Park & Bark with Mortgage Lender Fif Ghobadian

In this episode of Park & Bark, join Sean Mamola, San Francisco condo specialist and founder of rises.co, as he sits down with Fif Ghobadian from Origin Point, Compass' exclusive lender. Get ready for an insightful discussion on the latest real estate trends, financing options, and insurance challenges facing buyers today. From innovative buy-down programs to navigating insurance complexities, Sean and Fif provide invaluable advice to help you make informed decisions in today's dynamic market. Don't miss out on this essential guide to unlocking real estate opportunities. Subscribe now and stay tuned for more expert insights and real estate adventures!

Transcript:

Sean: Hey, I'm Sean Mamola, a condo specialist in San Francisco and the founder of rises.co. Welcome to an edition of what I like to call Park and Bark. Why am I calling it Park and Bark? Because I'm parking my rear end in this chair and barking out amazingly useful information that buyers and sellers need to know from select individuals who are crushing it on the back end. And today, I have Fif Ghobadian from Origin Point, Compass' exclusive lender. Thanks for coming today, Fif!

Fif: Oh, thank you, I'm super excited.

Sean: Cool, let's jump right into it, no wasting time. What do buyers need to know right now?

Fif: Okay, what do buyers need to know? It is a phenomenal time to be a buyer. Lenders are aware that the market is slow, so they've done all kinds of programs to increase traffic. One, they have reduced the minimum credit score from 680 to 660. They've increased the debt-to-income from 15 to 55. They're offering buy-down programs which we'll get into later, and they're offering bank statement loans. There are all kinds of programs out there to enable more people to buy. Even last week, we introduced you can buy a multi-unit with as little as 5% down, as long as they stay within the conforming limits.

Sean: Yep, great programs, amazing programs, and that's why it's so important to have one-on-ones with specialists like Fif, because I don't feel like this information is pumped out there as much as it should be. So once again, thank you so much. You mentioned a product that we've been hearing a lot about in our weekly meetings, which is the 3-2-1 buy down. Now, I've got to ask you, what is it, why do it, and how do you do it?

Fif: A great question. The buy down is what banks offer when rates are high. What it is is the seller, instead of doing a price reduction, let's say 5% price reduction, it calculates to about almost a third of that they put that money into an impound account, an escrow account at the bank.

Sean: Can you, sorry, for people that don't know what an impound account, like, what is it?

Fif: They just put it in an account at the bank. That money is used by the bank to supplement the buyer's mortgage. So let's say your mortgage rate is 7%, the buyer for the first two or three years, depending on the type of buy-down program, pays 2% less than that, or 3% less than that, and the rest of the money comes from what the seller put in the bank. So the seller is supplementing the buyer's mortgage. Now you mentioned 3-2-1. There's also a 2-1, which means the rate drops by 2% the first year, 1% the second year. There's also a 1-1, which means it drops by 1% the first year, goes back to normal after that. Lots of different variations. It's incredible.

Sean: And do you find that buyers are actually, do they come in knowing this, that these products are available? Or is this something that you're basically relying on the advisers, the real estate advisers, to push that information out and make sure? So does the buyer already know, or are they finding out about this once they go for that first tour?

Fif: In general, the buyer does not know. There are very few buyers that know, there are very few agents that know. So it puts a lot of pressure on the agent that does know to really educate the buyer, the buyer's agent. And it's a lot of work to educate them because it's a complicated concept, even though it's super simple once you understand it. To get to that point, people have, like, a "Wait, wait, I don't get it, what are you saying?" moment. 

Sean: It adds on to what could be a really confusing process already, which is home buying and lending.

Fif: Exactly. 

Sean: I think another really great point that you brought up was the credit score, which everybody knows. I mean, that's probably one of the first conversations we have is, "My credit's bad," or "I don't know what my credit is." But to know that that credit score requirement has actually dropped, yes, is another huge reason why the buyers should actually come out right now.

Fif: Right. And I have to just put the, really emphasize some of the programs I'm talking about are not offered by all the banks.

Sean: Correct. 

Fif: So I had an agent yesterday that called me and said, "Hey, I found out for loans over a million 89, that you don't offer buy downs at Bank of America or Wells." Well, we do. So you really have to understand that we do have a variety of products and a lot of options. So even if you work with another bank, it's good to know what we offer just so you can understand it.

Sean: So, I know another hot topic in our ecosystem, the real estate ecosystem, has been about insurance, right? There's a lot of talk about insurance companies pulling out of California because of weather, fires. It's just presenting too much of a risk. And I know that it's all about a trickle down effect, right, where it hits the homeowner, which hits the lending. So if you could just give me a really quick breakdown or a 10,000-foot view of how that is affecting Origin Point and the conversations that you're having with the buyer, I mean, the first-time homebuyer, which is really a special, special niche.

Fif: Yeah. So listen, it's not a mystery. A lot of insurance companies pulled out of the market, okay? It's more expensive to get insurance, no question. Okay? It actually brought in other people into the market. So Farmers, for example, last week said if a house is over 30 years old, you have to have a water leak detection system in there. 

Sean: Farmers Insurance. Not the Farmers of America, which we love.

Fif: Yeah, yeah, for insurance. That's right. They said if you have to have a water detection, leak detection system in your house, okay? You install that. It costs $1500. Then it needs to be inspected. So that makes it more difficult. How do we resolve it? I mean, honestly, I sound like an infomercial over here, but for example, I connected with our insurance company, Guaranteed Rate Insurance, on two occasions. They were able to come because it's a national company and solve the issue. Is insurance more expensive? Yes. People are counting on CalFHA and other sources, but there are brokerages like Guaranteed Rate Insurance that have saved the deal in a lot of cases. 

Sean: So that's a really important point that I want to impress is that you're going to other folks too and making sure that it becomes a possibility to close the deal and walk the buyers through and not just be like, here, sign these papers… 

Fif: No, no, no.

Sean: …go get a home.

Fif: Yeah, because it affects the debt-to-income. If you're expecting $300 a month in insurance and all of a sudden it became $600, it can actually enable someone to follow through. But if you can find an alternative, it makes the deal sweet and also affordable for the client. You might be able to afford it, but it might not be what you want to afford.

Sean: Correct. So the next thing that I wanted to ask you, let's say we're painting a scenario. You're giving a presentation on home purchasing and lending products that you offer. You have 50 people in the audience, first-time homebuyers, second-time homebuyers. They all have the money in the bank, they're all looking for the perfect home to check all their boxes, they're ready, ready, ready to go, but they're sitting on the sidelines. How can you impart to them why they should actually come from the party? I always say there's a party on the sidelines, you know, we need to bring the party back. And not just the party, but you know, just why? Why would you encourage them? What would you say?

Fif: Okay, I'm going to tell you one thing: it's the perfect time to buy, absolutely the perfect time to buy. People focus on one thing, the rates are too high, I'm going to wait for the rates to come down. One of the most important tools that I provide is the cost of waiting, which shows that even when rates go down, let's just say 4%, you might save over $1,000 depending on your loan amount a month. That's significant. What you've lost is the appreciation that keeps on mounting on the home that was a million dollars. In three years, it could be a million 200 thousand. You know, I'm throwing these numbers out, but appreciation drowns any savings from rate drops, and that's what you should ask for. Okay, what would happen if I waited? What if my appreciation is only 2% in this neighborhood? Even then, appreciation drowns any savings from interest rate drops. And also, there are hundreds of people just in my own database that have been pre-approved and waiting. And when rates drop and those doors open, it's going to be mayhem. Everyone's going to do multiple offers, and specifically first-time homebuyers wanting to put 5% or 10% down, they'll be priced out.

Sean: Always great to have Fif in studio with us, and we look forward to having her back real soon. But in the meantime, keep listening to the advice that we're bringing to you, find out what scenario might work best for you, get pre-approved, and stick around for some more pro tips and real estate adventures. I'm Sean Mamola, and I'll see you soon.