3/3/26 Financial Trainers, Mortgage Rates & California's Paper Bag Problem

The Moneywise Radio Show and Podcast Tuesday, March 3rd BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management Guest: Allyn Medeiros, Agape Mortgage website: https://allynmedeiros.com/ The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Allyn Medeiros and his business are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management].

• 0:00Speaker 00

  Live from the basement inside the historic Woolworths Building in downtown Bakersfield.

• 0:05Speaker 01

  Call or text in at 661-396-1000.

• 0:09Speaker 02

  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

• 0:37Speaker 00

  Now, let's start the MoneyWise Show.

• 0:40Speaker 03

  And welcome to the MoneyWise Show. We are live from the basement of the historic Woolworths Building in downtown Bakersfield. For the next hour, you are on KGO Money Talk, 1230 a.m., 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. We are your hosts today. I'm Sharad Waite and...

• 1:03Speaker 04

  Frank Lee.

• 1:04Speaker 03

  Hey Frank.

• 1:04Speaker 04

  Hey.

• 1:05Speaker 03

  We're also... Go ahead.

• 1:07Speaker 04

  Oh no, it's good to see you.

• 1:08Speaker 03

  Good to see you too. We cross paths in the hallways a few times today.

• 1:11Speaker 04

  A few times, yeah.

• 1:12Speaker 03

  We also have joining us today, basically a co-host, Alan Maderos from Agape Mortgage. Alan, welcome to the show. Good having you here. Likewise. Feel free to chime in. We're going to first answer some listener questions, then we'll talk about a little bit about what's going on in headlines. I know that some investors are certainly nervous about the geopolitical events that are happening that took place or started on Saturday a few days ago. Certainly markets are paying attention to that, so we'll give you our MoneyWise take on that. But before we do that, Frank, let's go through the questions.

• 1:44Speaker 04

  Yep. Okay, so the first message here, "100% I worked in the food and services for 20-plus years, and there's good and bad days, but you can never please them all. Just do your best, and I've been to the diner growing up and several times since this been open again and haven't skipped a beat. The food is amazing, and you guys brought out the best with Richard."

• 2:05Speaker 03

  Ah, that's sweet.

• 2:06Speaker 04

  Nice, yeah.

• 2:07Speaker 03

  Very nice. Thank you, listener, and anybody who's... out there supporting your your local restaurants. We really appreciate it. And certainly, we've got, we know that we've got work ahead of us at the at the luncheonette. But we've got amazing people working for us. You mentioned our chef, Richard Yoshimura. Very accomplished chef. He's very passionate. I see him every single day. I see his passion that he brings to the menu and to his work. So we really appreciate that that positive feedback. Thank you for that. What else have we got there?

• 2:42Speaker 04

  All right. So next question. What would help on investing? What to do with a large amount of money?

• 2:50Speaker 03

  Yeah, both you and I read this and we're like, oh, it seems like it's missing a few words.

• 2:56Speaker 04

  But I mean, straight to the point. I like it.

• 2:58Speaker 03

  Yeah, what, you know, basically, what would help on investing? And what do you do with a large amount of money?

• 3:06Speaker 04

  Yeah.

• 3:07Speaker 03

  You know, first of all, just like the investing part of it. I I've been in I've been in this business now for almost over 25 years. And so when I was, when I was first really working as a financial advisor, the internet was still coming in its own in terms of allowing people access to trading, online trading and and online brokerage accounts. That was a thing that was new when I started out. And that was a major shift. And just, just the invention of the internet was a major shift in our industry. Because all of a sudden, you had the average person

• 3:51Speaker 03

  with access to a lot of information and instant information. And that really, at that time, did democratize investing for a lot of people. For better or for worse. Of course, we saw what happened when the internet came out and then all the dot com companies came out and that bubble, that bubble inflated very quickly and blew very quickly. And so a lot of people were hurt, you know, during that time. But the reason I'm bringing up that the sort of the evolution of our industry of investing is because I think since then, since in the last 25 years, there has been an ever-growing sense that the average person can do it.

• 4:35Speaker 03

  The average person can invest and they don't need a professional. They don't need an investment advisor to help them with those things. And I feel as though that that is that is is only partly true. I think that there is, I think that there is a certain point where an individual can do their and manage their own investments well. But I feel though, like as though it's a very small percentage of people that can do that better than they could if they had the help of an investment advisor representative or a professional that they were paying to help guide them along.

• 5:15Speaker 03

  Like, obviously, we charge a fee for our advice and we don't charge, we're not charging a fee for, just so that we can pay our bills, we're charging a fee because we feel like we're adding value to what we're doing, which means we're adding on top of the gains that they would they would get if they just did it on their own. Like, we feel, and we have to justify our fee.

• 5:37Speaker 04

  Yeah, yeah.

• 5:38Speaker 03

  It can't just be, oh, trust me, we're doing a really good job. It's like, these are numbers. We're playing with math and dollars here.

• 5:43Speaker 04

  Right. And I guess we really can't explain this all in just one segment because there really is a lot that goes on in the back end. Like you said, I think anyone in this world can easily grow their wealth. You know, buying into ETFs and looking up which ones to do and maybe even going as far as diversifying between different asset allocations between domestics and international. That's great. You can do that.

• 6:11Speaker 03

  Yeah.

• 6:12Speaker 04

  But what as financial advisors is what we offer, there's a lot more to it than just the investment portion, like you said.

• 6:19Speaker 04

  Just recently, I was talking to a friend of mine. And he was all set on doing Roth conversions, Roth conversions. It's like, okay, yeah, no, that makes sense. Yeah, sure, if you're trying to. But what's the overall goal? Are you trying to save up for your retirement? Are you trying to save up for generation? Are you trying to build up generational wealth? Like, what is that goal? Because you can still save up for retirement through your employer benefit plan. The 401K, 403B, whatever it is. And that might be efficient. And then you might not need to do a Roth IRA. You might just do a traditional or an individual or joint account, or whatever that may be if you're trying to accomplish other goals.

• 7:02Speaker 04

  There's a lot of other factors involved in the planning portion. That's not just the investments.

• 7:07Speaker 03

  Yes.

• 7:08Speaker 04

  So that's where the value really comes in. It's guiding you in the right direction. And then the accountability. So I always use the analogy, it's like, well, think of us like personal trainers. You can go online, anywhere, find a workout plan, find a meal plan, a free template, and just stick to it. And you'll see dramatic results in weight loss or muscle gain, whatever it is. Yet, we still have obesity crisis. We still have all these issues. Personal trainers are there because they can offer that that value, the training, the regiment, but also the accountability, making sure you're on track.

• 7:48Speaker 03

  Yeah, that's a perfect example I've used frequently as the personal trainer, because even professional athletes, the top athletes in the world have a personal trainer or a team of trainers. And these are athletes that know their stuff.

• 8:01Speaker 04

  Yeah, coaches and everything.

• 8:02Speaker 03

  Yeah, coaches and these are, you name it, you name it. There's not, I don't, I don't, I don't know that there's a professional athlete that doesn't hire or at least at some point consult with somebody who can train them. They know how to train themselves. They know how to do a lot of those things. The reason why they have a trainer is because that trainer can get them that 1% or 2% more. And that makes the difference between them and their competitors. Same thing in our world, this is between one or two percent over thirty, a thirty or forty year career is enormous. And so why are you, you know, why are you taking that risk to try to do that on your own? To save whatever fee you might have to pay a financial advisor. As long as it's a good, now there are some shady financial advisors out there.

• 8:46Speaker 04

  Yeah.

• 8:47Speaker 03

  And so I get the hesitancy. But any advisor that anybody is working with should be able to explain the value that they're providing to their, to the people. And it has to be so much more beyond just we're offering these investments because that's where you get into the world of commission and commission based. And now you have maybe where your incentives are not aligning. And, and so with working with a financial advisor where it's fee based or retainer based. So that you can just make sure that you're staying on track. And studies have shown in our industry that if you, those people who work with a financial advisor

• 9:26Speaker 03

  gets about a three, three and a half percent higher, annualized higher return on their investments than them doing it on their own. And it's because of those things that you just mentioned. We help with the taxation of it. We do have access to institutional level money managers that some individuals don't have. So there can be some alpha that can be gained there. But I think most importantly is the fact that we can help manage behaviors. And we can help people make right choices as they progress throughout their life and the different stages of life. So there, there's, there's, there's the, the long answer there, Frank.

• 10:01Speaker 04

  Yeah. And I think that study that you mentioned, I remember, I think Vanguard was one who, who published it.

• 10:07Speaker 03

  Yes, exactly.

• 10:08Speaker 04

  One of the, the leading institutions that offer, again, ETFs, the Vanguard ETFs.

• 10:15Speaker 03

  Low cost.

• 10:16Speaker 04

  Low cost, very low cost and expense ratios and everything, yet they're the ones saying like, you know what? Like, yes, even though these options are available from our internal studies with financial advisors and or external studies as, as well showed that working with an advisor yielded better results.

• 10:35Speaker 03

  That's right, that's right. We've got some data to back up what we do. Now, the second part of this question is, what do you do with a large amount of money? This is, this is one of my, one of my favorite areas to work with, and we do a lot of this at MoneyWise. We've worked with a lot of people who have had sudden wealth, whether it's inherited money, or lottery winning, or some sort of financial windfall. And we've seen it happen from all demographics, all different types of people, from all different backgrounds, whether they've had experience with money or not. And so, we do have some experience in helping guide people what to do with a large sum of money. It can be incredibly overwhelming.

• 11:18Speaker 03

  You know, you take, for example, somebody who's in their twenties, and let's say they, they just inherited, even if it's, let's say they inherited $500,000. That is, which is, which is very common, because a lot of times their parents passed away, their grandparents passed away. So, they're home, they inherit a home, they inherit some real estate, and it gets sold, and they've got this money. That is like, let's like, there's so much, you can be, it can be a lot less than that, but it's life-changing money. And then, and then the person has dealt with the, with the challenge of really understanding what that, how much money that is. Look, it sounds like a lot, there's a lot of zeros, but it's not a lot of money if they've got $2 million of debt.

• 12:02Speaker 03

  If they've got $2 million of credit card debt, well, $500,000 isn't jack. And so, but you have to, this is again where working with a, a good financial advisor can help walk somebody through the steps to help them identify what their goals are, and, and what they're really trying to accomplish. Everybody's a little different. Somebody might say, "I don't care about retirement. I don't care about thing, anything that's beyond five or 10 years." Okay, that, that makes, that, that narrows down your options then, and it's easier to deal with, but.

• 12:34Speaker 04

  Yeah, and as, as that professional, we're also there to shed light on scenarios that maybe you haven't thought of and is worth considering. You know, like what, what does happen when you. Such a large inheritance, you know, it's like, okay, well, you have these options and you you think it's just as simple as that. But then there could be other things that follow, you know, subsequently from from those. And I think it's that game planning portion and just providing new perspective. That that, you know, is the cherry on top.

• 13:04Speaker 03

  Yeah, and there there is a place for somebody just to spend that money frivolously, frivolously, some of the money. Like designate a portion of that money, you just go blow through it, no accountability, crazy fun money, just do whatever you want. But then you may you have a, you know, usually what we do try to do is guide people into a few different buckets. You know, whether it's just, you know, a pleasure, short term, midterm, long term pleasure.

• 13:32Speaker 04

  Right.

• 13:32Speaker 03

  And but then helping them know what to do with it during that time can make a make a huge difference. Let's get to that last question.

• 13:40Speaker 04

  Yep. Okay, so if tariffs get rolled back, should families here expect real relief in their monthly budgets? Or probably not.

• 13:49Speaker 03

  Probably not. Yeah, that's my take.

• 13:52Speaker 04

  It's already damage is already done.

• 13:54Speaker 03

  Yeah, yeah, and it's like tariffs is only one part of the of the of the cost that goes that's going into the things that we buy. And it's only part of inflation.

• 14:05Speaker 04

  Yeah, it's and to your point, it's like these companies who've adjusted their their costs. And and their products and everything, if tariffs go, you know, get rolled back, they're not going to all of a sudden be like, oh, well, okay, let's, you know.

• 14:19Speaker 03

  Yeah.

• 14:19Speaker 04

  Let's decrease our profits.

• 14:20Speaker 03

  Right, yeah, let's change our prices and lower them here for a little while and then we'll raise them back up. No, they're not gonna do that. No, they're not gonna do that.

• 14:29Speaker 03

  You know, there is a there is a possibility that the tariffs, remember tariffs are just a tax. That it's just, that's all it is. It's it's a tax on on those goods and and that are that are coming in from whatever country. And it's collected by the government. The government collects that money from the companies. Where does the company get the money? Well, they're getting it from the consumers. So it sometimes a company is saying, we're not going to pass it on to our. Consumer, but those companies don't last very long. Eventually, they have to, they have to figure out a way to deal with their costs.

• 15:00Speaker 04

  Right.

• 15:01Speaker 03

  And, and so most companies are passing that, that expense on through the prices that they have. And they're passing on to the consumer. And so, and then the government is collecting it. So it's just going into a government account. And by the way, it, it, this is another pet peeve of mine that the, the amount of money that's collected from tariffs is nothing. It's, it's, it's in the billions. It's not in the trillions, people. And you know the difference between a trillion and a billion? It's about a trillion.

• 15:31Speaker 04

  Yeah.

• 15:32Speaker 03

  It's about a trillion dollars. Basically, it's a trillion dollars. And, and you know what our, our budget is, our national budget?

• 15:39Speaker 04

  Was it thirty?

• 15:41Speaker 03

  Oh, you're, oh, our GDP.

• 15:43Speaker 04

  Yeah, yeah.

• 15:43Speaker 03

  Yeah, GDP is, is like, oh, close to forty trillion.

• 15:46Speaker 04

  Mm hmm.

• 15:47Speaker 03

  So there you go. You know, and I don't care. You could tell you how many of you want in billions that we've collected in tariffs. Like, billion isn't anything anymore.

• 15:54Speaker 04

  Yeah.

• 15:55Speaker 03

  It's just nothing. It's nothing compared to a trillion. One billion is nothing compared to a trillion.

• 16:01Speaker 04

  Yeah.

• 16:01Speaker 03

  And we've collected billions. Okay, big whoop, you know, who, who cares? And plus, it's been going up and down so much.

• 16:07Speaker 04

  Yeah.

• 16:08Speaker 03

  And there, you know, there's more lawsuits to be had. And so it's just, it's really frustrating.

• 16:14Speaker 04

  Effectively, it, it doesn't, the, the only thing that really comes out of it is the, the, the price increase in these products. And it hurting the, you know, the, the consumers, because they're, they're the ones who are having to buy these products.

• 16:30Speaker 03

  Yep.

• 16:30Speaker 04

  A lot of these are essential products, too, you know, your toiletry, uh, food, uh, any, anything of necessity, you know? Basic, basic needs.

• 16:40Speaker 03

  Yeah, that's why it's economists across the board hate tariffs. And it's, it, it burdens the, uh, the, the markets, the global markets, uh, the capital, capital markets. It's, it's just, it's just awful. I, I get that they, they can be used to persuade other countries and other industries in other countries to put. To act, act a certain way. I can see there being some scenarios where there's unfair trade practices that are happening and this is maybe our only recourse as a country is to impose, impose tariffs to impose our will. But in a perfect world, there wouldn't be any of that. You know, like just the, the, the easier it is for companies to trade their goods to other,

• 17:25Speaker 03

  to other countries, the better. If they've got a product that another country demands, it's best that they can get that as easily as possible. It benefits both countries the most, especially when some of these products are done so much better in these countries. And so why are we, why, you know, why are we, why are we trying to change that? It's, it's, it's complicated, but I do get upset about it.

• 17:49Speaker 04

  Yeah, yeah, yeah.

• 17:50Speaker 03

  There's one more question. I forgot.

• 17:51Speaker 04

  Oh, yes, yes, yes. Uh, got it right here. Uh, thank you for sharing and we've signed up on the teenager education seminar. Will there be drinks and food for sale? Is it at Woolworths? I didn't receive a confirmation, so just wanted to check in. Thank you.

• 18:06Speaker 03

  Yeah. So thank you for checking in on the family finance night that is coming up on Thursday, March 12th. I think that there, I think we still do have some tickets available. It is a free event, but you do have to register and that is going to be presented by Money Wise and it is in partnership with the ROC and CTEC Safe One Credit Union. And there will be just light snacks. I just, I just heard from Seth. Yeah. Like cookies and water.

• 18:41Speaker 04

  And he's the advisor that's going to be hosting the-

• 18:44Speaker 03

  Yeah. Seth is going to be presenting it. Seth's awesome. Seth has so many years of experience in teaching, especially teaching young people. And so this will be, this will be a great, a great presentation. Basics on banking, basics, budgeting for real life, building credit, saving and investing. That's all going to be presented. It's at, it's at CTEC, which is the Career Technical Education Center on Old River Road. And-

• 19:12Speaker 00

  I will say you don't, you don't need to get the confirmation. I signed up. I'm taking my son as well. And right when you fill out the form, it tells you, thank you. You have been added.

• 19:21Speaker 04

  You're confirmed. Oh, okay. Yeah, yeah. Nice. There's the confirmation right there.

• 19:25Speaker 03

  Yeah. So it was, should be, should be a great presentation.

• 19:28Speaker 04

  I'm bummed out. I wanted to go in and see it because I missed out on his last seminar.

• 19:31Speaker 03

  Yeah.

• 19:32Speaker 04

  And it was great, full of dad jokes and everything.

• 19:34Speaker 03

  Was Dustin there?

• 19:35Speaker 04

  Yeah.

• 19:39Speaker 03

  All right, we're gonna do this, take our first break of the day, and when we come back, we're gonna be joined by Alan Maderos from Agape Mortgage. We're gonna talk about what's going on in the lending world. We're Money Wise, don't go anywhere.

• 19:47Speaker 00

  Money Wise Wealth Management is the only locally owned independent firm that uses a comprehensive wealth, tax, and estate approach, working closely with a highly trusted CPA and attorney. For information on how Money Wise can help you invest and plan for your future, call 661-847-1000. That's 661-847-1000.

• 20:15Speaker 03

  Welcome back to Money Wise. We're your hosts today. I'm Sharad here with Frank. We're joined also by Alan Maderos, longtime friend of the show. We'd like to bring Alan on because Alan knows pretty much everything about mortgage lending.

• 20:27Speaker 05

  Yeah, he's just easy to talk to.

• 20:28Speaker 03

  And super easy to talk to, down to earth. Alan, thanks for being here.

• 20:32Speaker 05

  Well, thanks for having me.

• 20:34Speaker 03

  Mortgage rates, I read a headline, mortgage rates are now the lowest they've been in five years? Is that right?

• 20:40Speaker 05

  No.

• 20:40Speaker 03

  Four?

• 20:41Speaker 05

  No.

• 20:41Speaker 03

  Three?

• 20:42Speaker 05

  No.

• 20:42Speaker 03

  Two?

• 20:43Speaker 05

  Gosh, damn. Almost three.

• 20:45Speaker 03

  Almost three?

• 20:46Speaker 05

  Yeah.

• 20:46Speaker 03

  So where are we at? Where are we at with mortgage rates right now?

• 20:48Speaker 05

  So, it depends on what day you're looking at this, right? So on Friday, interest rates nationally were just under 6%. But after the weekend, Monday, they opened up over 6%. But here's the difference. These are very specific loan to values, meaning you have 30 to 40% equity, you have a credit score over 760, and it's an owner occupied property. That's the kind of national rates you're looking at. But very specifically, conventional. So when you look at the national average, you have conventional rates and you have government rates. So government being FHA, VA, USDA, all of those have been in the fives for a while.

• 21:25Speaker 03

  Ah.

• 21:26Speaker 05

  Probably at least a month and a half. But the conventional loans had just dipped below 6%. And yesterday and today, they went above 6%, but not dramatically. We're talking 6.09, 6.1. So for them to dip below 6%, you saw the headlines popping out. But just as you know, you cannot take any action on a trade request by leaving a message.

• 21:54Speaker 05

  Right, so the market is real time and it shifted very quickly. So the news got wind that the rates dropped below 6%, but it's already passed. That window's closed already. So the best thing to tell a consumer is be in position to either make a decision to lock or not lock. Anybody that's purchasing a piece of property, they can't lock a rate typically without having a contract because you have nothing to buy. But if you're refinancing, that's a situation where you can kind of watch the market a little closer. But the savings that you'll receive by trying to play the market could be a diminishing return and it could be very scary for somebody that had hoped about this particular rate and it didn't happen because it wasn't locked because the consumer said, no, I think I'm going to find

• 22:38Speaker 05

  something better. So I don't know. But that's, that's basically what the headlines are saying right now.

• 22:42Speaker 03

  Yeah, I guess a little deceiving because most people don't use a conventional loan is my guess.

• 22:48Speaker 05

  No, a lot of people do. No, that's not even a question. It depends on the credit quality of the borrower. So if their credit scores are above 720, then conventional is typically a better option than FHA.

• 22:58Speaker 03

  But conventional, you said requires 20 or 30% down?

• 23:01Speaker 05

  No, no, I'm just saying when you look at national average rates, those are the things that go into that rate.

• 23:06Speaker 03

  I see, I see.

• 23:07Speaker 05

  So somebody's putting 5% down may not get a 5.875% rate, but somebody that has 35% down with those criteria, 760 plus FICO score, you know, owner occupied, they will very likely get that rate.

• 23:20Speaker 03

  Yeah. Well, that's good news. There's a psychological effect on people still happening, I think, with buying a house or selling their current house because we were so spoiled for so many years. There's so many people that are locked in at, you know, below four, below three. I've seen, I've seen still a few people. Have you seen that Frank?

• 23:39Speaker 04

  Well, myself, I'm at 2.75.

• 23:42Speaker 03

  Yeah, baby.

• 23:42Speaker 05

  And your brain is going, I could never give this up.

• 23:45Speaker 03

  No.

• 23:46Speaker 05

  Right? Ever. I'm going to pay this house off.

• 23:48Speaker 03

  Yeah. No, don't ever pay that house. Like I would, my recommendation, if you're, if you're wise with your money, if you've got a 2.75 mortgage, like you should not pay that off soon.

• 24:02Speaker 04

  No, I'm just going to delay this.

• 24:04Speaker 03

  Delay it as long as for the all 30 years.

• 24:06Speaker 04

  The whole 30 years.

• 24:07Speaker 03

  Because the difference, if you would have, if you just invest the difference in a money market account, in a T bill, you're going to do better.

• 24:16Speaker 05

  That's, that's the kicker is, is that people have to be disciplined enough to invest the difference, right? And that's, so I had. Goodness. Over a hundred loans in one year that locked below, you know, that three and a half percent.

• 24:30Speaker 03

  Yeah.

• 24:31Speaker 05

  That, uh, yeah, calling clients like that, it's really about how's the family?

• 24:36Speaker 03

  Yeah.

• 24:37Speaker 05

  How you doing?

• 24:37Speaker 03

  Right.

• 24:38Speaker 05

  Uh, but surprisingly enough, people still find situations where they start to lean on credit cards. They put more and ultimately they get stuck in the mentality that I have a rate that's three percent. And I'm never going to get this again. And they don't have a plan to pay off those 29% credit cards. Or pay off that, you know, trip to Disneyland that they put on the credit card. And then they start playing this game of balance transfers at zero percent and they don't pay that off. And what happens is all the interest accrues anyway. So you have to still use prudence in spending, but then have a budget. That's the word. It's a bad B word, I know.

• 25:18Speaker 03

  Yeah.

• 25:18Speaker 05

  But if you don't have an income source that can go up over time, then you need to work with the, the consistent dollars that come in the door. And financial planning has the premise of what are predictable income sources that you have? And where can we move money so that it does work for you? And if you're not doing that, uh, then you're kind of losing the game.

• 25:46Speaker 03

  Yeah.

• 25:46Speaker 05

  You know? And some people make spurts of money. They make large amounts at one time, but if they spend it all versus saving some and putting it into an investment or saving it for a rainy day, then they run cycles of bust, boom, bust, boom. And that's really very inconsistent and emotionally uncomfortable.

• 26:06Speaker 03

  Yeah, stressful. Most people don't like to live that way. But I, I do have to be careful sometimes when I talk about how people should not pay off their mortgage. Because there are people that don't have a plan or maybe don't have a budget. And so for those, and, and, but they don't have a problem making extra payment on their mortgage, even if it's a little bit, or just may paying the mortgage itself, that, that, that's not, they don't have a problem doing that. And so for better, for worse, there's a lot of people out there that their home is their piggy bank. And that's like the, that's how they, that's how they're putting away a few dollars every month is by putting a little bit extra in there.

• 26:48Speaker 03

  Now, I would say it's a very inefficient way to save and there's much better ways to do it. But if that works for you, and I know it does work for a lot of people, then okay, knock yourself out. Then it's just because it's better than the alternative, which is making the minimum payment and then blowing the rest on, on fast food or whatever.

• 27:06Speaker 05

  Yeah.

• 27:08Speaker 04

  Unless, unless if you go to Sonic.

• 27:10Speaker 03

  Yeah.

• 27:11Speaker 04

  I've been hearing a, a lot of the, the, uh, was it Sonic was making a comeback because they're offering the, the value menu or something.

• 27:18Speaker 03

  What?

• 27:18Speaker 04

  Value pack. Yeah, yeah, yeah. That's what I heard. That's what I heard.

• 27:21Speaker 03

  Because they're, they've always had a value thing, right?

• 27:24Speaker 04

  It was, uh, more for, for less than a lot of the other fast food chains.

• 27:29Speaker 03

  Oh, like they're undercutting?

• 27:30Speaker 04

  I, I think so, yeah.

• 27:31Speaker 03

  They had like a smash burger too. Does it still have a smash burger?

• 27:34Speaker 04

  I don't know.

• 27:35Speaker 03

  I don't know. Sonic is a weird one for me.

• 27:37Speaker 00

  I was gonna say, I don't think people go to Sonic to eat. I mean, everyone I've talked to go to Sonic for their, their slushies or their desserts.

• 27:45Speaker 04

  Yeah.

• 27:45Speaker 05

  I thought I heard that somewhere.

• 27:46Speaker 03

  Their drinks are nice. I don't, do they still have the Styrofoam cups?

• 27:49Speaker 00

  I believe so.

• 27:50Speaker 03

  How do they get around that?

• 27:51Speaker 00

  The Route 44s or whatever they're called.

• 27:53Speaker 03

  Route, Route 44 and it's a big Styrofoam cup, but I, I, didn't California ban Styrofoam cups?

• 27:59Speaker 00

  I know they just got away from the plastic bags again.

• 28:03Speaker 03

  Now there's another nightmare. Uh, these paper bags are terrible. They suck so bad.

• 28:08Speaker 00

  They break all the time.

• 28:09Speaker 05

  When you say terrible, you're like they tear.

• 28:12Speaker 00

  Here we go with the dead.

• 28:14Speaker 03

  Everybody has, yeah.

• 28:16Speaker 05

  Dang.

• 28:17Speaker 03

  Seth?

• 28:18Speaker 04

  I agree.

• 28:18Speaker 05

  Just talking about that.

• 28:19Speaker 00

  We went grocery shopping last weekend and I'm like, take it from the bottom.

• 28:24Speaker 05

  Can you double bag it for me?

• 28:26Speaker 03

  Yeah, and don't use the handles. Don't use the handles that that paper bag manufacturer created to use as handles. And every, every like, every bagger that I've been to has said, don't use the handles. Don't you take, carry it from the bottom. I was like, what's the point of this stupid bag? And then also like, very proud of how many of the blast, plastic bags I can carry, you know, because you can put them on your arm.

• 28:48Speaker 05

  You're white knuckling it in the house.

• 28:49Speaker 03

  Oh, yeah.

• 28:50Speaker 05

  I've got seven bags in each hand.

• 28:51Speaker 03

  Oh, easy, easy.

• 28:53Speaker 05

  With two gallons in this one. I thought I-

• 28:55Speaker 00

  I do miss them. I do miss them because we used it. Yeah, we used them for other things afterwards.

• 28:59Speaker 03

  Yeah.

• 29:00Speaker 05

  I miss them too.

• 29:01Speaker 00

  Animal stuff and yeah, I mean.

• 29:03Speaker 04

  I packed my lunch with them the next day, or whatever.

• 29:06Speaker 03

  So you know what happened? California kind of screwed this up. No shocker, but they, they, years ago, they banned the disposable plastic bags. And all that did is it forced all of the grocery chains to just make slightly thicker plastic bags that are non, supposedly non-disposable, because they're just a little thicker. So then we just got really nicer bags.

• 29:29Speaker 04

  Yeah.

• 29:30Speaker 03

  And then I think they just took it, they took it another step in going, going with the paper bags. I was inspired, one more, one more story about the paper, about the plastic bags, but this is a very inspiring story to me as a father who's very proud of how many of these grocery bags I can carry into the house. And I ordered groceries, this was years ago, ordered groceries, delivered, and I saw the delivery guy pull up, and it looked like a dad, solid dad, and he, I witnessed him put like 20 bags in each arm, and he had this whole system where he, where he had them all kind of in the, in the back of his trunk, and he could kind of slide his arm, one arm through all of them, and then the

• 30:14Speaker 03

  other arm all through of them, and then he kind of locked his arms together on his body, and walked up my steps, you know, to the front porch. And I had to open the door and just say, "You are, you are a grocery delivery god. How did you?" I was watching him, I was like, "There's no way you can lift all of that." And it was so inspiring, it was so inspiring to me, and I've been trying to achieve that ever since, you know, I gotta get this all in one, one trip.

• 30:39Speaker 04

  Yeah.

• 30:40Speaker 03

  Those days are now behind us. You can't deal with the stupid paper bags.

• 30:43Speaker 04

  No.

• 30:44Speaker 03

  It's destroyed, it's just destroyed that ability to be able to overload.

• 30:48Speaker 04

  Yeah. But what, what came out of it? Were the, those little bags that you can get, like the Trader Joe bags, or the Costco bags?

• 30:56Speaker 03

  The totes.

• 30:56Speaker 04

  The totes and everything that you can buy, and just carry those in, and everything.

• 31:01Speaker 03

  But that, I always forget.

• 31:02Speaker 04

  I forget to.

• 31:03Speaker 03

  I always forget, the stupid tote bags.

• 31:06Speaker 04

  But going back to the Sonic thing.

• 31:08Speaker 03

  Okay.

• 31:10Speaker 04

  Yeah, Sonic's new value menu has been getting a lot of. A lot of attention.

• 31:14Speaker 03

  Okay.

• 31:15Speaker 04

  Yeah, so they've been getting an increase in their drive-throughs and all that. So I was like, oh, interesting.

• 31:20Speaker 03

  So have you tried it?

• 31:21Speaker 04

  No, I haven't.

• 31:22Speaker 03

  When's the last time you've been to Sonic?

• 31:24Speaker 04

  Dude, it's been a long time, but there's one nearby my house. I was thinking about trying it. Yeah. But it's, it's, I don't know, like, fast food, I don't, I don't go to fast food. I think I, I've stopped. It just, I don't know, not, not, not for me.

• 31:37Speaker 03

  Yeah, you gotta be picky. There's some good, there's some good items, good menu items out there, but you gotta, you gotta pick and choose.

• 31:44Speaker 04

  Yeah, yeah, yeah. After this, I might try it, though.

• 31:48Speaker 03

  Yeah, it got me thinking about Sonic. I haven't been in years, too. I know they've done like a rebranding. Uh, the, the Sonic that I drive by on Rosedale Highway, they, they totally changed the colors and it's like.

• 31:58Speaker 05

  Yeah, it's like a.

• 31:58Speaker 04

  Oh, yeah, yeah.

• 31:59Speaker 05

  Blue color.

• 31:59Speaker 03

  Yeah, it's like a blue color. And I don't think they have roller skaters anymore.

• 32:03Speaker 04

  Aw, man.

• 32:04Speaker 03

  Which, which is, yeah, another like, yeah, you know, like, we're getting, we're getting too soft as a society when you can't have.

• 32:11Speaker 04

  They just have robots coming out, the humanoid robots.

• 32:13Speaker 03

  Yeah, now we're talking. Robots, robots will be good. So there you have it, Alan. You got anything else to say about, uh, fast food or grocery deliver, delivery bags?

• 32:23Speaker 05

  It's what's single-handedly keeping the economy together.

• 32:30Speaker 03

  So let's, let's get back to, you know, talking about the, uh, the mortgage rates, the psychology of people. It is, a lot of people feel like they are trapped in their home because they don't want it. They can't get rid of that low, that low rate. But we're starting to creep into that area where it, you know, if it's in the fives, we're getting close. But how are we looking locally? Uh, how is this impacting or how, how is the, the real estate market? Do you want to look at that?

• 33:00Speaker 05

  No, I've, I've got it in front of me here. So I mean, when you look at the Crabtree report, thank you, Gary Crabtree's.

• 33:06Speaker 03

  Thank you, Gary.

• 33:07Speaker 05

  Report for many years. Um, you're gonna see that January stats, which we have now, it's, it's kind of delayed. So, uh, but it still does kind of show trending. We're just gonna notice that the inventory has been higher year over year and how many homes are available for sale. Now, we had an odd winter this year. We had an extended period of fog, extended period of rain. And believe it or not, Bakersfieldians, I think, are very fair weather people and they just don't go out. So when you see that kind of activity coupled with houses sitting longer, it gives the impression that the market is slow. Well, the truth is, is that homes are selling. They're not selling at the same clip.

• 33:52Speaker 05

  But we are seeing more and more homes coming on during the spring season, which is kind of officially started. And with that, that trend, we're seeing more competition in the market for certain price points. Specifically, that 375 to around $450,000 range. And Kern County currently is sitting roughly at that 392 median sales price. New construction is higher, but if I've not looked at new construction personally, but I had a client just tell me that they were looking at new construction homes with a 1,300 square foot house. It was 410,000. So when you look at something like that, the perceived value versus actual changes.

• 34:32Speaker 05

  Because on a new construction home, they're not going to landscape the backyard unless it's built into the price. You're going to have front lawn landscaping and you're not going to get much in the way of interior things other than your basics. You have to upgrade everything. But what they do have going for them is new construction is offering incentives. This includes cash incentives towards closing costs. Or they will, you know, participate in some type of rate buy down. The downside is sometimes these rate buy downs are not permanent. So you might get a rate that's at 3.9%, but it's fixed for one year or five years. So it's not always what it cracks it up to be, and I think people really need to read the fine print.

• 35:15Speaker 05

  It does get you into the house, but it doesn't always solve the long-term problem. Affordability is a big factor. California still has the highest, you know, I guess, cost per square foot compared to like Arizona, you know, and other western states. The interesting thing is Kern County is still... Right in that range where we're 110% below the national or the state median average. Right now, it's 823,186 for the state median price.

• 35:48Speaker 03

  Oh, I was just gonna look that up.

• 35:50Speaker 05

  Isn't that a crazy number?

• 35:51Speaker 03

  How much is it?

• 35:52Speaker 05

  823,186.

• 35:54Speaker 03

  God, night. That is insane.

• 35:57Speaker 05

  So I'm helping a client. She's closing on Friday. She relocated from Bakersfield to Santa Clarita. Now, we're talking what, less than 90 miles, right?

• 36:06Speaker 03

  Yeah.

• 36:07Speaker 05

  1600 square foot place built in the late 60s, fully refurbished. I mean, it's a very nice home. On just under a 7,000 square foot lot, it went to 15 offers at a list price at 850. She wound up getting under contract for 875. So where's the value?

• 36:29Speaker 03

  Right.

• 36:30Speaker 05

  So it's very difficult because we have this emotional attachment to the fact that prices are going up here. But what do you really need to make in order to afford an $875,000 home?

• 36:42Speaker 03

  You're reading my mind. I was just doing the math while you were talking.

• 36:46Speaker 05

  And what number did you come up with?

• 36:47Speaker 03

  About 5,000 a month?

• 36:49Speaker 05

  The mortgage payment, yes. But yeah, so three times that for income. 15,000 a month is an ideal.

• 36:56Speaker 03

  Oh, right. Yeah. So because you're only going to lend a third of that. So your mortgage payment is going to be about 5,000 a month, right? So you need to make three times that.

• 37:04Speaker 05

  That's an ideal number for income. Now, that's, that's a lot of cash.

• 37:09Speaker 03

  $15,000 a month. It's a lot of money.

• 37:12Speaker 05

  It is. So again, this is why it becomes difficult for people to stomach that. And I'm sure there are other parts of the country just laughing in California and Florida and all these places. And like, you know, hey, you know, what do you want to do? Do you want to live in the state or do you want to move out because it's more affordable in other places? And we've seen a mass exodus in California over the last 36 months.

• 37:34Speaker 03

  Uh, push back on that.

• 37:37Speaker 05

  You're saying that we haven't lost over a million residents?

• 37:40Speaker 03

  Not in the last year.

• 37:42Speaker 05

  I said 36 months.

• 37:43Speaker 03

  Yeah, maybe. Maybe if you go back that far. But yes, I would concede that it has to do with, in part, to home prices, you know?

• 37:56Speaker 05

  I'm just saying affordability is an issue in California.

• 38:00Speaker 03

  Yeah, for sure.

• 38:01Speaker 00

  In California, how about Kern County?

• 38:04Speaker 05

  Well, it's closer. We have seen actual average rents go down here.

• 38:10Speaker 00

  Yeah, so I was just wondering, has there been more people in Kern County moving to Kern County? I mean,

• 38:16Speaker 05

  Yes, yes.

• 38:17Speaker 00

  Leaving the other places in California.

• 38:19Speaker 05

  We have seen that. You know, what's really brought that on as a possibility is a remote worker option, but it depends on the type of business they're in.

• 38:27Speaker 03

  Yeah, and that's becoming less, it's less popular, I think, remote working. I just looked, the national average of median home price is about 412,000. So Bakersfield, or Kern County, I'll say Bakersfield, is about the national average. Which is really fascinating.

• 38:48Speaker 03

  I know that people have moved away out of Bakersfield to other states. But again, there's other expenses, other costs that are beyond just housing that is squeezing California, like insurance, homeowner's insurance. Have you seen, do you have any insight or know about anything that's happening in the homeowner's insurance world? It just seems like a disaster.

• 39:14Speaker 05

  It is, it is. The reality is, is that we're not seeing new carriers enter California to offer competition. It's the state California Insurance Commissioner that allowed for the increase after the Paradise fires and finally making races. And you notice that many large companies just exited California altogether. So those that were kind of grandfathered in that had properties that were insured by companies like State Farm, they sometimes can get renewals, but it doesn't take much for them to change their mind. You know, and here's where I literally had somebody that was irate on the phone. They said, "I need to get new insurance ASAP because they're forcing insurance on my house,

• 39:57Speaker 05

  which is twice as much to what I'm paying now because my company decided they will no longer insure me. And I've been with them for 24 years. I'd never put it in a claim," you know, and that's kind of, I agree. I mean, you pay into insurance with the hope that if you have a catastrophic loss, they're going to be there for you. And all of a sudden, you don't have an insurance policy anymore.

• 40:16Speaker 03

  Right.

• 40:17Speaker 05

  So what do you do with that? Right? So I don't know what's going to be the solution for insurance in California at this point. I don't see premiums dropping anytime soon.

• 40:27Speaker 03

  Have you seen them? So they're still high?

• 40:29Speaker 05

  Yes.

• 40:30Speaker 03

  Just as high as they have been.

• 40:31Speaker 05

  Well, the only, the only ways to combat potentially a premium that's higher are two things. Reducing coverage to minimum standards to increasing your deductible.

• 40:42Speaker 03

  Yeah.

• 40:42Speaker 05

  Um, one thing we've noticed specifically with companies that are looking at water intrusion as being a problem. Uh, meaning leaks in the pipes, you know, plumbing, that kind of stuff is installing something called a Mowen system. It's basically Mowen, the, the company that does like faucets and stuff. They have an early detection system that's put onto the main of the house. That if they sense leaking, meaning the, the system is pushing water out at a greater rate than normal. And not during peak times, it will tell you through an app, um, would you like the water to be shut off? Or you can tell it, no, I'm filling my pool or yes, I'm actually, you know, making whatever and I'm using the water normal rate. It's just because they're saying that if the system shuts the water off.

• 41:28Speaker 05

  Then even though you may have damage, it'll be less damage because it's not running as long. So that saves the insurance company money. It saves the homeowner money. But yeah, those are the, the preventative things. I know homes that are over the age of 30 years, um, are also getting hit with additional premiums. Roof lines that aren't exposed to trees, trees are sitting over them. Those are being, you know, adjusted and now they're using, uh, satellite technology to see.

• 41:54Speaker 03

  Like Google Maps, right? Google satellite.

• 41:56Speaker 05

  So you, you see all of these things. They're looking at your pool. They're looking at your fence line. There, there's a lot of things that they do now as, um, a preventative way of ensuring certain things and questioning whether or not certain things are exposed to insurance. So.

• 42:11Speaker 03

  Wow. Um, I'm looking, coming back to the Crabtree report. Last year, the existing median sale price was 375,000. It's now 392. That's a decent increase.

• 42:23Speaker 05

  Correct.

• 42:24Speaker 03

  And then you have your existing pending list price. It's even better. Uh, last year it was 394,000 in January and January of this year, 416,000. So that's about a, uh, a year over year increase of about 5.6%. Again, hitting above its, it's, it's average. It's, you know, 30 year average in terms of just growth.

• 42:49Speaker 03

  The new construction median price though has gone down. It's down about 4% year over year from 484,000 to 463,000.

• 43:01Speaker 03

  Why has the new construction price come down, do you know?

• 43:04Speaker 05

  I'm speculating here, but I think it has to do with inventory that's been built that they have to sell. So they're taking some discounts in order to move the inventory because the one thing that consumers don't think about are carrying costs. If you have construction, you have construction loans out. You have to be made solvent eventually to the point where you get out of that red and that means moving inventory. But they do that through incentivization, right? So, one thing that I've noticed is that, this is just my personal thing, again, whoever's listening, please understand, this is my office. If given the same credits that a seller, a builder gives to their preferred lender, in this case, a lot of them have their own lending arm.

• 43:48Speaker 05

  I can actually get you better terms, meaning I've noticed my rate and cost is cheaper. So you're getting better terms, but if you ask that builder to give that incentive to an outside lender, they'll refuse. And that keeps the loan there. But what it does do for them is it allows them not to discount their price. So let's say they were giving you a $10,000 incentive. And you said, "Well, why don't you just sell me the house for $10,000 less?" They won't do it. And the reason why is because it changes the price integrity of their homes in the area because you sold it for a lesser value.

• 44:21Speaker 03

  I see, yeah.

• 44:23Speaker 05

  So, you know, it's, it is part of the game, I'll just play it that way. These builders have to maintain value integrity for the neighborhoods to sell. And each phase, generally speaking, their goal is to stay the same or increase a bit in sales price.

• 44:41Speaker 03

  Right. So, the, if somebody asks you, "Well, I'll ask you, are we in a buyer's market or are we in a seller's market?"

• 44:50Speaker 05

  It's pretty balanced right now. I would say though, that a pretty good percentage of homes sold have some type of seller incentives.

• 45:02Speaker 05

  I just had a contract accepted on a pretty pricey property. 1.4 million, no seller concessions at all.

• 45:11Speaker 05

  So yeah, buyers that have the ability and they want a specific house.

• 45:18Speaker 03

  They'll pay for it.

• 45:18Speaker 05

  Yeah, they're not asking for the seller to do anything. Now, this property was listed at 1.5, so they did get a price negotiation. But it's still, you know, $50,000 on a 1.5 million dollar house. You have to get a discount, but they're not asking for concessions at that point. But it's not going to sell as quickly either, right? So it just depends, the market. So yeah, and it's very common. The concession averages around 2% of the sales price. But that's to help a buyer typically get into that property and cover a portion of their closing costs.

• 45:53Speaker 03

  It feels like we've been in this balanced market for a while.

• 45:55Speaker 05

  Yeah.

• 45:56Speaker 03

  In Bakersfield.

• 45:56Speaker 05

  But we were really in a very strong seller market between 2020 and the end of 2022 to the middle of 2023. And then it started to flip as the rates moved above that 6% range.

• 46:09Speaker 03

  Yeah.

• 46:09Speaker 05

  It started to balance out.

• 46:10Speaker 03

  Yeah, and we had a lot of movement too. Like, a lot of people were moving around during COVID.

• 46:17Speaker 05

  Oh, yes.

• 46:17Speaker 03

  You know, it was like, oh, it's time to-

• 46:19Speaker 05

  They couldn't touch each other, but they can move.

• 46:20Speaker 03

  Yeah, for sure. And get into that new house or move to that new town or whatever. There's a lot of people. And then a lot of people working remotely, I think, gave them some incentive to move.

• 46:30Speaker 05

  Can I bring up something that wasn't on my topic list?

• 46:32Speaker 03

  Yeah.

• 46:33Speaker 05

  So FinCEN.

• 46:34Speaker 03

  Yeah, we love FinCEN. We're big fans of FinCEN.

• 46:37Speaker 05

  So they put into an effect now of additional scrutiny on LLCs and cash transactions and trusts that are handling cash transactions. So now there's a report that needs to be filed and completed. That's almost 100-plus pages of documentation, questionnaires for any type of sale with cash as the transaction type, when it's a trust or a LLC. And it just went into effect. It doesn't affect the majority of buyers out there, but they are looking very specifically for fraud and money laundering.

• 47:16Speaker 03

  Who is this that's requiring this information?

• 47:19Speaker 05

  Um, I think it's the state's attorneys, but it's something that California now has to employ.

• 47:24Speaker 03

  And the, and the, like, who has to provide that information?

• 47:28Speaker 05

  The title companies have to ask the questioner of whoever is paying cash for the property.

• 47:34Speaker 03

  Oh, I see. Essentially, they're looking for money laundering.

• 47:39Speaker 05

  Correct, and then LLC is created in order to insulate, right? But now we're gonna ask, where'd you get it?

• 47:43Speaker 03

  Yeah.

• 47:44Speaker 05

  Prove it to me. And they're like, well, we don't want to prove it to you. Well, you can't buy this house then. We're not gonna allow the titles to be, you know, completed on it.

• 47:52Speaker 04

  So that just went into effect?

• 47:53Speaker 05

  Yes.

• 47:54Speaker 04

  Interesting.

• 47:55Speaker 05

  I'll forward you guys the article on it, but it's, it's something that is not really known to general people because they're not always dealing with cash transactions, but title companies see cash transactions pretty regularly.

• 48:05Speaker 04

  Right. I mean, especially to some of our clients who are real estate investors that have the cash on hand, that can buy these properties with cash.

• 48:14Speaker 03

  Yeah, and I think those are easier to explain. Like, we see this all the time with our clients, you know? You pull some money out of their investment account to pay, pay for a house or whatever.

• 48:23Speaker 05

  Which would be fine, again, if it's a questionnaire that it's, you're nothing to hide, you know? It's just, hey, I have inheritance, this money is here, it's easy to document. Finson's not gonna give you a hard time, you're just documenting. And it's those that want to circumvent the system.

• 48:36Speaker 04

  Yeah.

• 48:37Speaker 05

  And move money through those entities that Finson's really focused on.

• 48:40Speaker 04

  Yeah, I see. But in, in this case, if we, in, in, let's say, a case study, we have this client who has LLCs that are purchasing these properties, I mean, it's not gonna really, uh, it's not gonna really hinder them in, in purchasing the property until, unless if they, they disclaim, like, where they got the money, right?

• 49:03Speaker 03

  Or can't disclose.

• 49:04Speaker 05

  And that's kind of one of those questions that I don't know the right answer to yet. But there's been some FAQs and other things that are on websites of title companies, and I'll forward it to the MoneyWise team, you guys can take a look at it. It's just something to be aware of, especially if Investors or people that are purchasing real estate with cash.

• 49:24Speaker 04

  Yeah.

• 49:24Speaker 05

  Ultimately, it's to curb money laundering.

• 49:27Speaker 04

  Yeah, as, as again with the LLC entity or a trust. But if they don't have those, then it's.

• 49:33Speaker 05

  Yeah, individuals normally they're okay, but again, they're always going to ask some questions.

• 49:39Speaker 04

  Right.

• 49:39Speaker 05

  So, but yeah.

• 49:41Speaker 03

  Anything else, Alan, that's happening? Any, any, any new?

• 49:48Speaker 03

  I have, it's been so long since I've refinanced or bought a home. Has anything changed in this, the process that goes into it?

• 49:57Speaker 05

  Not necessarily. When you are refinancing real estate, we're just going to pay off what the existing lien is, meaning the house loan. Plus, any expenses that you have can be rolled into that in a refinance, whereas a purchase typically you're paying those closing costs out of pocket. Right? So anything that you do for refinance, I would bank on between three and 5% expense, which is a multiplier of your loan amount as a cost to doing that refinance. So if you have a lender that says, oh, we can do it free, there's no cost to you. I'm like, well, cost out of pocket or just no cost? I'm sorry, but banks don't work for free. Title companies don't work for free. Appraisers don't work for free. So there is a cost, you're just not sure where it's at. So where is being allocated?

• 50:41Speaker 04

  Right.

• 50:42Speaker 05

  You know, so be straightforward, explain this, understand what is actually happening. Now, there are some instances where if it's something where they can increase the rate to compensate for that cost that they're incurring, you're not going to get the lowest rate in the market, but you're still probably going to get better than what you had. Right? So just be aware, that's the trade off. So I had somebody that wanted to refinance their loan and I couldn't do it because I couldn't stay below the 80% loan to value. But then also the debt to income ratio exceeded 50% of conventional loan. And the biggest reason why he has to refinance is because when the company did their mortgage,

• 51:24Speaker 05

  they did not properly assess the property tax bill and the payment was going to go up $370 a month.

• 51:32Speaker 05

  And I said, well, let me take a look at the paperwork. Sure enough, they just way under disclosed.

• 51:39Speaker 05

  So at the end of the day, it may look like a great deal on the front end, but when this company is out of your life, meaning your loan is done, you're probably not going to reach that person again.

• 51:50Speaker 03

  Yep, right.

• 51:51Speaker 05

  And there's no accountability or transfer of trust in that sense.

• 51:54Speaker 03

  That's why we like using local. That's why we like using local. You get, it does help. You've got somebody you can go to, you know, and get those kinds of answers. Alan, thanks so much for coming.

• 52:04Speaker 05

  Yeah, absolutely. Thank you, guys.

• 52:05Speaker 03

  Good stuff. You have a way of making mortgage lending interesting.

• 52:11Speaker 05

  Digitable.

• 52:12Speaker 03

  Yeah. I want to thank all our listeners for tuning in. Thank you for the comments and questions. We had a few that we weren't able to address here at the end, but we'll be back. We'll answer those. In the meantime, 661-396-1000, that's the number that you can call or text anytime. Of course, as we leave, we'd like to remind you of these three things. Be smart, be safe, and always be money wise.