April 7th, Monday Market Update and Mindset Call with Nikki, Cari and Angie

Market volatility has created dramatic swings in mortgage interest rates, with rates falling sharply after tariff implementation caused stock market declines, then rebounding rapidly the following day.

• Mortgage rates directly tied to 10-year Treasury bond yields, which drop when investors move from stocks to bonds

• Recent volatility saw rates swing from 5.875% to around 8% within 24 hours
• Locking rates provides protection while "relocks" allow borrowers to benefit if rates improve later

• **Minnesota Housing has reduced down payment assistance amounts and increased minimum credit score requirements** KNOW THESE NUMBERS!

• Experienced real estate professionals provide crucial perspective beyond rate fluctuations

For guidance through this volatile market or to discuss your specific situation, reach out to us directly - we're here to partner with you and help you achieve your real estate goals.

Chapters

• 1:13 Market Volatility and Mortgage Rate Fluctuations
• 5:27 Understanding Minnesota Housing Program Changes
• 7:25 Timing Considerations for Lease-to-Purchase Transitions
• 10:38 Strategic Planning for Property Sellers
• 14:51 Importance of Experienced Real Estate Partners
• 18:40 Building Wealth and Finding Calm

Transcript

Speaker 1: 0:38

All right, let's go.

Speaker 2: 0:40

Nikki, you're up. Well, it's certainly an interesting Monday. So, since the tariffs have gone in place, of course we've all heard that the stock market has reacted and gone shooting down. Some places are reporting, you know, downwards of twelve hundred or fifteen hundred points. What that does is, when that happens, people tend to invest in more bonds than they are stocks, and so that'll usually lower the interest rate on the bond side, which helps mortgage interest rates Because, as a reminder, mortgage interest rates are based on the 10-year treasury bond. So as that 10-year treasury bond goes down, mortgage interest rates also go down.

Speaker 2: 1:18

So what happened on Friday is that we saw this huge decrease in mortgage interest rates, and what you can take a look at here is these handy dandy little charts. This point right here, with the red line. That was Friday. So the higher up this line goes on the graph, the lower mortgage interest rates end up on the graph, the lower mortgage interest rates end up. So you can see that there was extreme volatility on Friday, with mortgage interest rates going all the way down into, like the high fives. Okay, well, what happened today is a major bounce back. Look at all the volatility today. This right here is about 8%. So if you take a look at all this volatility, all this movement in the market has gone bouncing up and down, up and down all morning and we've got a relatively small change overall of 12 basis points, but you can see that we went from 5.875-ish all the way up to like eight in the matter of a market of 24 hours, and so we've just seen all this extreme volatility that is happening in the market right now as a reaction to the stock market, to the bonds, to what's happening in the global economy. This is probably going to continue to happen with the volatility, probably for the next couple weeks at the very least, until, kind of, the markets even out and decide what to do in reaction to the tariffs. So it'll be very interesting. It's now my job, more importantly than ever, to advise my clients and make sure that, if they do want to look at refinancing or if they do want to look at purchasing a home, what the best play is going to be from a timing standpoint as far as interest rates are concerned, and then help to also settle things down for them in a market that's very volatile right now.

Speaker 2: 3:02

A lot of times when I talk about locking in interest rates, there's a couple different philosophies. Yes, we want to catch the interest rate on a good day. Obviously we want to catch it at the lowest possible during the amount of time that they're going through the loan process and closing. The good news in the mortgage industry is that let's just say you do lock in your interest rate and let's say you locked in at a six and a half and something dramatic happens in the market or we can achieve a lower interest rate. We are allowed to do what's called a relock throughout the process. That means that basically, I locked in at six and a half.

Speaker 2: 3:34

Mortgage interest rates are now down at 6%.

Speaker 2: 3:37

You know, and they've been. You know and we can do what's called a relock to bring you down to that 6%. We aren't necessarily required to in the idea like, oh, anytime rates drop, we're just going to. You know, keep doing that, but we will keep an eye on it so that there is some safety in locking in an interest rate that you're comfortable with and then knowing that if the market does improve significantly, you can do what's called a relock and get down to that lower market rate. The other cool thing is, obviously, if there's more volatility and interest rates go up, you're not subject to those interest rates increasing. So it's just basically my job right now is to make sure that I bring as much calmness as I can to locking in your mortgage interest rate and making sure that I'm watching things on a daily basis, sometimes even an hourly basis, to make sure that, as prices change and things like that, we can still, you know, lock in at a comfortable rate for people. So that's kind of huge. These next couple of weeks are going to be very interesting and very volatile when we look, when we consider all of the different changes that are happening. And until things even out and kind of settle down, we're just going to have to deal with the volatility, which isn't a huge deal. It's just something to keep an eye on and make sure that I keep the customers as calm as possible as things are happening. As we all know, the media does play into a lot of this as well, and there is a lot of talk out there about oh, mortgage interest rates are lower or whatever that is, and that is true, they are lowering, but it's like I said, it's a direct result of what's happening in the stock market right now.

Speaker 2: 5:07

Anyway, with that being said, I also want to talk about just some changes that have been happening. For, with Minnesota housing specifically, they did some changes I know there's some people that are in Minnesota, but, um, there's. They did some changes to the amounts that they're lending in down payment assistance funds. Um, it used to be that they would have limits up to 18,500, um or 16,000, depending on which program you qualify for. They've now lowered those limits to 14,000 and 18,000. So, um, we got to pay attention to that. Also, they have increased the minimum credit score requirements from $640 and $650 on FHA to $650 and $660. So, depending on where you're at from a debt to income standpoint, a credit score standpoint and an income standpoint, that is going to put you in a different category. Now, with Minnesota Housing and those changes that they're making, they have, like I said, they've lowered the amounts you can get for down payment assistance. They've increased some of the credit scores needed to achieve the down payment assistance qualifying and they have updated also not allowing manually underwritten files to be qualified for down payment assistance. So those are some of the major changes that have happened with that down payment assistance program, but obviously we keep on top of that stuff From an overall standpoint and not really state specific.

Speaker 2: 6:35

I kind of want to talk about lead times when it comes to buyers that are shopping for homes, that have leases for apartments or leases for wherever they're living, and kind of what that timeline looks like to get them out shopping.

Speaker 2: 6:50

Obviously, it's always good to pre-approve them before the 60-day mark, before their lease is up you know, within 60 days because most places will give you, will require you to get a 60-day notice in order to vacate your lease when it ends, and so we want to make sure that they are pre-approved well before that 60-day mark.

Speaker 2: 7:09

And when they do give their 60-day notice, that's probably the most ideal time for them to start shopping for homes, because then we can time the closing so that they aren't making double payments, so they don't have a rent payment and a mortgage payment in the same month.

Speaker 2: 7:23

That's usually the goal there's a lot of.

Speaker 2: 7:25

You know you can start looking before that 60-day mark, but as far as writing a purchase agreement and a closing date, we just have to be mindful of when that lease is going to be done and when that first mortgage payment is, so that they don't overlap and have double payments in one month Some people might be okay with it, but for the most part we're gonna wanna make sure that they don't have to deal with that. I've had people that their lease is up at the end of June right now and we're trying to time a closing and it's resulting in their shopping a little bit too early for them to be able to get a realistic closing time that's going to help them so that their first payment isn't until July. So just things to keep in mind as you're working with clients who are in a lease just check with the lender and talk through the timing and make sure that when they get pre-approved when they should start shopping so that we can make sure to have the sequence of events happen as it should.

Speaker 1: 8:22

Mm, hmm. Well, and I know on the flip side of that, if you want to talk, because I know in the past I've had renters that were fine, having to take both on just because it made financial sense. And so can you touch base on that when it does make financial sense, maybe to double up or what that looks like.

Speaker 2: 8:57

Yeah, it really it's. It's all about, like, as far as financial sense goes, it's all about like timing, like what are they comfortable with? That's really what we pay attention to. And then do they, you know, are they going to be strapped with a lack of money and savings, with you know and all those other things that come along with you know ending utilities, setting up new utilities, you know final bills and all that stuff, and that's a lot. That could be a lot to take on.

Speaker 2: 9:14

A lot of people will move, you know, just because they found the right place, and that's okay too. But as far as we want to make sure, do our best to make sure that we aren't overspending their money. If that makes sense, if we can time it where it's, you know, not a double payment, that'd be great. I mean, sometimes it happens and that's fine. But especially for a first-time home buyer, they think they usually think they can probably take on more than they actually can, because they aren't very familiar with what the actual cost of you know moving and things of that nature can amount to. So, just a good conversation with them and making sure that, yes, they're excited, they wanna be able to buy a house and they wanna get out shopping, but being very mindful of when we're writing the purchase agreement and talking about closing dates and things of that nature, to really make sure that they have the understanding and knowledge of what those costs are.

Speaker 1: 10:03

Yeah, well, and I think it's just another very, very strong point that your lender partner matters. And working with Nikki and someone of our caliber that's been doing this, can I say a quarter of a century? Yes, you can A quarter of a century. I mean, honestly, it's almost like you're the expert. They don't know what they don't know, so they don't even know what to ask. So that's where, when I keep continuing to beat this down and I will until the end of time, who you partner with matters, because Nikki can take those things or the different scenarios.

Speaker 1: 10:44

You thought about A, but did you think about B, C, D and Z? Some people just don't know what they don't know Most people, because this is not what they do every day. So it's really important and I know the instances that I had in the past when it kind of made financial sense. It's when we just happened to find that one property, and so there are those one-offs. And that again is why, if you pull in Nikki and you can have this conversation on a much larger scale and kind of be able to forecast and pull in these different pieces that they just don't know or understand for the most part, it can change everything Absolutely.

Speaker 2: 11:27

Yeah, I was just gonna say there's also a strategy.

Speaker 2: 11:30

If someone's moving from one property to another, like an only owned property to another owned property, there's also a strategy there that talks about you know when they should make their last mortgage payment on the property that they're selling.

Speaker 2: 11:40

You know because there is a timing thing.

Speaker 2: 11:42

Like, for example, if you're let's say, you're closing on the fifth of the month on both properties, making that mortgage payment on the prior home on the first of the month is going to change the payoff, it's going to change all those things and it's going to put you in right up against your closing date as far as making sure you have accurate numbers when you go to sell the house and making sure that payment's gone through and all those things.

Speaker 2: 12:03

You do have a 15-day grace period on a mortgage payment where there aren't any late fees assessed. So one of the discussions that we will have when vacating one property to another is do I make my mortgage payment the same month that I'm closing, just to make sure that nothing gets screwed up from a timing standpoint and from a payoff and all those other items that have to do with how much you're getting out of the house and where that money's going to the next house. So there's a lot of those discussions too. So it's not just renters but also the people that are selling homes. What does that timing look like as far as making that last mortgage payment?

Speaker 1: 12:38

Very good point and I just wanted to go back in. Like I said, I was really excited to talk to you today, and why is because I want just to have the agents out there understand, with the 5% to 8%, and that many of your clients are not listening to this podcast and the people that are actual experts in the business and understand that they are listening to the media and there's just a lot of misinformation, disinformation and just you know. We have to now take all of this noise and bring it in. And you said be the calm, be the neutral and give the facts good conversation. Look like that we as agents can be having with either our sellers or our buyers, first-time homebuyers. That will put this in a better perspective moving forward over this next, you know, few weeks or months.

Speaker 2: 13:37

Yeah, I think it's important to recognize that we've been in times of volatility before. That. When you are relying on agents with experience and you're relying on, you know, lenders with experience, the ones that have been through this situation before and can help bring reason and calmness to your particular experience is going to be important rates are doing to get some resolve to that, to feel safe, knowing that you know it's not the end of the world if you lock in between you know, at a 6.625 versus a 6.5, where we don't want to see that much disparity obviously is the difference between fives and eights, you know. I mean, obviously that's a very volatile area to be in, but knowing that you know somewhere in the mid sixes is probably where you're going to end. And as long as you're happy with that payment and you're happy with, hey, this is where my budget is, then the rest of the noise and all the things that are happening around you don't matter and you can really rely on your trusted agent and lender to really say, okay, is this going to work for me and will I be better off with this situation or this house versus what's happening in the media?

Speaker 2: 14:51

What's happening with the mortgage interest rates? What's happening with all this stuff? It's more important that we concentrate on the individual situation, because the media can make blanket statements and things that don't necessarily apply to you in particular. And there's, you know, there's all these different factors that go into buying a house or selling a house, and the interest rate is just one thing. It's just one factor that happens during the process. It's not the whole thing. It's not determining whether or not you should buy the house. It shouldn't determine whether or not you know you have use and enjoyment, whether or not you're making a good financial decision. That interest rate is important, but it's only one thing and we just need to make sure that we're talking about all the other things that surround their decision and why they're making the decision that they are.

Speaker 1: 15:39

Well, and that's a perfect example and segue into this is a relationship-based business. So it's again looking at the whole picture. I know right now with some buyers I'm working with, they are just looking at their payment, because that's the determining factor on where they want to go or what this looks like. I mean, we looked at a house that was priced $10,000 more than they wanted to spend and the association was $100 less a month. So there are so many different factors that go into it. So it's really about understanding.

Speaker 1: 16:12

When you meet with your buyer or your seller, I want one of the first questions you ask them is what are your goals? What are your goals around real estate or around selling your home or, you know, do you have a portfolio? I mean, just again, take their blinders and peel them back and give them even some things and plant some seeds that they might not even been thinking about. But that's our job is the you know expert, the consultants, the people with the license is we have to give this bigger picture and let them know options and what they don't know right now.

Speaker 2: 16:49

Absolutely.

Speaker 1: 16:50

Yeah.

Speaker 2: 16:51

And it does take a lot of experience. You know I've been also kind of dealing with, you know, agents, that one in particular that hasn't had a lot of experience, and so really kind of helping him as well to explain things to his clients and explain what you know timing of things and all these you know, all these other items that you know play into really purchasing a home at this time. And you know anything that I can do to help is going to be, you know, helpful to, obviously, the clients.

Speaker 2: 17:21

but it does make a difference to have an experienced realtor and to go through a process as a lender, to go through a process with an experienced realtor versus a one that's you know you can have probably hasn't had their license and has had their license for probably less than a year, and you know, I would encourage anyone that has had their license for a shorter amount of time to really rely on your mentors and to really make sure that you have a good coach and a good mentor in place, because it does make a huge difference. It makes a huge difference for your clients, when you're offering on homes, to have confidence in knowing that you understand the process and understand what's supposed to happen, and understand negotiating and all those other things that go into being a good steward for your client, and all those other things that go into being a good steward for your client.

Speaker 1: 18:05

Absolutely, and I know. That's why I'm so passionate about coaching and mentoring agents, both new and 20 plus years in the business. Because when I got in this business, sure I did over 30 deals my first year, but can I tell you what it looked like in the background?

Speaker 1: 18:20

Oh man, it was hard and it was stressful and it was confusing and it was. I was anxious all the time. I mean, it was not fun and, um, you know, some parts of it were the closing table is always amazing. I always got a hug and that's what kept me going. Is that when my clients looked at me and said I couldn't have done this without you, I knew it was true, because I gave everything I had, and more than you know and it showed in other parts of my life, which is a whole different story, but you know, it is.

Speaker 1: 18:50

It's who you partner with and who they partner with. So, yeah, if you're an Asian out there that is looking for a good coach or mentor, definitely reach out to me. That's my passion and what I do. Or, you know, if you're an agent that's been doing this 5, 10, 20 plus years and you want to start building your own wealth and stop building your brokerage's wealth, you're looking for legacy wealth. I have that answer too.

Speaker 1: 19:12

So I think it's just everything is changing, and some in a really good way, in a really positive way. So, like you said, if we focus on what we can control and the positive parts and you know the goals of the people that we're partnering with. Everything else can kind of fade into the background. So it's yeah, I love it, I love it all. It's a great call. Yeah, good, any questions? I will check the live stream quick before we jump off. I don't see any there. Well, nikki, I really appreciate again your time and as you're listening to this, again, reach out to Nikki, reach out to myself. We're here to partner with you and help you and your clients get to their real estate goals.

Speaker 2: 19:59

Awesome, all right, bye everyone.

Speaker 1: 20:01

Have a good one.