Shutdown Jitters, Rate Watch & How no-score buyers can still qualify for a home 9/29 Market Update

Markets brace for a volatile week as a possible government shutdown threatens the BLS Jobs Report and nudges the 10-year Treasury, with mortgage rates holding in the low-to-mid sixes after losing recent gains. 

We also map a path for no-score buyers using rent, utilities, and payment shock, then close with a reminder to show up fully present for clients.

• shutdown risk and jobs report uncertainty
• how bond moves shape the 10-year and rates
• current pricing in the low-to-mid sixes
• lock vs float strategy for October closings
• qualifying without a credit score using rent and bills
and much much more!

Chapters

• 1:12 Volatile Week Setup
• 1:31 Shutdown Risk And Market Impact
• 1:56 Jobs Report And Rate Direction
• 2:54 Fed Divide And Watching Rates
• 3:22 Current Mortgage Pricing Snapshot
• 4:06 Strategy: Float Or Lock
• 4:06 Qualifying With No Credit Score
• 5:43 Building Nontraditional Credit History
• 7:19 Housing History And Payment Shock
• 8:39 Pricing Rules For No-Score Borrowers
• 10:02 Early Planning Pays Off
• 12:18 Be Present With Clients
• 14:08 Boundaries, Focus, And Trust

Transcript

SPEAKER_00: 0:37

Welcome to the Monday market update. It is September 29th. How are you today, Nikki?

SPEAKER_01: 0:44

I'm doing well. I'm doing well. I'm happy to, you know, have some news from for a Monday. I mean, you know, we're going to have quite the week this week when it comes to mortgage interest rates. So it'll be interesting to see what the bond market does. So the big looming issue right now is the government shutdown and where that budgeting is going to come in and whether or not the government is going to have a brief or longer shutdown or a shutdown at all. Of course, all of us are hoping that they can work through some of the details and not have a shutdown, but it is something that is pending right now and it is making the market go like this, like crazy. So that creates a lot of volatility in the market. The big issue with this potential shutdown, at least when it pertains to mortgage interest rates, has to do with if there is a government shutdown, the BLS Jobs Report will not come out on Friday. Now, as a reminder, the BLS Jobs Report gives an indicator of health in the economy and has a huge influence on the 10-year treasury bond, i.e., mortgage interest rates. Whenever we talk about a government shutdown or a looming government shutdown, the bond market actually kind of likes it and starts to lower down that 10-year treasury bond, whereby mortgage interest rates will start to lower just a slight bit. We're not talking by a lot here, but we're talking about just like a little bit of the recovery that we like to see. Now, when that, but it's different this time because of that jobs report that's supposed to be coming out on Friday. If we get a favorable jobs report on Friday, that's good news. We will see more improvement in the market. If not so much, then we're going to start seeing inflation tick up a little bit, which is never a good sign. So a lot of disagreement in the Fed right now, too, about what to do about their interest rate as well. You have half the voting members talking about needing to lower that rate even more. And then you have another part of uh the voting members who are a little bit more what we call hawkish and say, I don't know, I think we're going to, you know, we need to wait, we need to wait, we need to wait. So there's going to be more on that, obviously, to come later. But as of this week, it is going to be an extremely volatile week. So what my job is now this week is to make sure that I am watching and waiting and seeing what's happening in the market, making sure that clients that I do have that are not locked right now, who have been kind of floating down with October close times to kind of go, okay, when's the best time to act on these interest rates? I'm gonna have to be watching very closely for them as well. We did lose a lot of the improvement we saw from the Fed interest rate cut. Um, we lost a lot of that improvement. So we are sitting in the low to mid-sixes right now. We aren't really touching the fives, depending on the program. So it's one of those things where we're just, like I said, waiting and seeing. So they're telling us to just chill out for a minute. And I know it's gonna look scary, but just to wait from a locking standpoint. So just some information that's happening this week. Speaking of locking and speaking of borrowers and different positions that they can be in, I've had actually two clients come to me for mortgage loans that do not have credit scores. Surprisingly enough, you can get a mortgage loan without credit scores. So I'm not sure if we had talked about this topic already, but I wanted to bring it up because it's it's super interesting to me that you can establish a credit history that's outside the credit report to allow for a client to be able to purchase a home without a score. When you don't have a score, two things are in play. Number one, either you just don't have any credit history, you've never applied for credit, or if you, let's say you've had maybe a credit card, but it hasn't been open long enough, or it's just one card and there just isn't enough history there to create a score, that could happen. The other would be if you have no open trade lines for a solid six months, you your credit score will go away as well. So if you remember, way, you know, probably a couple months ago, I talked about a new type of credit report called the vantage score. And that vantage score, including things like rental payment history, utility billing history, et cetera, in an effort to make it easier for people without traditional credit scores to qualify for mortgage loans. We haven't fully implemented vantage score. However, we can still use the same idea and the same amount of trade lines and establish a pattern of on-time payment history in order to be able to create a 12-month on-time payment history for the client that is sufficient enough for on for approval from a mortgage standpoint. The way we do that, we have to have 12 months of housing. That is not, that is not an option. If nobody, if they haven't paid rent, there's not much we can help them with from that standpoint. But if they paid rent on time for 12 months, and they can show that either by a lease, a verification of employment or a verification of rent from a landlord, or 12 months of cancel, like 12-month payment history showing on-time payments, we can use that as a 12-month payment history to establish housing payments. And the longer the better. So if they've had a lease for 24 months and they paid on time, that gives us the ability to say, okay, the payment shock or rent versus housing payment, the difference between those two is what we calculate called a payment shock. And if as long as we are under 100% on the payment shock, we can use it as a valid way to approve them for a mortgage loan. That along with we're going to be looking at monthly payments that they make on, you know, just to do their daily stuff. So it could be car insurance, internet service, utilities, streaming services, believe it or not, subscriptions, medical insurance, daycare payments. You know, so if they just had medical insurance taken out of their check every month, that counts as a 12-month payment history. So there's a lot of flexibility in when it comes to the to establishing these credit histories to be able for people that don't have a credit score for one reason or another to get approved. Interestingly enough, it used to be that when we had a no-score borrower, we had to price the loan. In other words, give them an interest rate that reflects that they don't have a credit score. That interest rate was often 2 to 3% higher than what you would get if you did establish a credit score. The old way of going about things is I would work with the clients for six months to establish that credit score and then run the loan that way because it would save them a ton of money on interest. Now we do not need to do that. We do not need to give them a higher interest rate. In fact, we cannot give them a higher interest rate just because they don't have a credit score. So that interest rate is actually based on either the co-borrower's credit score or we base it on a 600 credit score, which is a little bit on the low side, but it doesn't affect pricing nearly as much as it used to. So there are some avenues that people with no credit and no credit history, there are some avenues that we can help them establish that can get them to the qualifying for mortgage. Also important to note in the state of Minnesota and in the state of Arizona, you can qualify for down payment assistance without a credit score. There's no discrimination from that standpoint. So that's nice too.

SPEAKER_00: 7:38

Very nice. All good to know. And yeah, I think we talked about this a while back, but definitely very, very good to revisit. And it sounds like there's some new information as well. And you know, it's just again, what I tell all the agents that I coach and mentor, or even buyers that I'm coming in contact with, you know, regardless of if they're they have a credit score, it's good, it's bad, they don't know, they don't have one, or they're, you know, six days out, six months out, a year or two out. I always say, I'm so glad we're talking today. Now's the perfect time because it is, it's a perfect time to get in contact with you and have them talk with you, figure out even if it's a year or two out, we have the gift of time then, and we can figure all this out. So it's never ever too early to get in contact with Nikki and really understand what the roadmap looks like. And I cannot tell you how many buyers over the years, especially first, it was always first-time home buyers, they're like, Yeah, we're probably like nine months to a year out, but just you know, starting to to starting the process, just starting to look and because they don't know what they don't know. And I get them in contact with you, and boom, two to three months later, they're closing on a house because yeah, they were more than ready, they had no idea. So uh we do this every day. So that's where it's really important that we show up as the experts. We have great resources and people like Nikki in our corner that will take it and run in her lane while we're still running in our lane. So it's so, so important to have you on standby and I appreciate you so much.

SPEAKER_01: 9:16

Yeah, absolutely. And you know, it's it's ironic because no credit score is actually an easier mortgage approval than low credit.

SPEAKER_00: 9:22

So love it. Yeah, let's find them. Yeah, the screen social media posts right there. So anyone listening to this, really, really think about that. Because I I know that you'll have a lot of people intrigued if you post that and uh I get some curious, curious people.

SPEAKER_01: 9:40

Yes, absolutely. Absolutely.

SPEAKER_00: 9:43

Well, before we go, I was thinking about you know what to talk about. And two things happened recently, and so I just want to bring this to light with agents when you're meeting with buyers or sellers, or you know, helping people with one of the biggest purchases or sale of the one of their biggest assets, is be present. I can tell you, there's been a few instances in this past month where I was with, you know, people that I've known for either for years or I haven't seen for years. And when you're sitting with someone and talking with them, especially about their home, either selling or buying, be present. That means, you know, if you truly don't have an emergency, which 95% of things aren't emergencies and even emergencies, don't have your phone on the table, even if it's upside down, it just signals to the other person that they're not the most important thing, that your phone is in whatever you may be waiting for. And if there is a five to 10% emergency that you're just waiting for, let them know that. Let them know that's why your phone is out. And once it's taken care of, then put it away. But I just can't tell you how how distracting it is. I went out to dinner with some friends, and I was the only one out of the four of us that didn't take my phone out. And at one point in time throughout the dinner, they were distracted, they were on their phone, they were texting, like, oh huh. Like, I'm like, you know, it takes a lot for you to even just get out, go do stuff, be away from your family, and to be around with people that you know, you can share very clearly telling you you're not that important or not the most important thing, or whoever's on the other end of their phone, or when you're looking at someone, you know, be present when you're looking at them. Don't be looking around as if something is more important or interesting behind them, because that's also like, what are you looking at? What are you looking at? So I just think as agents and as professionals showing up in this industry and for our clients, our customers, our prospects, there should be a certain way that you behave and act. And I just wanted to remind everyone out there, because I know a lot of people aren't aware, and we just get so into ourselves and into our phones that I uh it was on my heart to share today. So I just want to bring it up.

SPEAKER_01: 12:08

I always say nothing is gonna change my business in two hours. There is not one thing, even even someone sitting at a clothing table, there is nothing that's going to derail my business in two hours. It's just never gonna happen. So giving someone the time of day or giving someone two hours is not gonna absolutely do anything from a damaging standpoint to the business or to anyone that needs to get a hold of me.

SPEAKER_00: 12:28

I love that. That's so, so, so great to hear. I knew you acted, I knew you you were like that because that's how you absolutely show up. But there are agents and there are people out there that need to be reminded. And my family had to remind me, you know, sometimes you treat the people closest to you not quite the best as you do absolute strangers. So even think about that. And I know um my coach implemented No Distractions dinner with with his family, which I think is pretty phenomenal in a world where we can just feel so disconnected. So I'll get off my soapbox, but just have to bring that up today.

SPEAKER_01: 13:03

All right, that sounds good. Yeah, that's always good advice and always a good reminder. Perfect.

SPEAKER_00: 13:07

All right, Nikki. Well, appreciate you. Thanks for showing up as usual, and we'll see you all back here next week. Bye, guys. Bye.