to doughnuts, I’m anticipating call and vice versa. So that’s the huge piece there of accountability versus the call center in Tennessee. What are you going to get?

Adrian  37:00

Yeah, if you’re a poor communicator, and you’re in Tennessee doesn’t matter, your company or another tomorrow, so you’re just gonna dial for dollars, don’t worry about it. For personal relationships to maintain, you know, your clients get to have the weight of our relationship on every one of their transactions.

Rob  37:20

Exactly. And happy hour on Friday afternoon. Doesn’t happen until the client is taken care of.

Adrian  37:27

Yeah, that victory bird beer is well earned. Exactly. There you go. Awesome. Love it. Love it. Cool. Thanks so much. Thanks so much for your time, everyone. This is the get rich, slow podcast. We look forward to seeing you next week. And if you got any questions for us, please shoot them our way. We, we love to take feedback. Okay, gosh, but before I leave Rob one thing, I do need to make a correction. I’m so sorry. I made a mistake. In an earlier broadcast. I misquoted. It’s Ferdinand Porsche, not Porsche. Apparently, it’s Porsche. My father is very adamant about that. He’s German from Germany. I was born in Germany; I should know better. So, I apologize on behalf of all German people. It’s Porsche. It’s not pretentious to say that. It’s just correct. I’m sorry. That’s the way it is.

Rob  38:21

Used you stand corrected. I learned a few things. It’s awesome. Thank you all.

Adrian  38:29

Yep. Thank you all. We’ll catch you next time. Yep.

Intro  38:32

Bye. Thank you for listening to the get rich, slow podcast. If you like what you learned, please subscribe, rate and review so we can grow wealth for even more families.