Mortgages, Market Trends, and Real Estate
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Scroll down for a transcript and chapters start times. This discussion is with Vector advisor Mike Nesheim.
Summary
In a recent conversation, Vector senior wealth advisor Mike Nesheim talks with mortgage expert Tyler Wiltse from Cambria Mortgage. Tyler shares his insights into the current mortgage landscape, focusing on everything from interest rate trends to strategic refinancing.
Tyler emphasizes that while recent interest rate hikes may deter some buyers, real estate remains a strong investment. For those unsure about timing, he advised that consulting a mortgage expert early on is essential, especially when planning major moves. For individuals transitioning between homes, Tyler highlighted options like "rent-back" arrangements and bridge loans, which provide both flexibility and financial security during the buying and selling process.
Another focal point was the importance of a holistic approach to mortgage planning. Tyler and Mike discuss how mortgages can be a critical piece of an individual’s overall financial strategy. They talk about refinancing strategies, with Tyler recommending consideration of an option to delay closing-cost in cases where rates might decrease before too long. Additionally, as rising home prices push more buyers into the jumbo loan category, Tyler discussed alternatives, which may offer better terms. This discussion underscores the need for proactive, well-informed planning in today’s evolving market.
Episode Chapters
1. Introduction to Tyler's Background
Start Time: 00:01
Tyler shares his entry into the mortgage industry, including family influences and his journey into lending.
2. Working with Cambria Mortgage
Start Time: 01:49
Tyler describes Cambria Mortgage, its Minnesota roots, and the range of lending services it offers.
3. Interest Rate Trends and Market Impact
Start Time: 03:13
Discussion on recent interest rate increases and how they’ve affected buying and selling behavior in real estate.
4. When to Consult a Mortgage Expert
Start Time: 04:18
Tyler explains why early consultation with a mortgage consultant is beneficial, especially for planning around market timing.
5. Transitioning Between Homes
Start Time: 05:30
Tyler suggests strategies like rent-backs and bridge loans for clients who are selling a home and buying a new one.
6. Insights on Construction Loans
Start Time: 07:30
Tyler outlines construction loan options and the importance of flexibility during the building process.
7. Refinancing Strategies
Start Time: 10:43
Guidelines for refinancing, including timing and factors to consider for saving on interest and closing costs.
8. Jumbo Loans vs. Conventional Loans
Start Time: 15:35
Explanation of jumbo loans, when they apply, and alternative strategies for high-value home purchases.
9. Importance of Financial Planning with Mortgages
Start Time: 18:30
Tyler emphasizes how mortgages fit into a holistic financial plan and the importance of involving financial advisors.
Transcript
(adapted for readability)
Vector senior wealth advisor Mike Nesheim sits down with Tyler Wiltse from Cambria Mortgage to talk about the mortgage industry, interest rates, and home buying and selling.
Tyler, tell us a bit about how you started in the industry.
Tyler shares that his grandfather, a banker in Brainerd, inspired him to learn about liabilities before assets. This foundation led Tyler to finance school at Mankato State University, after which he moved into lending. He found the process of helping people manage debt a rewarding path, and now, nearly 19 years later, he’s still dedicated to the mortgage field, working closely with clients and partners in a constantly evolving industry.
As he describes, the industry is growing every day with new products and ways to access funds and equity. Many clients now have favorable interest rates from past years and are interested in using their equity to purchase second homes or properties for their children in college. Tyler expresses excitement for this dynamic part of his work.
Working at Cambria Mortgage for 13 years has also been a rewarding experience for Tyler. He highlights the company’s Minnesota roots and balanced scale—big enough to provide resources but small enough to care about each employee. Cambria Mortgage offers a range of products, from residential and commercial lending to home equity loans, which allows them to meet various client needs.
On the topic of recent interest rate hikes, Tyler notes that many people are now sitting on the sidelines, waiting for lower rates. He explains that timing the market is difficult, and in his experience, the best time to buy real estate is "yesterday." He advises clients to buy when they can afford to, as they’ll have the opportunity to refinance later when rates drop, making today’s investment potentially more valuable.
When should individuals reach out to a mortgage consultant? Tyler recommends starting early, especially if a client is considering selling. This allows time for thoughtful planning. He suggests spring through summer as the ideal selling period, as the market typically cools in the fall when children return to school. However, regardless of timing, he believes it’s best to consult a mortgage expert as soon as possible.
For clients moving from one home to another, Tyler offers advice on managing the transition. He mentions options like "rent-back" arrangements, where sellers rent their home back after the sale to give themselves time and liquidity. Alternatively, a bridge loan can be helpful, allowing clients to move into a new home before selling their old one. However, he cautions that bridge loans may lead to double mortgage payments if the original home doesn’t sell quickly. Ultimately, the best choice depends on each client’s unique situation and the guidance of a trusted real estate agent.
For those interested in building a new home, Tyler discusses construction loans, which are structured in either one-time or two-time financing options. The two-time construction loan allows more flexibility, which can be valuable if clients decide to make upgrades during the building process. Tyler emphasizes the importance of having a quality builder, especially when planning for unexpected changes.
Refinancing also requires strategic timing. Tyler’s rule of thumb is to refinance only if the new interest rate is at least one percentage point lower than the existing rate. He explains that this rule ensures that refinancing costs are balanced by savings. Tyler stresses the importance of coordinating with a financial advisor to ensure refinancing aligns with the client’s larger financial goals, like downsizing for retirement or managing increased family expenses. He advocates for no-closing-cost purchases for clients expecting to refinance in the near future, as this strategy can save them from paying fees twice.
Tyler further explains the difference between jumbo and conventional loans, especially as rising home prices make jumbo loans more common. He notes that a jumbo loan starts at $800,000, requires more money down, and has fewer investors involved. However, alternatives like combining a first and second mortgage can sometimes be beneficial. Tyler also points out that certain large lenders are stepping back from the mortgage market, leaving room for companies with a strong mortgage focus to step in.
As we close, Tyler reminds listeners that mortgages are an integral part of a person’s overall financial picture. Meeting with both a financial advisor and a mortgage consultant is crucial when making significant life changes. Each person’s situation is unique, and informed guidance can lead to substantial savings and financial success.
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