Скачать или смотреть Todd Gehrke Explains How Mortgage Pricing Works

Todd Gehrke shares why MOST people get ripped off when they fall for the trap of focusing solely on the interest rate when it comes to financing houses, cars, or anything with a loan on it.

Todd Gehrke: [00:00:00] All right so here's something that's every mortgage is structured the exact same way. You have the price that you're going to pay. And you've got the interest rate and it goes in a sliding scale. So the higher you want to pay and costs the lower the rate that you're going to get. But you've got to look at it this way. It's like playing a game of poker. If any of you guys have ever gambled do you think about it you've got six thousand dollars with the chips sitting on the table and you've got a choice here you can play all in on that six grand. And if you do you lose the very first hand. Those are the hard costs that you just paid. But in return you're going to win one hundred dollars for every hand that you play. Now you can play as long as you want 30 years but you can only pay to play one hand a month. So the question becomes how long is it going to take me to win my six grand back. Well it's easy math right. Hundred bucks a hand. It's going to be 60 hands 60 hands divided by 12 months. It means it's going to be five years. So it's going to take you five years to win back that's six thousand dollars you paid in hard costs. Now option number two is you can say well I'll keep my six grand here with me on the table.

[00:01:14] And I will lose one hundred dollars every hand. And what you do is you leave keep that money. You take a higher interest rate. You don't pay any closing costs at all. But the net result is your monthly payment is one hundred dollars higher. And the reason you do that is because you go why I'm not sure how long I want to sit at this table. Do I want to sit here for five years just to win my money back. Because if you end up now the average Fannie Mae was founded in 1968. Freddie Mac in 1970. There's they've been tracking this and the average lifespan of a loan of a mortgage to most them 30 year fixed is about four point two years. So it's easy to figure out what they are free for you. You can just look at how many homes have you owned and how many mortgages you've had in each house. So you bought a house you lived in it for eight years you refinanced once for example. That's two loans in a year you're at four years. Then you bought another house you're in it for 10 years so you got three loans now in 18 years and you refinanced. And we do the math. So the average is about four point two years. So let's go back to this. This poker game. If you didn't go all in with a six grand and you kept this mortgage for the average of four point two years.

[00:02:27] That means you played about 50 hands before you got up and left the table which means you still took a thousand dollars of chips with you because you weren't playing the game long enough to either spend that money or to win it back. Makes sense. So that's how all these loans are work. Let me show you something. What we do is we look at that. We actually pull up the back room and I'll show you where the what the market does. And we throw it into this analogy so let me show you what I mean by this. So what I did is I just took a traditional five and a thousand other purchase putting 20 percent down. Credit score is going to be right around where the national averages will you 740 here. None of this stuff matters that's all just for example. Everybody's got their specifics right. So now look at this. Here's what we got. If you were going to borrow four hundred thousand dollars for example you've got a difference. The loan amounts are the same but I structured these as far as a long medium or short term option. So the long term option means you're all in when you're six grand and you will win that money back over time. The short term option is is you're not going to play that first hand you're not going to lose any money you're going to lose a little bit every single hand that you play because you're not sure how long you want to sit at the table.

[00:03:45] So there is a break even point. There always is. So when we look at this the interest rate the loan amount is always going to be the same. The term is always a 30 year fixed. The closing costs the cost of your appraisal doesn't change the title work all that kind of stuff and we're just going to use 30 we'll use thirty five hundred bucks here. That's about what it would be. And then how much do we want to spend to buy down the interest rate. So at three point nine nine it would be about six thousand dollars at four point four nine. It would be you'd actually get a rebate of about 380 bucks.
License info here: www.newamericanfunding.com/licensing.aspx License info here: www.newamericanfunding.com/licensing.aspx Todd Gehrke, Sales Manager, New American Funding NMLS6606