In episode eight of Real Estate Rescue, Cody Oakes interviews Beau White from Southern First Mortgage. Beau shares his journey into the mortgage lending business and discusses current trends and concerns in the real estate market. With the economy and interest rates being a topic of concern, Beau provides insights and expertise to help listeners navigate through these challenges.
Tune in to gain valuable knowledge on mortgage lending and real estate investing.
TIMESTAMPS
[00:03:49] The Cycles of the Mortgage Industry.
[00:06:37] Real Estate Market Trends.
[00:10:38] Real Estate Market Fluctuations.
[00:16:06] 100% Financing and Private Mortgage Insurance (PMI).
[00:25:03] Real Estate Market Predictions.
[00:29:39] Speeding Up Loan Process.
In this episode, Cody Oakes with his guest, Beau White, delve into the challenges of maintaining competitiveness in the market while also understanding the state environment. They emphasize their business's commitment to being highly competitive in terms of rates and providing excellent service. However, they also stress the importance of comprehending the state environment. They acknowledge that every business has experienced ups and downs, making it a tumultuous journey.
Moreover, Cody and Beau highlight the impact of credit on various aspects of home buying, such as interest rates, homeowners insurance rates, and mortgage insurance rates. They stress the significance of credit in determining the structure of a mortgage and how it can affect the overall affordability of a home. They also encourage homebuyers to focus on their credit and understand how it can impact their ability to secure a favorable mortgage.
QUOTES
SOCIAL MEDIA LINKS
Cody Oakes
LinkedIn: https://www.linkedin.com/in/cody-oakes-69089bb7/
Beau White
Email: bwhite@southernfirst.com
Mobile: 404-641-4131
LinkedIn: https://www.linkedin.com/in/beauwhitemortgage/
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Have any questions?
Visit Southern First Bank
https://www.southernfirst.com/contact/find-a-banker/beau-white
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WEBSITE:
Real Estate Rescue: https://www.realestaterescuepodcast.com/
Intro/Outro00:02 - 00:17
Welcome to Real Estate Rescue, a show dedicated to helping you stop foreclosures, navigate through the world of probate, and better understand the how-to of real estate investing. And now, here's your host, Cody Oakes.
Cody Oakes00:17 - 01:12
Welcome back to Real Estate Rescue. I am your host, Cody Oakes. Today, we have Beau White with Southern Forest Mortgage. Me and Beau have been, well, Beau is actually my blocks. And so with Real Estate Rescue, what we tried to do was create a mortgage lending company. So we reached out to Beau and kind of talked about all these special programs. And Beau, thank you for coming on to the show today. And what I wanted to figure out was kind of talk to you about how you got started, what got you into the mortgage lending business, things that you're seeing, trends that you're seeing, you know, across today because everybody's a little bit concerned with the economy and concerned with real estate in general and the interest rates that nobody has seen in quite some time. Do you want to just go in and tell us how you got started?
Beau White01:12 - 02:49
Yeah, sure. So I've been in the business since February of 2003, so a little over 20 years. Previous to jumping into the mortgage business, I was in telecom startups and sales and was married in 99 and had our first kid in 2022, in October of 22, or I'm sorry, 2002. And post 9-11, the telecom industry really took a hit. And so my father-in-law, who was in New Orleans at the time, well, still is today, reluctantly said, hey, maybe you want to make a move and let's see what we might be able to find for you. So he introduced me to someone who was very successful in mortgage business. And I accepted to take that position and in late 2002, and actually was required to go to a mortgage academy for a mortgage school for about, I don't know, call it, call maybe And so I decided to do that, jumped in, I took the class, and was able to really jump deep into the industry in February when I really started to go out and actually do the right things to build relationships and really start to originate funds.
Cody Oakes02:49 - 03:33
So when you got into this, 2003, You're kind of like a veteran warrior here because whenever the first clock said, what did you think? I know that I've had individuals and friends of mine who, you know, real estate was just booming back in the early 2000s. Everybody was kind of jumping into the real estate, also jumping into the brokerage. And then, you know, they're making $200,000 to $300,000 a year. The last time it happened, you know, some of those mortgage brokers that I need to deliver visas. So what is it? What is your take on, you know, what has allowed you to be able to still be in the mortgage lending business today?
Beau White03:33 - 05:41
Well, I mean, a lot of it has to do with the different cycles that, you know, we've seen over, in my experience over the last 20 years, we've had three definitive issues, if you will, through the mortgage meltdown, the recession, and COVID. And over the last 20 years, we've seen rates be as high as 8%, which happened October 19th of this year, to as low as sub 3% back in January of 21. When I got into the business, the interest rates, I believe, if I'm right, at the end of 2003, just falling below 6%. And through, you know, through the time you've had a being in Atlanta, you've had a population boom, right? You've had a lot of new construction that have come into the venture market. So aligning myself with really good real estate agents, financial planners, CPAs, and builders, really has helped me continue to be successful for This is, 2023 has been one heck of a year. We're seeing a lot of weird things happen in terms of interest rates increasing month over month. We've seen the Fed raise the Fed funds rate 11 times since 22. And all of that puts us in a strange position as a mortgage lender to be able to try to be as competitive as possible as far as rates are concerned, offering really good service, but at the same time, understand what's going on in the state environment. And so, you know, it's been a wild ride, but it's, you know, there are a lot of peaks and valleys in every business that you're in. But I think we're at a point now where I think, you know, maybe we've seen the worst of it in terms of where rates could
Cody Oakes05:42 - 07:06
Yeah, I absolutely agree with you. There's a saying, I've got a few buddies of mine that are pretty tied in with some pretty good investors. The whole notion is stay alive till 25, is what they're saying. Now, obviously, nobody can actually predict the market. It's all based on data and all the time, then they make the decision. It's time to either increase or at the time of week. I will ask you this. So with us doing real estate rescue and us partnering up with you as well, I know that there's a lot of people that are kind of on the sidelines here. And I think, seeing that rates have not increased over the last two Federal Reserve meetings, that that's probably a good sign. And what's your thoughts? Because I know that as far as real estate goes, Real estate boomed in 2020, 2021, after COVID, pretty much real estate just started shooting up. I bought my house in 2019, but I thought, you know, when I came to know, I just raised everybody's comps up, but I forgot about that I had overpaid. I think that's kind of the idea, you know, for most people, because you don't realize that, you know, real estate over time, whether it's going through cycles or not, eventually continues to go up, right?
Beau White07:06 - 09:07
Yeah, yeah. I mean, I can use myself as a prime example. We bought our home that we're still in today in 2006 at the height of what we consider to be the tip top of where housing prices were. If you take a look back from where we are today versus when we bought, it was a very sound investment. It didn't feel like that for you know, real estate general is a long term, should be considered a long term investment. You know, you can always use real estate as a catalyst to buy your first home, take the equity from that, move to your second, third, fourth property, whatever you choose to decide. And over time, I think it's pretty safe to say that you may I don't really focus on interest rate more than I do the opportunity. What I mean by that is you can really get caught up in what you're hearing from the media in terms of rate, how high it is, how high rates are, how many times the Fed has raised the Fed funds rate, where rates are going to go. But ideally as a home buyer, you really ought to focus what your budget is for your monthly payment, what your budget is for cash to close, and really focus on that as your guide to be able to purchase a property that you want. Then eventually down the road, as we go through these cycles like you're talking about, there are opportunities to refinance, to pull cash out, to do debt consolidation, a lot of opportunities.
Cody Oakes09:08 - 09:27
I agree. So thinking about this, and maybe I'm wrong here, but when inflation or the dollar is losing value, you're buying real estate. It seems like that real estate continues to go up. It kind of offsets that, right? It does. So if you look from 1970, where you're purchasing homes for $40,000, $50,000.
15%.
Cody Oakes09:27 - 11:10
Yeah, 15% interest rate, which probably sounds really crazy. 0.5 million. The idea is this, is that over time with the Federal Reserve and with debt, the value of the dollar has decreased and with that comes inflation. The best bet is to go ahead and get into real estate, because if you were to buy in 2021, you had three wars, people paying $12,000, $30,000, $40,000 over And what's crazy, though, is that nobody thought about it. Nobody thought about it twice. They wanted a house, but rates are so low. Oh, my God, I have to get in. I'm going to pay $130,000 over. Well, now rates are high and everybody's scared. It's crazy to me, because at the end of the day, and the way that I see it is, you do go through cycles, but long-term, if you're purchasing a home, and I don't see the house market drop to Obviously, in certain areas, it's Charlton, Las Vegas, or Phoenix, or Austin, Boise, Idaho. Those markets, yes. But as far as purchasing real estate, I feel like once these rates do come back down, if you're not in the real estate, you don't own a home, it's going to be very, very difficult to be able to get to a house. I feel like once that has happened, house prices just sort of soar.
Beau White11:10 - 11:19
Well, you know, and there are a lot of factors that go into that. But you also have to remember, too, that Atlanta's a booming city and a lot of people.
Right.
Beau White11:20 - 12:43
And so when you have an influx of potential buyers, equal printers, it puts a little pressure on the economy, for sure. When you consider the knowledge of the home buyer these days, it makes it even that much more difficult. for a lot of people to kind of push into a market and consider purchasing a home. I mean, you think about, I think Ben, the average credit score of the buyer today is 705. Two years ago it was 717. And prior to those years, it was actually lower. And what you're starting to see is you're starting to see more and they understand why credit is so important. They understand what makes them a serious buyer. And so I think all of those factors do play a part in exactly what you're talking about, that it could be difficult to purchase in specific areas. Number one, if you're not prepared, and at the same time, long-term goal, like we talked about before, is a payment investment.
Cody Oakes12:43 - 13:01
So, anybody that's out there that's, you know, I think a lot of times it's just fear and uncertainty and not knowing, not being educated, right? So, with you, what does your company do to educate? So, if there's someone out there that's thinking, hey, I'd like to go in six months or, you know, four months, what kind of advice would you give to those individuals?
Beau White13:01 - 14:51
Well, it all goes back to what I mentioned previously. I think the number one thing that you need to focus on, again, not rate. You know, Focusing on rate and the refinance environment is probably something that you need to consider. But if you need to purchase, then you need to focus on what your monthly budget is going to be from a payment standpoint. Identify what that comfort number is, and then allow a mortgage advisor to give you the guidance based on what your comfortable down payment is. the program that you're looking at, whether it be conventional, jumbo, FHA, VA, you know, whatever the program is, and then allow them to structure kind of back into what that looks like. You know, being pre-approved is critical. You know, understanding your creditworthiness, what your budget is, you know, all of these things play a major part meaning that you're working with an agent, you're going out to look at different properties, and when that offer comes across with a pre-approval letter, and it has to be a real pre-approval, not just a proof of obligation, having that within the offer really gives the seller and that listing agent the comfort that they're going to have to retire. And I think we're doing better as a board And you just have to, you really have to choose the right folks to rely on that service for you.
Yeah, absolutely.
Cody Oakes14:52 - 15:06
So what is the, what type of programs that you guys have that you're doing? I know that, you know, we've talked about a few of these that are really exciting for real estate rescue and areas that we're looking at. So you want to kind of explain that to the viewers? Sure, yeah.
Beau White15:06 - 16:59
So I'm a Southern First, we're a regional, South We offer every loan program on the site. Conventional, government, jumbo loans up to $3 million. We even have bank statement loans, debt service coverage loans, which are referred to as DSCR loans for investors. We even have a portfolio of loans that we can lend professional loans, doctor loans. These are all for residential mortgages. And now, there has been a pause on a lot of portfolio lending industry-wide because of where we are in this environment today. Just because of the call to fund for lend at a certain number for the banks using their own funds, it puts a strain on the balance sheet. So some of those programs have paused, now is we understand the value of really giving back to the community. And what I mean by that is we have a certain amount of loans through really what's considered a CRA or community reinvestment. And we will offer a 30-year fixed rate on 100% financing, up to $550,000 in common capital accounts. There are certain areas that the property has to be in, so there are no income restrictions required. There's no PMI, it's a true 100% loan, no bail payment assistance required.
Cody Oakes16:59 - 17:01
So, explain exactly what a PMI is.
Beau White17:01 - 18:35
Yeah, so a private mortgage insurance is insurance that is an add-on to a mortgage payment if you don't put a 20% balance. And that usually increases Yeah, yeah, absolutely. Yeah. And, you know, there are some, you know, creative ways to get around that through doing, you know, lender paid mortgage insurance, things of that nature, but, but, but that money has to come from somewhere. And typically, it's going to come from either a higher interest rate, or trying to, you know, maneuver that through, through the mortgage itself, but Realistically, you've got to be very focused on credit because credit impacts interest rate, it impacts homeowners insurance rates, it impacts mortgage insurance rates. That's why I'm very, very focused on making sure that credit is really important to a homebuyer. Now, with that being said, it's not everything when it comes to the structure of to median credit score, yeah. And so with that credit score and a debt-to-income ratio that doesn't exceed 45%, you know, that market will fall back into zero down.
Cody Oakes18:35 - 18:41
Has the VTS, like, increased over time? Has it always been around that 45%?
Beau White18:41 - 19:38
Well, there's kind of an old kind of understanding of what 43, 45% in general. Now, there are different programs that will allow you to go above 45%, but when you're considering a conforming or a government loan, what a lot of people may not understand is that when they apply for a mortgage, we actually run their information through an automated number writing system, whether it be through Fannie Mae or Trademark. And so they actually will determine the risk value situations where you can go above 45%, but for this one specifically that we're talking about, zero down, are matching those information.
Cody Oakes19:38 - 19:56
So with that being said, if there's a potential buyer out there that's soliciting and maybe their credit isn't quite up to 6.6, isn't it a pretty easy way just to reach out to you and you just kind of take a look at their credit and kind of put them in a trend line of where they need to go within a certain amount of time?
Beau White19:56 - 20:15
Sure, absolutely. Yeah, so there are ways to improve credit. We have systems, rapid resource, like you just mentioned, where we take a look at the credit and put some scenarios of someone paying off a certain amount of debt and what that would actually do to boost your credit score.
So we have that capability.
Beau White20:19 - 21:31
But you also have to remember, too, that if you're doing one like an FHA or USDA or VA, credit score can go as low as five. Now, there's not a lot of potential for an approval at that number, just based on what we've seen in terms of trends of approvals. But certainly, if someone has as low as a 620 credit score, getting that through in that patient mortgage is not a problem. And so the one thing that I do specifically in my team is that we really take a look at every what their available cash-to-closes, and we put together every scenario that fits what they're looking for. So we really take a consultative approach to that, as opposed to just looking at, you know, one specific silo, if you will, do they meet the credit score requirement? Do they meet, you know, X dollars as far as cash-to-close? We can take a look at all the programs available to them to be able to give the right answer.
Cody Oakes21:32 - 21:41
So it sounds to me like you guys have more than just one pipeline, more in your arsenal than a lot of other mortgage companies actually do.
Beau White21:41 - 22:13
Well, I mean, a lot of mortgage companies and banks offer very similar programs. At the end of the day, most of us are pretty competitive in terms of what rate and things are. There's not a lot of that in the industry. And so it really is a matter of just choosing the right person, the right team to help you through that process.
Cody Oakes22:13 - 22:32
Well, you guys have been great with us with Real Estate Rescue and just giving us a lot more information and kind of walking in the spirit of our customers and our clients in the right direction. Do you see with the 100% financing, I know that, you know, you've got Cobb, you've got Fulton, you've got McAllen, right? Correct, yeah. Are you guys looking at expanding those accounts?
Beau White22:44 - 22:56
A lot of that has to do with the lending capability of the bank itself. And so, you know, we have to kind of assess that on a quarterly or semi-annual basis.
Cody Oakes22:56 - 23:05
Yeah. Is there anything else that you would like to tell to the viewers and to the listeners about your services and how to reach out to you?
Beau White23:05 - 24:21
Yeah, sure. I will say this before I give you my information. to 8%, peaked over 8%. And just since that time, they're down below 7.5%. My point in mentioning that is that when things do shift, they can tend to shift pretty quickly. And so I think that should kind of be a notice to any potential homebuyer out there that they do need to be prepared. And there is a real consideration of the cost of waiting. You and I talked about this earlier. There could be a potential of you waiting for rates to go down while values continue to go higher in terms of sale prices. You may miss out on some equity in the near future, for sure.
Cody Oakes24:21 - 27:07
I agree with you. I think that a lot of people can only compare what we're going through now up to 2025. It's very difficult for you to find a low rate and a cheap price. Absolutely, as an investor, that's what we want. It's crazy. I remember seeing my dad, because this is before real estate, way, way And he was purchasing homes back from the 2008 collapse. He was purchasing real estate in 2010, 2011. He was buying homes for $15,000, $20,000. That's kind of what everybody is thinking that's going to happen. I just don't see it personally happening. We look at the data and we're just in a completely different cycle. All cycles tend to be different, right? So I don't know, maybe that happens with commercial mortgages. goes, you know, I think that, you know, a little bit of a drop, it's got to flatten off even somewhat, but like at the end of the day, you got to take on the, it's all perspective, right? When rates are low, then you're, you're, you're paying $20,000, $30,000, right? But now is a great time to tap. You know, come in and make us an offer. We'll entertain, see. And there's not a whole lot of competition. Now, obviously, we have houses that are sitting on the market six months on your own. Now, do you think that, you know, as long as you have it under a certain pricing category, those houses are sold. You sold one that went under a contract within two days of us listing. We sold another one, went under contract three days. So they're going, they're still going real fast, but, you know, the day of getting five, six, seven offers, you know, so it's easier to negotiate. And just because the rate is higher than what we expected to be, or higher than what we're used to it ever being, in the last, you know, 15 years, 20 years, I don't know how long it's been, right? You know, I think that, you know, when people hear that, they're fearful, and they step back, rates to come down. Like Beau said, if rates do come down, what's going to happen to real estate? It's going to shoot up. You're going to pay for it one way or the other. You're going to pay for it on the purchase side, or you're going to pay for it on the interest side. But at least with Bitcoin right now, you can go ahead and refinance a couple of years down the road. 100%. That's a good point to make. Every client that we talk to,
Beau White27:12 - 28:04
really does feel that this interest rate is temporary, that we will re-engage, we will re-engage back with them within, you know, really every six, 12, 18 months, that's what we do, just to do an assessment, just to see if it makes sense to re-connect. You know, we give a lot of guidance based on our understanding of the market, the trends of the market in terms of interest rates, and can really give them proper guidance as to when the best time to consider a refinance would be. So I don't, that's why I go back to say, I don't necessarily want my clients to focus on what the rate is today, because we all know that it's going to be, you know, very temporary.
Cody Oakes28:04 - 28:30
Yeah, I think that's a general consensus overall. Yeah. And it's only because of the That's right. Yeah. Yeah. Well, look, I appreciate you coming on. I would love for you to go ahead and give a shout out of how people can find your services and get in contact.
Beau White28:30 - 29:21
Yeah. So, best way to contact me, like anyone really these days, is myself. 404-641-4131. And my email is first initial last name. So, bwhite at southernfirst.com. And one thing I will mention before we part here is that we have a really great application system that we can send to everybody by text. You can do the application on your phone, you can upload documentation from your phone, it's very intuitive. milestone. So it's a really cool app.
Cody Oakes29:21 - 29:29
That's awesome. Making things easy is the way to go versus having to fill out applications.
Beau White29:29 - 29:51
It is. And I'll tell you this, by having this technology, it actually speeds up the process in general from start to close. And so, you know, we've closed alone as little as 10 calendar days within the last 30 days. You know, you think about a week in between that, so really seven business days.
So, you know, we can get these done really fast.
Cody Oakes29:54 - 30:21
Well, look, the information is going to be listed below on our podcast, Real Estate Rescue. We're going to put your link, and if you can send that over to me, I'll list it all down below. And if you guys are looking to speak with a mortgage lender, there's a great guy, great family man, and he will lead you guys in the right direction. So until next time, real estate is Thanks for having me.