Beyond the Rate: Your Mortgage Questions Answered

Episode 66: Pocket Change Podcast

Summary

Wanting to begin your homebuying journey? Reach out to Kelly or one of the other Mortgage Champions at Leaders Mortgage Services.

The Pocket Change Podcast is presented by Leaders Credit Union. To learn more about Leaders, visit leaderscu.com.

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Full Transcript

Shea:

Hey, this is Shea!

Carrie:

And this is Carrie!

Shea:

Welcome to the Pocket Change Podcast.

Carrie:

Where you'll learn better ways to spend, save and invest and take control of your financial journey. So, our guest today is one of our mortgage champions, and she is on a mission. She wants to make education accessible and clear, and she wants to empower her buyers.

Shea:

That's right. She's here to really walk us through and our listeners through, you know, rates. So everyone's got questions about mortgage rates, buy downs, building their financial confidence. So I think our listeners really get a lot of good information.

Carrie:

I do too. She's got some great advice. We're excited to welcome our guest, one of our mortgage champions, Kelly Jaunet Jones. Welcome to Pocket Change!

Kelly Jaunet Jones:

Great. I'm so excited to be here.

Carrie:

We're happy to have you here. So tell us a little bit about what got you into the mortgage business and why education is so important to you.

Kelly Jaunet Jones:

So, I've been in the mortgage and real estate world for, like, ten years now. Before I was at Leaders, I actually was the Marketing Director for a whole other mortgage company. And before that, Marketing and Business Development Director for a big team. And so marketing and business development has always been at my core. And, I was starting to figure out that education was a really big part of my core value of what I wanted to keep doing. And so when Leaders reached out to me to see if I wanted to join the team, it was something that I told them, you know, we can talk about this, but like, I want to keep with the education focus. I love teaching people, whether it's about mortgage or marketing or anything. And he was like, actually, fun fact. So are we. So it was a great alignment for me. And but I've been teaching classes about marketing and Canva and home buying and all of that for several years prior to being at Leaders. And I'm so happy to be doing more of that here as well.

Shea:

So what are some of the common questions you get about the homebuying process?

Kelly Jaunet Jones:

I think the most common question I get about homebuying is really like, what does this process look like? You know, when people don't know what they're about to embark on, it can be a little scary. But really, the more that I've worked with people, the more I'm realizing that it's less about what does this process look like? And more about, is this right for me? Like, that's the core question of what they're trying to get at. You know, they're looking to buy a house at some point, but they don't know if it's right for them, if it's right for their family. If the price is right, if the market is right. So for me, I like to lead with education. So instead of saying you need to be in this kind of loan and this, it's more about let's talk about it. What are your goals? What are the most important things to you? Is it not paying as much down payment? Is it, is it having a decent monthly payment? Something like that. And so we work from those angles and I try and educate as best I can. Because really when people feel educated, they feel empowered. And then all of that trust starts to build because you're letting go of like, the, the smoke and mirrors that people think about mortgage because it is so confusing. So I like to lead with education, to build trust and then confidence in the people that I work with so that they can go out and make the right decisions for themselves.

Shea:

It really is, you know, a huge process and we only do it maybe a few times in my lifetime. So having that knowledge behind it really helps people make informed and confident decisions like you're saying. So that's great.

Carrie:

So one of the biggest questions we all have right now are what are the current rates? And will they go down anytime soon?

Kelly Jaunet Jones:

So yes rate is the biggest question right now. It has a lot to do with payment. So people are very conscious about that. You know rates have swung in many different directions in the past few months. And so it's hard to predict, like what it's going to do. Most of the time I tell people rates are tied to different economic factors like labor inflation, CPI reports, all kinds of things like that. And that's hard for people to keep up with…

Shea:

I mean, I don't look at that every day.

Kelly Jaunet Jones:

No…

Shea:

I’m not looking at those reports.

Kelly Jaunet Jones:

No, I mean I try to but still like I'm not an economist, I'm a mortgage lender trying to help facilitate people make good decisions on home buying. So what I tell people is two things. One, if you're just wanting to look at what rates are, a lot of people say, well, look at the fed rate. Well, that's not really the case. The fed rate moves very rarely now. And when it does, it stays stagnant. So what should people look at? I have two tools that I always tell people to take a look at online. One is the Freddie Mac Daily rate. It's always posted and you can see the historical rates and how it's dropped or increased, over many sections of time. It's a good metric of kind of on average, where things are. Another one that I like to tell people to look at for direction is, the Ten Year Treasury. So the Ten Year Treasury is, not necessarily tied to mortgage, but if you think they have similar, core markets, investors that they go for, so they tend to go in similar directions. One of my favorite podcasters that I listen to, he often talks about the, Ten Year Treasury and mortgage rates as slow dancing. So they're always kind of together. They may be falling further apart, or they may be going in closer, but they go in the same general direction. So those are the two places I tell people to look. But other than that, when people become super rate conscious, and they go in for a rate and say they have X rate and they're like, gosh, that that rate is high, that payment feels high. And so I tend to say, okay, what is ideal for you? And let's say they say, well, it would be half a point less than what it is now. Okay. Let's take a look at that. How would that half a point decrease in a rate really affect your monthly payment? And I think a lot of times people are pretty surprised. If you're working in the higher sales prices, yeah, that's a significant swing. But if you're in a more, moderate price, you could be talking about like a couple tens of dollars, like $20, $30. So my job is to say this is what the difference would be. What decision would you make now knowing that? Does it, does it does it make you say, oh gosh, I didn't know it was that much? Like I, probably, I can do that. Or do you say, you know what? No, that's my budget and that's it. So my job again is to take this information, educate people, help them understand what their limits are, and then they make the decision.

Shea:

Yeah, that's really good.

Carrie:

Really good advice. Yes, so can you explain to us a little bit about what buying down the rate is?

Kelly Jaunet Jones:

Yes. So that is a very popular topic right now because of where rates are. One is… I just want you to think about it temporary and permanent. That's the main difference in those two buy down options. Permanent is exactly that. You have, an amount of money, and you can use that in closing one time dump into decreasing the rate. You can use that with seller contributions. You can use that with your own money. But what I tend to tell people is they don't realize that it can be a pretty expensive fee to buy down the rate, and that's across all lenders. So if you think about it, if it costs like $2,500 to go from a 6.5 to a 6.375, what is that difference? And then what is your break even on that investment? Because if it's not for like five years or even three years, do you think you're going to refi before that? I would hope so. So did you make the right call on using that money in the right way? Are you at the break even point for that investment? Again, my job is to present those facts, those figures, and let people decide for themselves what makes sense. Now, the temporary buy down is something that a lot of people don't often hear about. It's really popular right now. A lot of realtors know about it and a lot of lenders know about it. But buying down with a temporary buy down is a big bang for your buck. So this is seller only money for the most part. Don't want to get into guidelines, but for the most part it's seller only money. So what amount of money you're going to get from the seller and what can I do with it? So let's say you have money from the seller. You can basically take that money and for a set amount of years, because there's different kinds that you can do. You will decrease your monthly payment by one or multiple full points of interest. So it's possible you could save like $500, $400 off of your monthly payment for a year. And then it steps down and steps down. It's dollar for dollar savings and that money never goes away. Difference is permanent buy down, you refi, that money's gone. Temporary buy down, it's actually sitting in your escrow account. So you can take it just like your other escrow money. And you will always have that because it's yours. Okay. So a big difference.

Shea:

Yeah. It's a lot of people don't know about that. You know those different options.

Kelly Jaunet Jones:

All those tools are helpful to know.

Shea:

So you're in the Greater Memphis area serving that market. So tell us about Memphis right now. What's it like for buyers and sellers?

Kelly Jaunet Jones:

For buyers and sellers. It's really you know it's really… it can be very area specific. It can also be very seasonal. When it comes to the holidays or school starting, it can be maybe… historically it has been maybe a harder time to sell, but it's much more area specific because in Memphis we have a very unique, school structure.

Shea:

Sure.

Kelly Jaunet Jones:

And so moving even, a few minutes down the road, could mean a completely different school, not just school zone, but like whole different school system.

Shea:

Right. Municipal school. Yeah.

Kelly Jaunet Jones:

You know. Right. And so people are very sensitive to that. And so it can be it can just be it's different. I wouldn't say right now, but maybe seasonally, I guess in the last probably six months, I have seen a lot of sellers pay for closing costs, which is great for buyers. That doesn't specifically mean that it's a buyer's market, because inventory is still sparse. But what it does mean is that there's a healthy amount of flexibility in the market. Sellers may not get full price offers and multiple full price offers on every single house in the area, but they do get kind of a healthy days on market. It's not like it's sold in two days, but I think that's good too, because it brings balance to the buyers. They don't feel like they're so rushed, like they have been years and years prior. So, while some people say… is it a depressed market? I mean, is this a more even market? Again, it depends on who you are and what you want for your money.

Shea:

Yeah, that's helpful to know.

Carrie:

Yeah, it's very helpful. So we know you have a marketing background and you enjoy teaching. Can you tell us a little bit about the classes that you teach?

Kelly Jaunet Jones:

Yes. So I started teaching, during Covid, there was a real estate group, and they said, Kelly, we really need agents to learn more about marketing and especially Canva. You don't know what Canva is I know you guys do, but Canva is a fantastic, accessible tool for people to use that have no graphic design experience. And a lot of times, people with graphic design experience really like it because it can help you not have to recreate the wheel for every single thing that you do. So, that was something that I had many, many, many years of experience with. And so they said, can you help come and teach some of our agents on that, plus your marketing strategies and, and how you kind of go through, your marketing processes. And so I just put that paper and started presenting that to so many offices. And, and then from that, I expanded to a couple of different classes on branding and things like that. And then once I got closer to the mortgage process, you know, it was more like, people need to know about this. Like, this is tough, but it can be learned… agency to know. People need to know. So I started creating classes for mortgage and and then all those classes became CE (continued education) approved. And I got to teach those at the Memphis Association of Realtors, Central West Tennessee Association of Realtors. I've taught actually at the Baton Rouge Association of Realtors. So it's been really fun doing that. My most recent, two classes that I've been approved for, which I'm really stoked about is, nerding out on, on mortgage here is HFR. So HFR is actually a… it is a CE and certification class. So for Realtors, when they get CE some of the classes are able to be used in their kind of repertoire and marketing for things that they've achieved. So this class, HFR, offers Home Finance Resource. So if they take this class and they pass the tests and everything, they become a certified Home Finance Resource. It is six hours of mortgage stacked mortgage CE, and I'm one of the only kind of practicing, lenders in the state…

Shea:

Wow.

Kelly Jaunet Jones:

…that get to teach it. And there's not very many practicing mortgage lenders in the country that teach it. So having somebody that's in it and being able to give you actual real world scenarios and things that have happened has been really helpful to realtors. And I love bringing that to them too, because it's not just buyers that we work with, you know, it's realtors too. And if they have, you know, nervousness or, reservations about it because they're not educated in it, it's hard to build trust with them too.

Shea:

Right.

Kelly Jaunet Jones:

And we need a whole team aspect. So then we're working together on things for our buyers and not like this.

Carrie:

Right.

Kelly Jaunet Jones:

So it's been really great. And then the last one is Mortgage Math for Realtors. And I love that class. It is three hours of math and it is anywhere from this easy stuff like loan amount to like basis points and discount points and things like that.

Shea:

It's probably needed for everybody.

Kelly Jaunet Jones:

Yes, it is needed for everybody. I mean, I'd love to teach it to home buyers too, if they want it. Exactly. So I really, really am excited about this class. It's a really great accessory to any mortgage knowledge that you have, so I'm excited to teach that.

Carrie:

Of those sounds so helpful for realtors. But also, as far as the Canva goes, I mean, it's such a useful tool for small businesses that doesn't have, you know a graphic designer on staff.

Kelly Jaunet Jones:

Yeah, I've taught some classes for small businesses. So, chambers and just kind of like small business associations and even like, you know, medical spas and anybody that has, employees or even, you know, contract workers that are responsible for getting their own business, you know, they have to be online and have great graphics. So I love teaching that to really anybody. It's been fun.

Carrie:

It's great.

Shea:

So if someone's been a lifetime renter and they're nervous to take the leap of buying a house, what's your top advice for them?

Kelly Jaunet Jones:

Yeah, my advice is find your baseline. You know, it is scary and super vulnerable to have a conversation with someone for the first time about the reality of your financial situation. And I definitely understand how that feels. I talk to people every day like that. I think I've talked to four people just today that have had that same nervousness, and they just want to know where to start. At the very basics I tell people, find somebody that you can have a conversation with. If you don't feel like you can have an honest conversation with someone, then move on. There's a lot of us, there's a lot of mortgage lenders. And even with when within one organization, you're going to have people of different personality types and different specialties. So find somebody that you can have a conversation with and then find out where your baseline is. Just find out what is your credit score. Find out you know, what your actual qualifying income is and what that means and how that affects you. Find out really what kind of down payment you need in order to start the process. So, you know, there are lots of options out there. And I think people just don't know because they're scared and they feel like I'm not good enough for somebody to talk to because I don't even know what my credit score is, or I've done awful things to my credit before, like, everybody wants you to win when you call. Really, truly. So just have a conversation and someone you can keep talking to through this process because you can get there. I promise you, you can.

Carrie:

It's great advice. Okay. So this is a financial podcast. So we like to ask our guest what is the best piece of financial advice you've ever been given?

Kelly Jaunet Jones:

So the best piece of financial advice that I've been given is not very as, education based as I usually get to. It's not a lot of dollars and cents. It really was starting young. I know not everyone has the privilege of youth, but if you do, if you have no idea how powerful that time.

Carrie:

It’s true.

Kelly Jaunet Jones:

You know, you can always look at a compound interest calculator. But really when my husband and I first got together, we didn't have like three pennies, okay. But we could work really hard and we wanted to learn. And so we found resources that would tell us like where, not where to invest, but like what kind of insurances do we need and what kind of plan do we need to get to get us to where we are? And sometimes we continued with three pennies to scrape together after all of our retirement contributions and short term disability and long term disability and all those things to make us feel secure. Sometimes that plan and that future and that idea of us being more secure in the future was sometimes all that we had. And we continued to walk that together. And now we're to a point… I can't say that everything's perfect, but, I do feel like I'm really proud of where we are. I'm proud of our younger selves for believing that we could get here.

Shea:

You have peace of mind and security.

Kelly Jaunet Jones:

Exactly.

Shea:

That's what you were looking for.

Kelly Jaunet Jones:

Exactly. And so, and just a little piece of advice, even if you can save a little bit of 529 college savings fund for your kids, it is worth every penny. It really, really is. Even if you can save just a little bit, you know, $20,000, it's not going to be a huge, you know, dump in the bucket for college, what it is right now, but it gives you something. So just try a little bit when you're young and you will thank yourself so much.

Shea:

That's right. And so finally, if you found some extra change in your pocket, what would you spend it on?

Kelly Jaunet Jones:

So. I thought it would be skincare, but actually, Memphis has gotten some really hot restaurants to come around in the last like five months. And one in particular I'm really excited about. And so I would save my pennies for their upcoming, caviar selection. Very excited. I'm not a caviar person, but I want to... I really wanted to try it. So just, things to feel fun and excited and just celebrate some wins. A place to do that.

Carrie:

I love that. Yeah. Well, thank you so much for joining us today. Kelly is great. It’s a joy learning all of your advice. And I think our viewers will too.

Kelly Jaunet Jones:

Great. Thanks, guys.

Shea:

Thanks.