What Every Homebuyer Needs to Know Before Getting A Mortgage - Episode 96
In today's episode, I sit down with Jennifer Beeston, a top mortgage expert, to talk about what you need to know before getting a home loan. We discuss why it’s so important to shop around for rates, how to avoid being ripped off by lenders, and the hidden costs that come with buying a home. Jennifer shares practical tips on how to make the best financial decisions, whether you're buying your first home or are a seasoned investor.
About our guest
Jennifer Beeston is a nationally recognized mortgage and real estate expert, known for her dedication to financial literacy and consumer advocacy. As the #1 VA loan officer in America and a top 1% mortgage lender, she provides clear, practical advice on home financing for first-time buyers and seasoned investors alike. With over a decade of experience, Jennifer has been featured in major media outlets like US News, Business Insider, Time, and NBC News, and shares her insights through her popular YouTube channel, making homebuying strategies and mortgage planning accessible to all. She is a passionate advocate for transparency and financial education, empowering individuals to take control of their financial futures.
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TRANSCRIPT:
Naseema: [00:00:00] Jennifer Beeston is a nationally recognized mortgage and real estate expert celebrated for her commitment to financial literacy and consumer advocacy. In addition to being a number 1 VA loan officer in America, her expertise extends across all sectors. All loan categories consistently ranking her in the top 1 percent of mortgage lenders nationwide.
Jennifer's mission is to make the complex world of home financing accessible to everyone from first time home buyers to season investors by providing clear practical advice that empowers individuals to achieve their financial and home ownership goals. With over a decade of experience, Jennifer has been featured in major media outlets like U. S. News, Business Insider, Time, and NBC News for her insights on mortgages, real estate, and personal finance. Her popular YouTube channel is a trusted resource for homeowners and investors offering easy to understand content on home buying strategies.
[00:01:00] Mortgage planning and financial empowerment. Jennifer advocates for transparency in the mortgage industry.
And is deeply passionate about financial education. Her ability to simplify complex financial topics makes her a sought after speaker and podcast guest, inspiring audiences to take control of their financial futures with confidence.
Jennifer Beeston: Um,
Naseema: space. And I am honored to be joined by Jennifer Beeston. She is a top one person lender in this country, VA specialist, like all of the things, but she has seen some things, she knows some things and she is going to put us up on game.
So thank you so much, Jennifer, for joining us. I'm excited [00:02:00] to talk to you.
Jennifer Beeston: Thank you for having me. I'm excited to dig into it and make it so some people don't get ripped off. Silence.
Naseema: I've been in this. This lovely home that I'm in right now, since 2020, and I went through some things when qualifying for my mortgage that I should not have gone through and yeah, I was through multi mortgage and filed a whole bunch of complaints against them because they are just horrific, but I want people to avoid a lot of the things that are out there.
A lot of the traps that people, can fall into when applying for a mortgage, so let's just hop into it. Let's just talk about it.
Jennifer Beeston: Yeah, look, the biggest thing I see is. People are just blindly trusting. Silence. It's like they meet a real estate agent at an open house. They do zero, [00:03:00] zero research on the agent. The agent recommends them to a lender. They do zero research on the lender. And if, people get one thing out of the podcast, it's this.
Interest rates and fee vary based on the loan officer you talk to. They can be huge as does expertise and skill. So you could get declined When you should be approved, and it could just because the loan officer doesn't know what they're doing.
Naseema: hmm. That is true. I think about. How little we vet these people that we're spending so much money with, there's probably not a transaction that you're going to do in your lifetime. That's as big as buying a mortgage. Except for maybe 200, 000 dollars student loans like me,
, always fun. Those student loans, we love them as a lender too. We're like, wow, but you're in a good job. So that's good.
Naseema: they're paid off their dad, but I'm just saying we don't we listen [00:04:00] to, like you said, we go to open house. We go with their lender. If it's a new construction you see all these great deals and you have all this stuff that you get back all these incentives to go with this lender.
So you don't. incentives. Thank you for that. Thank you for the incentives because I was like, screw multi mortgage, forget all these incentives and as a matter of fact, if y'all keep on playing with me, I'm gonna just drop out of this deal, and ended up going with my own lender, but yeah, we don't do our due diligence. What should people do in order to properly vet, their mortgage brokers their lenders.
Jennifer Beeston: Yeah, so there's a couple different things. Look, 1st of all, if you're doing new construction. Most builders have an in house lender that they're going to be trying to push you to, and I refer to them as indoor cats. These are loan officers that never have had to get their own business. These are loan officers that don't really have to do a high level of customer service because you're being paid to use them. [00:05:00] A lot of times people, especially with the new build, they just go, Oh, they're going to pay my closing costs. They're going to do this. They're going to do that. Wait a 2nd, sometimes the way they're giving you all those incentives is you're paying a higher rate and you're paying higher fees. So 1st tip would be if you're looking at new construction.
Always get a second, a third opinion from, a banker, a mortgage lender, a broker, versus what they're giving you. Because sometimes we'll see it where it's like a 10, 000 credit. The buyer's still coming in with a ton of money. I look at it and I'm like, Yeah, the 10, 000 is in the rate and you're also paying all these points that you don't need to. So really verify. And then if you're not doing new construction, look for reviews. People assume if I go to my bank, I'm going to get a discount. I don't know about all banks, but I used to work at a bank back in the day and the loan officers got paid less on the [00:06:00] loans that were for people who already banked because they were assumed they would just keep working with them.
Credit unions can be great on certain products. Mortgage brokers. Are they always lower? No, it depends on the broker. Mortgage lenders, look for reviews. Never do not take a recommendation blindly because. I think 1 of the things that people don't realize as well is that there's in the industry and it's illegal and shouldn't be going on.
But sometimes someone's recommending someone else because they're getting some type of kickback. You really have to look for 3rd party reviews, compare rates and fees. A good lenders never offended. If you're shopping us, we're like, please. Stop me. Let's go.
Naseema: Yeah, and that's what I ended up doing for my dad's loan and I was like, oh, actually, you have a really good rate. But how do people shop lenders? Because I know a lot of people are like, so scared of a credit hit like if I go over here, they're going to pull my
Jennifer Beeston: Oh, it's [00:07:00] too
much.
Naseema: yeah.
Jennifer Beeston: Yeah, it's too much. It's funny because I'm so glad you brought up the credit because people are like, don't know if it's because of the credit Bureau advertising, but it's they're so hyper focused on it. And it's you get to shop multiple lenders within a 45 day window.
You can go on the consumer finance protection Bureau website and they say that, and it shouldn't hurt your credit. Yeah. Also, most lenders up front, they're not doing a hard check. They're doing a soft
check. So that doesn't even touch your score, but there is a risk with that. I always do pre approvals that are fully under it in and you've got to do a hard credit check for that because you can't close the loan with the soft.
Sometimes you'll see score variances. If a lender quotes you. A rate and a fee based on a soft, but your hard comes in lower that can affect the rate and fee that you get. So reviews, 3rd party reviews interview. Don't just go online and look at the click bait. It's always [00:08:00] click bait. And look for someone you can talk to.
So important.
Naseema: And talking to people is really important because you can check their vibe. There are so many lenders out there that just do not have any kind of customer service skills. They won't, they don't get back to you. They're rude. They're short. They don't answer your questions. They're just like, oh this is what it is.
And like, I'm like, hold on, hold me.
Jennifer Beeston: No, it's crazy. It's so crazy. I was talking to someone actually, it was this weekend and they're like, yeah, we were talking this lender and the rate they quoted was really high and they told me the rate. And I was like, Jesus that's crazy high. And so they said to the lender, hey that rate feels a little bit high.
And he goes if you can't afford it, you shouldn't buy a house and based on the numbers we have, you can afford it. It's
Naseema: What that's a word
Jennifer Beeston: Just because I can afford to get ripped off doesn't mean I should get ripped off. It's craziness. It's just [00:09:00] craziness. So vibe check, I think, is really important.
Naseema: Yeah, so what are some other things that you've seen out there in the lending space that just like really annoys you
Jennifer Beeston: Oh my gosh, there's so many. I could go on for days. Okay, I hate instant approvals. You see the ads all the time where it's we'll approve you in 10 seconds. I'm here to tell everyone that's not how getting a loan works. If you guys put in your information, The way that you get that approval is based on what you put in.
So if the lender declines you after you've already had an offer accepted, you paid for an appraisal, you paid for inspections, they just go back to the consumer and go that's what you put in. We just got your docs now. So it's crazy. It's crazy. Guys, if you're going shopping for a house, get a fully underwritten pre approval from a lender that you have vetted.
Don't be afraid to ask questions. Don't be ashamed that you're shopping. Be proud of it. [00:10:00] And if they won't do a fully underwritten pre approval, why are you giving them your business?
Yeah, don't get it. It kills me. What else? Bait and switch. Bait and switch is huge. So, talking about rates is really important.
And one of the things that I'll see is most lenders. We're not going to lock you until you're in contract, meaning the sellers accepted your offer. We have a timeline that's when we can know how long we can lock for. And what I'll see sometimes is these loan estimates go out to buyers. They're really low.
Wow. That's really good. It's not locked. And then a week or so before closing, that loan officer says to the client, Hey, we really got to get you locked now. The client goes, what do you mean? I'm not locked. I thought I was locked. And they go, no, your loan estimate was never locked. You never told me to lock it.
Naseema: Because they knew to tell you.
Jennifer Beeston: They're supposed to be psychic, but, competitive in loans right now that [00:11:00] we're seeing people do some really dirty stuff. And as a consumer, the best thing you can do if you're in contract, and you're going with this lender over this lender, because of the rate. You need them to lock it and you need to check your loan estimate.
Because sometimes they'll go, yeah, yeah, I got that right. There's no points and then you get the loan estimate and it's locked. And we have people send it to us and we're like, so you're paying 2 points. What they didn't tell me there were points.
Naseema: Oh, my God, that is so scary, but I feel like that's what happened to me. Oh, you're going to get this rate. You're going to get this rate when it was time to sign on the line. It was like, no, this is the rate you're going to get and you have these points and this is the best deal out here. So you just need to just go ahead and sign I'm not getting goofy.
Like, why would. I'm sure there are people that would just sit up here and listen to you, but I'm not stupid. No, we're not [00:12:00] going to do this. I'm going to find a better line.
Jennifer Beeston: And thank God you did, but, the thing is this, they don't teach this in high school. They don't teach this in college, we're taught all this stuff that has no bearing on our lives yet. The stuff that really affects us financially. You have to go out and look for resources, like your podcast, my YouTube, look at all these different resources to get the real deal.
Naseema: but then that's a whole nother subject. And I know this annoys you too. It's like all these influencers that are
telling you this information online that you're just like, oh my God, it's like too good to be true
Jennifer Beeston: Ah,
Naseema: Yeah. And that people are falling for because everybody is everybody's dream to own a home, right?
And so a lot of times people just do it by any means necessary, especially if they are being told this information like they can afford it. They really can or. The terms are crazy and they don't know how to read
contracts. They don't know, people don't [00:13:00] even know what points are. People look at the interest rate and then they look at their payment.
He basically, people are just like, can I afford this payment and don't really understand what they're paying?
Jennifer Beeston: and the payments being totally manipulated as well. What I do with my clients is after I fully underwrite them, I go through every closing cost line by line. And I say, hey, this is what I control. This is what no lender controls because it's other people. And. Property taxes and insurance.
That's where we see the manipulation. I'll have someone say Jen, his payments lower and I'm like, show it to me. It's because he estimated 25 for homeowners insurance in California in a fire zone, right? It's never going to be that. And taxes are based off of 100 bucks. And it's a fake payment.
We don't control taxes and insurance. So it's a bummer that consumers have to be so aware, but they really do, especially right now. The mortgage [00:14:00] industry for most mortgage professionals, it's been the worst 2 to 3 years of their lives. Huge boom. And then it's just been like, we've seen people who used to do hundreds of millions of dollars worth of loans and they're doing like 3 a month. You got to really watch out right now, especially with that payment.
Naseema: And is that just because it's just the economy, the rates are so high I don't know. I feel like the rates are high, but the houses around me are still selling like crazy. Yeah. Yeah,
Jennifer Beeston: are not coming down and they're not going to. You've got all the housing crash bros as I lovingly call them on YouTube. The market's been ready to crash. Every 6 months for the last 5 years, but the bottom line is supply and demand.
You're in an area where there's not a lot of building. There is a demand there and it's just I always think of the state of New Jersey. New Jersey hasn't come down in price. There's a lot of [00:15:00] states where even with the huge jumps we saw in 21 and 22, they're still appreciating.
Naseema: I'm what I've seen that kind of just it's scary to me in places that used to be affordable Florida the housing prices are comparable to here. But how are people paying for these houses when they're getting paid 20 and 30 dollars an hour.
Jennifer Beeston: So I actually moved to Florida from California 2 years ago, so I'm a great example of that. So you saw states like Texas comes to mind, Florida, North Carolina, Tennessee. Those prices started going up because you saw people leaving high tax states like California, New Jersey and New York. If you look at the Florida prices, especially like I think of Miami Beach, it's a lot of outside influence that have pushed these prices up and it's making it really hard for people who are making it.
It's the Bay Area story, but it's now nationwide.[00:16:00]
Naseema: Yeah, yeah.
Jennifer Beeston: Because I started my business out in the Bay Area the Bay Area has been rough for over a decade,
Naseema: Yeah.
Jennifer Beeston: but it doesn't mean that housing is impossible. It just depends on where you are and the people who moved from California to Florida, or those other states, they move there for a lower cost of living because of state tax.
Also, still, the houses are more affordable. So that's what I would suggest to people if they can work remote, if they have a job, there's certain parts of the country where. Aspen. Who can afford a house there that's not a billionaire? Anyone?
Naseema: No.
Jennifer Beeston: Yeah. Move somewhere if you can, where you can actually afford a house and a life.
Because that's the important part. The life.
Naseema: And I tell people that even in the Bay Area, you're going to make a good salary, but don't be house poor and my definition of house for is, your mortgage, everything [00:17:00] included being 30 percent or more. Over 30 percent of your take home pay take home pay home. Hey,
Jennifer Beeston: Ooh. I don't know if anyone can buy a house in the Bay Area with that rule.
Naseema: right. But,
then I feel like you have to be creative. 1st of all, I know it's hard. It's not impossible. It's hard. Maybe you need to have being a multi generational household. Maybe you need to do some house hacking. Maybe you need to buy a little bit smaller, older home, it's not impossible.
You just probably won't be able to check off all of those things on your list. But how do you define house poor?
Jennifer Beeston: I'm going to go into that in a second, but I just want to say, I feel like, and I feel like this might help people, no matter what price point people are qualified, they never check off everything on that list. I've got people in every price range, $100,000. You can still buy houses in some parts of the country for $100,000.
There's little pockets, Kentucky, Ohio. [00:18:00] And, they're like if I could get to 200, and then at 200, if I could get to 3 and 5 and, 2 million. If I could get to 2. 25 everyone's always. That list is always a little bit higher above, so I would probably just pick a couple key things and toss that list.
Naseema: Yeah.
Jennifer Beeston: House poor, I think, is a huge risk, and it's actually why I became a lender. It's because before I was a lender, I accidentally ended up house poor, and that stayed with me. It stays with me to this day. I remember getting the bill and almost dropping my son, who was almost two at the time. We were at the mailbox almost dropping him because I was like, I wasn't on the mortgage.
My ex husband at the time was, and I looked at that payment and I said, Oh, my God, how are we going to pay this? And that's what I think people need to understand. Lenders can qualify you to a point where you cannot afford food. I can't stress it enough.
Naseema: Yeah.
Jennifer Beeston: so never [00:19:00] go to a lender and say, hey, what's the max?
Yeah, and people say that to me, they're like, Jen, what's my max? I say, absolutely not. I want you to sit down with a budget. I want you to tell me the payment that you can afford monthly. And I'm going to do my numbers based on that. If you want to go up and down from there, we can, but I am not starting out here because once I start here, I'm never going to get you here.
And you're going to hate
Naseema: Right,
Because you
start looking at houses at that price point, and then you convince yourself. I am money savvy, but I have done that, too. You convince yourself 1st of all, that you deserve that house. You can pay for it. And if you can't pay for it now, you'll Figure out a way to pay for it. And so you do this, these crazy psychological money gains in order to make that mortgage work.
But also the lenders are telling you, yeah, you can afford it. You can afford it because they base it off of gross income. Like you said they can make you a [00:20:00] mortgage, but you won't be able to eat. Why is that even allowed?
Jennifer Beeston: I don't know. Honestly, because I was thinking about it, what's interesting because income tax is something I think about a lot, right? It's 1 of the reasons I left California, which is, I never thought I would and as a lender. You're right. We go off of gross income. But $100,000 in terms of how much someone's going to bring home in, I don't care, pick a state, New York versus $100,000 in Florida.
They're going to come home with two very different amounts. But as a lender, we're not taking that into play as a lender. We don't consider unless it's a VA loan. VA loans are different. Childcare, childcare. Yeah. Childcare. One of the gals on my team actually ended up becoming a stay at home mom because childcare was gonna be $1,500 a month and she wants to have a second child.
And she was doing social media. We don't take that into [00:21:00] consider how much is childcare in their Bay area. Do you have to give
an
Naseema: you, it's more than my mortgage. So my mortgage is 3,400 a month. My childcare is $4,000 a month?
Jennifer Beeston: Whoa. Wow. Wow. Okay. That's, and that's the thing. Lenders aren't looking at this and we can't. Here's where it gets weird too. So as a lender, if you say, Jen, I really wanna go to X, Y, Z. If I can make it work, I have to make it work. Even if I ethically don't agree with it, I can have the conversation of Hey yeah, you can do that, but can you pr please do a budget?
And this childcare issue is like, imagine if a lender Max qualifies you. You are done,
Naseema: done.
Post, yeah.
Jennifer Beeston: Yeah I hope you want a second, third, fourth, fifth, sixth job, or you have rich parents, because you're hosed.
Naseema: Yeah. Yeah. It is. Ridiculous. [00:22:00]
Like ridiculous. And the thing is, that's just childcare, right? You're not even talking about first of all, most people don't even realize how much money they spend a month on food because they don't do a budget. They don't track their spending.
But yeah, people just don't know. So I think that, really get an understanding of how much you're spending every month So that's what you're saying like
when you do a budget like really really look at and calculate How much are you spending a month go at least three months back and see like how much are you really spending?
To really ascertain How much you can afford?
Jennifer Beeston: And what will you cut? Because what I always hear is when I get this house, my changing habits will spend. And I'm like, No, they won't they will for a month, they'll change for a couple of days. But 1 of the things I talk about a lot is let's say, because I see this where the rent's a 1000 dollars.
And they're going to a 4000 dollar payment, and they're not saving 3000 dollars a [00:23:00] month, which, so the question is, okay before we hop. Let's start making that payment to our savings account and let's see what it feels like because if it's miserable, don't do it. It's not worth it. I'm a lender saying don't buy a house.
So, But if it's going to ruin your life, don't do it.
Naseema: But I don't hear those messages a lot. And I just feel like there's so much pressure to be a homeowner that you'll hear the opposite message.
Jennifer Beeston: You
have to stretch.
Yeah.
everybody. It's always hard on your first home. You just have to stretch. Maybe you can sell some blood plasma. Sell your stuff on Etsy. Like your soul. I don't know. It's terrible.
Naseema: I just, First of all, I've been there. I've done that. I went through The housing market crash of 2008, 2009, so I have a legit fear [00:24:00] of being house poor. And I am not the person that's going to tell you to buy a house by any means necessary, because sometimes it just makes a whole bunch more sense to rent.
And people will tell you, oh, renting is throwing away money. No, it's not. Yeah.
Jennifer Beeston: you this. I'm renting right now. This is a rental. And you know why? It doesn't make sense for where I am. I'm not ready to make the commitment. The area is not environmentally stable. If I look at my long term financial goals, there's not enough stability.
Right and that's what people need to think about is. Do I want to live in this area for a while?
Naseema: what's the, why, because I say if you're not willing to stay there at least 5 years in that house it's probably a bad investment. Okay,
Jennifer Beeston: for California. Yeah, probably 5 for [00:25:00] others. I would say minimum 3. Okay, the only time I change that is for instance 2 segments. We have people who are buying their 1st house 3 percent down. They're living there for a year, year and a half, turning it into a rental.
Then they're buying their next 1, right? Or. I love your I was listening to the 1 about your children and how you're going to want them to do house hacking with their 1st house. If you can get a duplex as your 1st house or a multi unit, or conventional still seeing more than conventional or V.
A. Live there for at least a year and then. Let's go to the next 1, but there's a lot of research that goes into that. Is this property going to cash flow? Because buying a house and thinking you can sell it for a year and not lose a ton of money. I don't know where that happens unless you're doing flips and flips are risky.
Naseema: what is it when you don't have a house for 2 years and then you sell it? What's the tax?
Jennifer Beeston: Oh, capital gains. Yeah, and people need to talk to a tax [00:26:00] advisor as well. So you have to live there for at least 2 years before you sell. Otherwise you get hit with capital gains.
Naseema: Yeah.
Jennifer Beeston: And then in the investment realm, there's other things. The tax advisor would be definitely better.
But. Also 1 thing people don't talk about is the stability of the relationship you're in sometimes, you'll have people that are real bad relationships and I'm sitting there listening to, him be like, hey, don't tell her what's on my credit report. And her being like, what's on his credit report?
And I'm guys are both going to see this. You're both on the application. Maybe we should sort out our distrust of each other before we hop into this house together. If you're in a relationship that you're not comfortable or secure in hold off on buying that house until you settle out that mess because it's a mess getting out
Naseema: Oh, come on. I'm so glad you brought that up. Because I can't tell you how many times people stay in horrible relationships because they're trapped into, they're [00:27:00] trapped in this housing situation together. They can't afford to get out, not even to rent, like they can't leave. And nobody talks about that either.
Yeah,
Jennifer Beeston: The other thing is from a couple perspective 1 thing I would say, if people are going to be buying with, whether it's a spouse, a boyfriend, a girlfriend, a best friend. You need full financial transparency. Because, and the other conversation that I get in where I'm always like, okay, I guess I'm part of this now, I'll talk to 1 person and they'll be like.
Oh, he's going to pay the whole mortgage and he'll be like, she's going to split it with me. And I'm like.
Naseema: What?
Jennifer Beeston: You need to talk. I don't know. Have you found
Naseema: don't They
Jennifer Beeston: No.
Naseema: don't. And that's why I was like, listen, I don't care. If you're just boyfriend, girlfriend, if you're married, if you are doing a large transaction, like [00:28:00] buying a house together, you need to have a prenup or a partnership agreement in place because that'll force you to sit down and look at the numbers.
Jennifer Beeston: Mm hmm. And, 1 of the messy themes is, let's say you have 2 people, they buy a house together. They're not married. They break up. You guys have equal ownership unless you drew up something different and like I would say draw up what happens if you break up and neither of you can afford to buy the other one out because you'll have it where neither can afford to buy the other one out.
This one's saying I'm not going to move and I can't afford the whole payment. You still have to pay or your credit's ruined and this one's trapped and then you have to get lawyers involved and it's incredibly expensive. So it's just about doing your homework, that's all we're doing, right?
We're not torturing people. We're just saying do your homework.
Naseema: it through is a major financial transaction But I just I can't emphasize this enough that there's so [00:29:00] much pressure on being a homeowner and just getting a house that people ignore this basic financial advice before getting into it. And they get into loans that they can't afford. They get into situations that might not be tenable a couple years down the line, just for the sake of owning a house.
Another thing they do is they buy a house and then Now, they got to fix up the yard, they got to build the pool,
Jennifer Beeston: Buy a car that matches the garage door.
Naseema: build a brand new kitchen. And so it becomes like this, the problem that
just keeps on
Jennifer Beeston: Now,
Naseema: digging that gets worse and worse. Yeah.
Jennifer Beeston: Look, you and I are both sitting from the place of experience, right? We've seen it. I see it every single day. all the different ways this can go the good, the bad and the ugly. And so it's [00:30:00] not that people are. I just don't think they're educated enough. So it's that's why I think podcasts like this are great.
This is why I've been on YouTube screaming going. Look at this. Look at this because you're right. 1 of the things I tell people after they buy the house is just try to wait 6 months and write a list of everything you want to do and how much it's going to cost. And budget for it, because a lot of times people do all this stuff and then they end up in credit card debt and then they're trying to refinance, to pay off that credit card debt.
But it's not always a possibility like, the equity jump you saw from 19 to 23, it's not normal anywhere in the country. So I feel like there's a lot of people that grew up in that market. So they think it's normal for houses to go up 50 percent in 2 years in certain states. And it's just not.
Naseema: It's not, I've seen the [00:31:00] negative equity. I've been through that. So I'm leery,
Jennifer Beeston: no, yeah, you always want to try to make sure. That you can afford the payment, and you're not going to be forced into a refinance, which, goes to some of the shady stuff on tick tock and on Instagram, where they're doing these ads where they're like, you don't need a home equity loan where you make payments, you will give you money and you don't make any payments.
And seriously, I don't know if, legit it's out there and what it is, is it's they're taking a equity percentage. Of the house, and it's a balloon loan.
Naseema: Is it like a kind of crazy reverse kind of mortgage, kind of thing? Or is this just a whole nother financial product that they made up that should be illegal? Like
all those loans?
Jennifer Beeston: reverse mortgages have a lot of regulations. Whereas no, these are like, I can't believe these exist because as a loan officer as a lender who does this for a living. I saw the ad and I was [00:32:00] like, wow, how are they screwing? What's the, how does this work? And I had to dig through 10 pages to get to the terms and conditions.
And that's where I'm like, Oh, they're taking an, a percentage of the equity and the upside, and it's a balloon loan is the average American going to know that, Oh, if I take out this loan with no money, I have to pay it back in full by X, Y, Z date, or they can, Put a lien on the house, or, whatever the penalties are.
No, they're not going
Naseema: No, because people don't read, especially if you had to dig that deep to get to it and understand it. Because a lot of people would not understand what's the balloon payment? I don't know. You know
what I'm saying? Like, most people don't know that. I know that only because I grew up in that crazy
Jennifer Beeston: 2008,
Naseema: real estate market where balloon payments were some insane things.
And I've seen people lose everything because of balloon payments.
Jennifer Beeston: Oh, no, balloon payments. I cannot. Tell people to stay away from them enough and it's not something that you see in [00:33:00] traditional lending. You're not going to have a or or. Fannie Mae, Freddie Mac with a balloon. It's usually these more predatory types of loans out there, which are generally someone trying to disrupt the mortgage industry without understanding the mortgage industry.
So it's buy now, pay later,
Naseema: yeah, yeah, that's what I'm saying. I feel like these things are creeping back up after all these regulations that kind of got rid of all of those subprime loans they're creeping up under the spin techie like companies and
Jennifer Beeston: We're helping America have access to more money.
Naseema: Yeah. And the thing is, I feel like more often than not people, minorities, women they are the people who fall prey to these things because you're less likely to be able to qualify or think you're able to qualify for conventional loans, which I used to think that no cap.
Like I used to think that. [00:34:00] I could never qualify for a conventional loan. I thought it was only going to be like an FHA loan or one of the subprime loans. Like I just thought no, I never be able to. And then I started looking at it. I was like, Oh my God, how did I not just Look at these conventional loans, because I thought, conventional loans meant you always had to put 20 percent down and you have to make a certain amount of money and you have to be able to show a certain amount of money and all this kind of things that weren't necessarily true because the lenders I was working with just didn't have a broad array of products that they offered,
Jennifer Beeston: Were they just putting you in FHA straight away?
Naseema: Initially when I started, so I started, when I was 21, I think it was all those subprime loans, like all of those, crazy, no doc, loans.
Yeah, exactly. And then later, I think, When I would talk to [00:35:00] people I would just like randomly be like, oh, yeah, so what do you think I can qualify for it? It was like they would automatically just assume I wanted an fha loan or something
Jennifer Beeston: see some of that, which, I'm always telling people people go well, is the 1st time homebuyer loan and it's no, it's not. And also look, if you've got good credit, there's not a good reason to go unless, there's specific scenarios. It could make sense.
But conventional 3 percent down. Is 3 and a half, but. People do that and you'll see lenders where they'll tell a buyer. Oh, you should do FHA. They don't ask why and the lenders pitching FHA because the interest rates lower, right? It's a more expensive loan to get, but they don't talk about that.
They just shine the lower interest rate without saying, oh, lower interest rate, but you have mortgage insurance for the life of the loan. There's a 1. 75 up front.
Naseema: Yeah that
Jennifer Beeston: So everyone should always ask if a lender [00:36:00] qualifies you for any loan say, hey, is there a reason you didn't look at, if you're qualified for hey what's the reason?
Why is conventional an option or did it not work right? Conventional may FHA make sense. And then if someone's a veteran and anybody's suggesting something that's not VA, be afraid because there's a couple situations where, you know, FHA, the only situation FHA really makes more sense is if you're buying a multi unit and you need the rental income to qualify.
But if someone's saying, oh, you should do FHA instead of VA, that's wrong. Why would you pay mortgage insurance? I don't get it. Ask questions, ask questions, ask questions, ask questions, ask questions. And if the lender you're talking to is rude, dismissive, says you're asking too many questions, leave.
Naseema: Yeah.
Jennifer Beeston: There's billions of lenders. You can throw a rock and hit one of us.
Naseema: [00:37:00] But people don't know that. And I think.
Another thing that's really disappointing is sometimes people get discouraged if they work with somebody and they're offered something that they can't afford or they're denied for a loan and they don't know that they can look at alternatives. So I just want to take the last part of this podcast interview to kind of like go through I am a first time home buyer, or I'm somebody that's got burned by the mortgage industry.
And I'm just trying to make the best decision when it comes to purchasing a home. Now, what steps do I need to take to make sure that I'm not being taken advantage of? Yeah.
Jennifer Beeston: a house and do it you got to start out by understanding your spending as well as what you can actually afford. Because if you're going to ask a lender, don't do it. It's a recipe for disaster. Number 1, you're going to do a budget, you're going to come up with a payment that you're [00:38:00] comfortable with.
And what I would say on that is that I would have. The payment you're comfortable with your dream payment, which probably isn't realistic. And then the payment that will make you throw up. Okay, and I see I'll say to people, I'm like, what's your puke point? Because sometimes. It may be that you can handle 100 dollars more than your budget.
You just have to go back and go.
What do I cut? Yeah. And then the next thing is, look, you've got to research lenders, look for reviews, go online, get recommendations from people, but always verify and then trust and interview them. You don't have to just fill out an application. Call them.
Are they willing to take 10 minutes to talk to you about your situation? Ask questions. Are they willing to answer them? If their response to every question is fill out an app. That's the wrong lender,
Naseema: real quick before when we're talking about budgeting and the payment that you could afford, the payment should [00:39:00] include
Jennifer Beeston: Taxes and yeah, it needs to be it needs. Yeah, when I'm trying to figure out that number for people, I want to know, because most people don't know homeowners insurance is a big 1 right now. People have no idea how expensive homeowners
Naseema: Mine has doubled. For example.
Jennifer Beeston: Yep, which makes sense
Naseema: Yeah. Yeah,
Jennifer Beeston: Yeah, we want that big number. So I want to know. Taxes and insurance. And then we'll have the conversation of if insurance is this yeah, I can go up a little bit more if insurance is this, we got to come down a little more, and there's specific states like New Jersey, New York, where you got to pay attention to the taxes because it can vary by, not just the county.
It could be like the street.
Naseema: my me to where I live, the taxes are crazy different block by block.
Jennifer Beeston: Did you get hit with my favorite word? It's actually a terrible word. Melrose. Did you
Naseema: Yeah, so I, [00:40:00] I have, I did have Melrose on 1, the last property I brought in this city. But the block over literally, because my friend has a house, a block over, none of that, her taxes were so much less than mine on her feed. Yeah.
Jennifer Beeston: yeah, new construction, in every state, they have different California's Melrose, Texas has PIDs, but it's something people want to ask builders is, are there additional taxes? Because a lot of times they're not going to disclose that.
Naseema: Yeah, I, actually, that's how my lender advertised, because they knew just because how this city is set up, that that's a big concern for people. Yeah, and that was 1 of my 1st questions, because I was like, I don't want to pay all these taxes. Yeah.
Jennifer Beeston: I've seen that are like, an extra 50 bucks a month, but then I've also seen them when they're like, an extra 500.
Naseema: Yeah, yeah.
Jennifer Beeston: that's going to affect your
Naseema: Mine was, mine was definitely closer to the 500 range.
So,
Jennifer Beeston: Is it over now? Yeah. Or not yet. Okay. And at some point, Melrose ends, [00:41:00] but,
Naseema: no, it was in another property. When I bought here, I was like, I'm not paying that extra tax. What is the tax rate? And it was good because it got tack. It got this property got added on to another a older community. And so we didn't have to pay those special taxes. Yeah, that is something that people just don't even know to ask often.
Jennifer Beeston: well, and people should do some research too, because it's look, I don't know what loan officers you're going to pick across the country. There's some amazing loan officers. There's a lot that aren't right. And it's that's also why I'm like, if the real estate agent recommends the lender please, please verify that the lender is going to work for you and not for the agent, because it really benefits you to have these parties separate so that you have.
Eyes that don't depend on this person for money. They can say to you, like I've gotten into drag out fights with agents because I'm like, I'm not going to close on this house. The buyer told me it [00:42:00] has black mold. and and they're like you don't have the report. I'm like, he told me it has black mold.
He said, there's a report you need to fix this or we're not closing. My lender wouldn't require that. Your lender wants the buyer to die young lady, but I don't. So here we go.
Naseema: Oh, my goodness. Yeah, that's crazy. Okay. So we're at budget. Make sure you can afford the payment. Come up with educate yourself that your lender. Thoroughly, yeah. People do that.
Jennifer Beeston: because they're terrible. They're so bad. I'm like, I'm like, sometimes I'm like,
Naseema: People don't know how to ask questions.
Jennifer Beeston: Look, and sometimes I don't know if people are just playing with me, but I'll 72 questions and I'm like. This is chat GPT because none of it makes sense, and it's yeah questions that matter to you.
If you don't know what to ask, just have the [00:43:00] conversation. What should I be afraid of? What do I need to watch out for? If I'm looking at a house what would be a problem to lend on? You want someone you can talk to. Yeah,
Naseema: questions I have to, like, I have a trust, so even things like that come up okay, if I'm gonna put this under a trust, like what do I need to do in addition, like, all of those kind of questions people don't know to ask that kind of thing. But a lender would know, yeah.
Jennifer Beeston: on the trust and everything else how we would have to handle it. But. It's I feel like I was talking to someone who used to run one of the big call centers in America, and it's a call center now where I'm like you better read that loan estimate because whatever they told you on the phone, it's not going to match.
Right and I was
like, what do you think could really protect buyers? And he said, Jen ask questions when people start asking questions, the truth always comes out. So if people just ask and ask and. No, 1's going to make fun of you if you ask a question that doesn't [00:44:00] make sense. I'll be like, I didn't think of that 1, but I should be addressing it because someone, ask, ask, ask.
And then you should be pretty safe.
Naseema: Yeah, so people, first of all, people don't know what questions to ask, but people also need permission to ask questions sometimes because they don't think that they can't or they think that they should be able to trust that person. This is a professional. I'm coming to you as a professional. I should be able to trust you.
No, ask your questions, because you could be thinking about something on a totally different way, even as a nurse, right? You're coming to me. You're going to have a baby. You don't know what the process is. You're thinking that things are going to go a certain way. Let's have a conversation. Let's come to common grounds because probably what you're thinking is going to happen is not what's going to happen.
I
Jennifer Beeston: two epidurals. I don't handle pain. The nurses were fantastic. But no, that's the thing is that I think people need to understand that just with any industry, there's good and [00:45:00] there's bad and, a bad loan officer can cost you a lot of money.
It can make it so you feel like you'll never be able to buy a house, because I see a lot of that. I see declines when they should be approved. But a good loan officer can get you. To where you never thought you would be in a house. Financially stable, totally aware of what you got into.
And prepared, so take your time.
Naseema: Yes, yes Jennifer, people want to work with you. People want to access all your amazing resources. How can they get in contact with you?
Jennifer Beeston: I have a YouTube channel. There's always going to be a link to my calendar. I have a calendar. I actually have 2 girls on my team. All they do all day is answer people's questions. They're licensed loan officers. You don't have to fill out an app. You don't have to work with us. We're there so that.
We look at loan estimates from other lenders. So check out my YouTube. If I don't annoy you too [00:46:00] much, hop on the calendar or give us a call and we'll, help you every way we can.
Naseema: And I have the, I'll have all your links. You have a book
Jennifer Beeston: Thank you?
I do. I wrote a book called Brain Hacked, How Tech Trains Your Brain to Spend and How to Fight Back because as an early social media adopter, I saw The way the algorithms were working, and as someone who looks at bank statements all day, I saw the rise of the unconscious consumer
Naseema: Yep, that by now pay later.
Jennifer Beeston: that and the Amazon boxes show up to the door. No, 1 knows what's in them. It's click click bankrupt. It's happening.
Naseema: Yep. And then I want to bring you back so we can talk
about all things VA loans, because I know you know about some amazing things you can do with the VA loan. So I'll be looking forward to that. And yeah, you have incredible resources on that as [00:47:00] well, if people want to just go ahead and dive into that now.
Yeah. Absolutely.
Jennifer Beeston: Yes, I have a free VA course it's everything you need to know from tip to toe about whether you're a veteran, a military spouse, a parent of a someone serving in the military, how to get that VA loan and all the fun stuff you can do with it.
Naseema: Cool.
All right. So all of those links will be in the show notes and I'm looking forward to having you back, but this has been so good. So informational. And I just hope people heed your advice and miss out on all of the things that we have personally gone through. Skip all of that and get into the house that you can afford.
And that makes sense for you.
Jennifer Beeston: Yes, we want that house to be a benefit and not a burden.
Naseema: Exactly. Alright, thanks Jennifer!
Jennifer Beeston: Thank you.
Hey there I’m Naseema
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