On today’s episode of Real Estate Today, Ryan and Greg discuss the MaxOne and MI Buster programs, which make home buying affordable to more of today’s borrowers.
MaxOne is a Down Payment Assistance program that, incredibly, offers no payments and no interest until you either refinance or sell your home.
MI Buster allows buyers to avoid Mortgage Insurance with only 10.1% down instead of the traditional 20%!
Amazing programs that save buyers money and makes the dream of home ownership available to more potential home buyers.
First Class Mortgage Company works with wholesale lenders that offer these exclusive programs.
Ryan Cook (00:05):
Hey, welcome to Real Estate Today. I am Ryan Cook with HomeSmart First Class Realty, and I’m here with one of my preferred lenders, Greg. Greg, why don’t you introduce yourself.
Greg Page (00:14):
Hi, I’m Greg Page with First Class Mortgage Company.
Ryan Cook (00:16):
Fantastic. So Greg and I are probably gonna do this on a weekly basis. And the whole point of this podcast is we’re not focused on mortgages and not focused on home buying and selling real estate.
Why Are We Doing This?
What we’re trying to do is get out the information about what’s happening in the real estate market and have a discussion about it so it’s understandable to the average person out there, and hopefully you’re able to use that information.
And then based on that, if you think it’s worthwhile to reach out to either of us for additional help, we’ll be here for questions, emails, whatever the case may be.
That’s sort of the format. It may be finance. It may be just general real estate news or something that the federal government’s thinking of doing as far as maybe changing mortgage insurance rates or whatever the case may be. So we’ll try and bring relevant stuff to you on a weekly basis.
So that’s pretty much it. Does that sound about right to you, Greg?
Greg Page (00:58):
That sounds sounds about right to me, Ryan.
What We’ll Be Discussing Today
Ryan Cook (01:01):
Alright…so perfect. So I’m looking at my list today. There are two actually pretty unique programs that you actually told me about about a week and a half ago that I was like, you know, we should probably do a podcast on this. One is called Max One, which is a home buying down payment assistance program for FHA (Federal Housing Administration). So we’ll tell people what FHA is once we get started here. We never want to assume people understand what we’re talking about. Cause we do this all the time. There’s a lot of complexities to it.
Greg Page (01:27):
Yep. There are.
Ryan Cook (01:28):
And then the second program we want to talk about is the MI Buster or the Mortgage Insurance Buster which is a pretty, you know, as, as the way you explained it to me, 10.1% is the new 20% down. Right? Perfect. So we’re gonna start with the Max One program. So what can you tell me about this Max One program that’s a little bit different and why people should probably pay attention to it?
MaxOne Down Payment Assistance for Home Buying
100% Financing Down To A 580 FICO Score
Greg Page (01:50):
The Max One program is a new program that one of our lenders has rolled out in the last few weeks. And basically it allows for a home buying down payment assistance program to help the borrower with one hundred percent financing. So basically the buyer just bringing some closing costs or maybe the appraisal fee is all they would need to close. It allows for down to a 580 FICO score, which is pretty aggressive.
Are There Stringent Requirements?
Ryan Cook (02:16):
That’s real aggressive. I mean, when it comes down to 580, does it have different requirements as far as well, because this is a down payment assistance program, but other programs I’ve seen that’ll have a lower credit score may require a larger down payment. Is that the same thing with this?
Greg Page (02:29):
Well, typically you would think, but in this case they are allowing a 580 FICO to be the drop dead number and then providing on an FHA, the additional 3.5% assistance through a program, a grant program, which is pretty unique because it doesn’t have to be paid back until, well…
Ryan Cook (02:48):
Go ahead. Because I have a question about that.
MaxOne Has No Monthly Payment
Greg Page (02:51):
Until you refinance or sell the property, the grant doesn’t have to be paid back. It’s an interest free payment. So if they give you $7,000, until you refinance the property or sell the property, even after 30 years, you’re not obligated to pay. Then you only owe the $7,000 back. That’s pretty aggressive.
How Does MaxOne Differ From Other Programs?
Ryan Cook (03:14):
That’s real aggressive. I guess that’s, that’s sort of like a Title One loan almost in a way but Title One is typically put towards fixing something specific in the house, fixing or repair in order to get it ready for sale. So 580 credit score, man. There’s a lot that goes into a credit score with a home buying down payment assistance program like this. Like, is it, do they have to qualify for FHA first and then qualify for this program second? How does that process work?
Greg Page (03:44):
Yeah, it’s pretty much done through the underwriting of this particular lender.
What Is Underwriting?
Ryan Cook (03:49):
Most people don’t know what underwriting is.
Greg Page (03:51):
Oh, that’s where, that’s where the processing team sends in all the documentation to the lender’s underwriting team, who then compiles the information to make sure that the bank statements and the paychecks and the identification to make sure there’s no fraud involved. They’re basically going through the entire loan package to identify that the client is who they say they are. Make sure that the documentation that they’ve submitted is real, that it’s all factual. They do verifications on employment and so forth, check that the taxes are real and if everything matches up and it meets their requirements, they move forward to help the the client buy the home.
MaxOne Allows Non-Owner Occupant Co-Borrowers
Ryan Cook (04:36):
All right. So I’ve had a lot over the last couple years, I’ve had a lot of first time buyers that are having a parent or some other, you know, close relative assisting with the home buying purchase maybe as a co-signer. Does this Max One program have any restrictions as far as, you know, a non-owner occupant co-borrower you know, someone cosigning on it? Is this restricted?
Greg Page (05:02):
As of right now? No. It’s pretty amazing. Yeah. Yeah. It’s a pretty aggressive program. Again, the fun thing about this industry is as you know, there’s a lot of changes and they happen on a regular basis. We get documentation and emails typically twice a day. And when we saw this program and the one we’re gonna speak about next, we were blown away by it, because it is extremely aggressive. And the goal at the end of the day is basically to help more people with home buying and get in and achieve the, you know, the American dream of home ownership.
How MaxOne Is Different From Other Down Payment Assistance Programs for Home Buying
Ryan Cook (05:34):
Sure. Now with a lot of these programs, down payment assistance, like I’m thinking where we are in Southeastern Massachusetts. A lot of the industrial cities like Taunton, Fall River, New Bedford, Brockton, et cetera, will have down payment assistance programs specific to that area. Like Pro Home is one in Taunton where they’ll do down payment assistance. There’s a pool of money available for the year and once it’s gone, it’s gone. But typically they have income limits. Like you can’t make over a certain amount. Are there any income limits on this Max One program?
Greg Page (06:06):
As we speak? I have not seen that to be the case. Okay. Obviously we’re trying to help people who haven’t been able to buy a home in the past. But as we speak now, I have not seen any limitations being rolled out by this particular lender when it comes to home buying.
MaxOne Program Summary
Ryan Cook (06:21):
Okay. So in summary, we’re looking at as low as a 580 FICO score with no funny business, as far as, you know, no first time home buyer requirements. You can have a non-owner occupant cosigner. So, you know, mom, dad, brother, sister who can sign on and still get this down payment assistance. It’s gonna be the 3.5% which is typically what you have to come out of pocket on an FHA loan. And there are no income limits. Does that pretty much sum it up?
Greg Page (06:55):
As far as I know, as we speak. Yes.
Ryan Cook (06:59):
Honestly, I’ve been doing this over a decade and that is one of the most, I think that is the most amazing down payment assistance programs for home buying I’ve been exposed to.
Greg Page (07:08):
Yeah. I mean the grant itself, just the fact that it’s zero interest and zero payments is pretty aggressive, but again, the government’s looking to help more people achieve home ownership. And this is just one more step in that process.
How Is This Program Different?
Ryan Cook (07:21):
But, the difference here with this grant is other grants I’ve seen in the past where you’d get, say down payment assistance, is the payment would decay. So it’d be like, say it’d be over five years. So after the first year, 20% of that down payment would be waived. And after the second year, another 20% would be waived. So if you stayed in the house like five years, you wouldn’t have to pay it back; it’d be a real grant. You wouldn’t have to pay anything back. This one, no matter what, this will have to be paid back at some point, yes. At the time that you either refinance or sell. Right?
Greg Page (07:53):
That’s correct. As you mentioned earlier, there are some local programs with, you know, certain demographic areas like Fall River, New Bedford, whatever it may be offering these programs, as you mentioned after five or 10 years, whatever it may be, they do degrade. And, and, and at that point there’s nothing to pay back. The one we’re discussing there is a payback, but it’s payment free interest free.
Ryan Cook (08:15):
Yeah. That’s pretty amazing. And you can pay it back if you want earlier?
Greg Page (08:19):
Oh yeah. They, they, they don’t have any problem getting the money back <laugh>
MI Buster Cuts Down Payment Requirement In Half for Home Buying
Ryan Cook (08:23):
Okay. The other program, which this one, you know, 10.1% is the new 20% – the Mortgage Insurance Buster program. This is specific to one of the wholesale lenders you work with, right?
Greg Page (08:39):
The Benefits of 10.1% Down
Ryan Cook (08:40):
All right. So why don’t you tell me a little bit about this one, because that, that 10 or 10.01% down, I was like, okay, what, is there a catch? Like, I, I was sort of waiting for like the, you know, pull the rabbit out from the hat. So what exactly is this program?
What Does It Mean In Dollars?
Greg Page (08:58):
Well, let’s, let’s use a, a $500,000 home as an example. If you have to come to the table with 20% down, you’re walking in with $100,000. With only 10% down 10.1% down, you’re looking at about a $50,000 reduction in the down payment required to purchase that home. That, that can transfer into more home that the client can buy more money they can keep in the bank and utilize it… should they want to have any renovations when they get in there it offers a lot of opportunity for your agents to be able to show more properties at maybe at a little bit higher value. It’s kind of a game changer because we’ve all grown up with the 20% down if you don’t want the MI, the mortgage insurance.
Ryan Cook (09:48):
Just so people understand, like, I think people know what mortgage is. Like every, a lot of people are still under the misconception that you have to have 20% down to buy a house. And, and that’s not true. I mean, you have here in Massachusetts, you have Mass Housing, which is 3% down. No MI, although the MI is actually, you
Greg Page (10:12):
Just spoke about a hundred percent financing, so, you know.
20% Down Is A Myth for Home Buying
Ryan Cook (10:15):
Right. But, so just so people understand like that 20% is a myth. You don’t need 20% down in order to purchase a home. Okay. Now, typically when you don’t have the 20% down, a lot of mortgages require you to purchase mortgage insurance. Why this is such a pain is it’s, that’s, it’s a percentage of the amount borrowed, right? It’s a fixed percentage I believe…
Greg Page (10:41):
It’s 1.75% of the amount borrowed in most cases that that’s the number.
Why Do You Want To Avoid Mortgage Insurance
Ryan Cook (10:46):
So what you have to do is along with your mortgage payment, your insurance and your taxes, which that’s one part of the payment, there’s another part of the payment which is the mortgage insurance. And why it’s a pain is when you do your taxes, you can write off the interest paid on your mortgage. But you can’t write off the mortgage insurance portion. So it’s, it’s just money going out the door. That’s not benefiting you as a homeowner and helping you build wealth. Right?
How A Homeowner Typically Removes Mortgage Insurance
Greg Page (11:19):
And, and yeah. And what a lot of people don’t know is is that when your home value gets to the 80%, you’re entitled to call your realtor and ask that it be removed. But a lot of people forget about it. They don’t recognize the value people,
Ryan Cook (11:35):
The realtor, or call the lender,
Greg Page (11:37):
Ryan Cook (11:39):
Yeah. Okay. I was like, call the realtor. I’m like, who was your lender?
Greg Page (11:43):
<Laugh> now call the lender. And, and they can say, you know, we’ve reached the 80% and, by law, they have to remove it at 79%. Now who’s paying attention.
Who’s Paying Attention To Your Mortgage Insurance So You Know When You No Longer Need It?
Ryan Cook (11:55):
The question is who’s paying attention.
I actually do that for my clients. Actually, I should go back and change that… when we used to know the interest rate and I could see what their payments were, but when they changed all those laws, what 2015, 2016, and they change it to a CD from a HUD, so a Closing Document and the interest rate and stuff like that.
I would just say, oh, it’s a 30% loan at 5.2%. And I could, I could easily calculate their amortization schedule and see, you know, where their payments are. So that if I, if I look at the value of their home, I’d go, Hey, you know, I would send them alerts like, “Hey, you’re getting really close to 20% equity in your home. Like we should be reaching out to your lender to do to at least get the mortgage insurance taken off or looking at, looking at a refi”.
Now it’s hard for me to do that. So how do we, how do we keep track of that?
The Value Of A Lender Relationship
Greg Page (12:52):
You know, as a wholesale broker, that’s not our world. It’s really on the homeowner and the lender that have that conversation. We do have programs where we are looking some of our lenders actually have built into their websites where we can go in, because obviously we want to maintain a good relationship with our clients and, and we can reach out to them and say, Hey, you know, with the values that have gone up the way they have, and your five years into your, into your mortgage, this may be a good time. So take a look and see what, where we are today. Again, with the home values rising, the way they, they have recently, some of these people are recognizing that ability to remove it faster than others.
Ryan Cook (13:36):
Sure. Now does it, does it require them to get an appraisal, a value from a licensed appraiser or can a Realtor help?
Greg Page (13:43):
License? Not really, no. No. I mean, typically the lender will look at it and make the determination because it’s kind of their way of having, making sure you have skin in the game. With the fluctuation in the market the way it is, if things do turn around and go upside down, it gives them some skin that they’re not gonna lose any of their investment. Should there be a, a, a market… I don’t wanna say reset, but you know, as we know, values have gone up and they’ve gone down and after what it happened back in the day we saw a lot of values dropped pretty drastically. So it’s basically just a way for the lender to make sure that they’re having some coverage. Should there be another turn like that?
Does the MI Buster Program Offer Competitive Interest Rates for Home Buying?
Ryan Cook (14:27):
With a program like this, when it comes to interest rates, like, you know, I try and explain to clients like there are thousands of lending programs out there from different lenders and not every lender has access to every program. And different, different loans will have different interest rates, depending upon the terms of the loan, your FICO score, your debt to income ratio, other, you know, your this like what, how adjusted gross income or something like that. Like we look at all that stuff, but are, are the interest rates on this Mortgage Insurance Buster program you know, same as they’re gonna see, or they offset a little bit.
Greg Page (15:06):
Oh no, no, they’re, they’re pretty much spot on.
So one of the things that sets us apart, because we are a broker we can deal with, you know, as many lenders as we want. We’re currently signed up with quite a few of them offering a wide variety of programs, as you mentioned.
Working With A Bank vs Working With A Mortgage Broker
The other thing is, is when, when a client goes to a bank, a bank has their program here it is. If you go to say Bank of America, they have no vested interest in saying, Hey, you know what? We are Bank of America and here’s the rate we’re gonna give you, here’s the program we offer. But if you went down to the street to Wells Fargo, they got a much better deal going on as a, as a, a broker ourselves.
We have a vested interest in ensuring that we’re securing the best possible program for our clients.
Greg Page (15:56):
We wanna make sure that they’re getting the best possible deal available for their home buying experience. And that’s what we do. We, have systems in place where we can actually see who’s doing what, where our client needs are gonna best be met. And that’s our job to make sure that we find the best product and program that fits their home buying needs. So having these two new programs has just been a, a, a mind boggle because as you know, whoever heard of it’s always been 20%, but not anymore. It’s always been a hundred percent not anymore.
Can You Find Similar Home Buying Programs With Local Banks?
Ryan Cook (16:29):
Sometimes like there’s a local lender that may have have a very short term program where it’s 10% down with, you know, no MI or no, but they’re keeping that in house as a portfolio loan. And it’s normally like, they’re the money they’re lending out in the community… that ratio versus what they’re taking in from the community is off. And they like gotta get money out in the community. And it’s like, you got 30 days max to like, take care of that program. This is something that is available to anybody at any time.
Greg Page (16:57):
Well, yeah. And as you and I spoke earlier we literally get on average two emails a day from our lenders. And some of them have videos like this and others just say, prices are better. Prices are worse. You know, they’ll explain why the bond market’s doing this, or whatever it may be. So it’s a, it’s a really fluid situation that changes on a whim. So yes, to your point. There are, there are community lenders who will have specials that they run. And if you’re lucky enough to walk in the office that day they’re gonna tell you about it. But our goal is to, is to utilize our vast lending capacity with the various wholesale lenders that we deal with to ensure that our clients get the best possible deal.
Ryan Cook (17:43):
Alright, fantastic. So today we went over… looking at my notes and not looking down and just away… we went over the Max One program, which is a down payment assistance program for FHA financed buyers, 3.5% down. It’s a grant, no interest, no payments until you refinance or you sell the property.
MI Buster Summary
And we went over the Mortgage Insurance Buster program where 10.1% is the new 20%. So on the average price of a home in this area, which is close to $500,000, that could, it could save you $50,000 and out pocket expenses in order to be able to purchase a home, which you could then put that into renovating your home or whatever the case may be. Fantastic. So this has been a fantastic first episode of our real estate today podcast. <Laugh>
What’s In Store For Next Week?
Next week, we’re actually gonna bring a guest named Jim Dring. You wanna tell me a little bit about Jim really quickly?
Greg Page (18:37):
Yeah, I’ve been, I’ve worked with Jim for over 20 years. He now represents a bank called Quontic and Quontic is a national bank that provides a variety of programs. Most notably, they non-QM. Now,
Ryan Cook (18:51):
What is QM? What does that mean?
Greg Page (18:53):
Quality mortgage. Non-QM is… it’s not subprime, but it’s people who maybe have a different way of reporting their income. Not everybody goes to work Monday through Friday, right?
Ryan Cook (19:05):
Basically non-W2 employees for the most part.
Greg Page (19:08):
Most, pretty much gig workers, business owners, whatever it may be. Okay. They have a, a nice variety of programs that opens up a whole new world for us to help your clients buy the homes that maybe a traditional lender is not gonna allow them to do. So Jim will bring wealth of information.
Why Are We Doing This?
Ryan Cook (19:26):
Yeah. That, that should be pretty cool. I mean, the whole point of, of doing this and why you and I sort of talked and like, Hey, we should probably put some sort of podcast together is there are a lot of misconceptions about real estate and mortgage financing and, and all that stuff. So really this is sort of like a demystifying taking the myth out of a lot of this and trying to explain it in, in layman’s terms to everyone out there. So they become more educated consumers, it brings down the stress level and the anxiety levels… Cause they know, you know, we’re gonna talk about if something’s good, we’re gonna tell ’em it’s good. If something’s crappy, we’re gonna tell ’em it’s crappy and we’re just gonna explain it and easy to understand language, hopefully.
The Value To The Real Estate Community
Greg Page (20:09):
At the end of the day, Ryan, I mean, when you are, when your agents are out showing properties and somebody mentions, well, I I’m an Uber driver. That’s okay. You know, it shouldn’t cast a shadow on your ability to buy a home because there are lenders to go, that’s fine..Come on in. So hopefully this, this podcast and the future podcast, well, as you said, she a light on the potential, the opportunities and, and hopefully it’ll allow, allow your agents to sell more homes,
Ryan Cook (20:38):
Or any of the agents out there. I mean, it’s really, you know, how can we help agents improve how they serve the clients in the community? And this is just one of the ways we’re trying to get that information out there. So this is on for both agents, lenders, consumers, hopefully we’re trying to make this something that is easy for anyone to understand and utilize. Awesome. Absolutely.
Greg, this was a great first episode. I look forward to next week on episode number two, but a good initial episode and fantastic. We look forward to our next conversation.