Financial Insights with Todd Gydesen: Fed Rate Cut And What Every Portland Metro Homebuyer Needs to Know

Summary:

 In this episode of Off the Record, Joe and Makayla welcome Todd Gydesen from Vantage Mortgage Group to discuss the evolving landscape of the Portland, Oregon real estate market. They delve into the recent Federal Reserve interest rate drop and its potential impact on homebuyers. Packed with practical insights and expert advice, this episode is essential for anyone navigating the complexities of today's real estate environment.

Episode Highlights

• Fed Rate Drops: Todd shares insights on the Federal Reserve's recent decision to lower interest rates, suggesting this could encourage hesitant buyers to enter the market and seize opportunities.
• Portland Real Estate Market: The discussion highlights the unique dynamics of the Portland housing scene, featuring the Vantage Mortgage Interest Tracker—a valuable resource for staying updated on current interest rates and making informed decisions.
• Move-Up Buyers: Todd addresses the challenges faced by move-up buyers, often hesitant to sell their homes due to high mortgage rates. He emphasizes the importance of understanding their financial position to facilitate a smooth transition.
• Market Outlook: With a cautiously optimistic perspective, Todd forecasts renewed activity in the housing market as affordability improves and interest rates stabilize, particularly benefiting first-time and move-up buyers.
• Pent-Up Demand: The conversation reveals significant pent-up demand driven by life events such as marriages and growing families, highlighting the ongoing need for housing despite current market uncertainties.
  • Tips and Strategies: Todd provides essential advice for prospective buyers, including:
  •  Plan Ahead: Assess your financial situation and set clear home-buying goals. Understanding your savings, income, and credit can streamline the process. 
  • First-Time Buyer Insights: Research your local market and establish a budget that incorporates your down payment and monthly mortgage comfort level. Preparation is key! 
  • Know Your Affordability: Familiarize yourself with the area’s median income. If you earn below 80%, you may qualify for reduced interest rates.
  • Explore Affordable Housing Options: Stay informed about local affordable housing developments, which often feature streamlined application processes
  • Engage with Professionals: Collaborate with a real estate agent and lender early on. Their expertise can help you navigate the buying process with confidence.

Ready to explore your homebuying options? Reach out to Todd Gydesen at Vantage Mortgage Group for expert advice on navigating today's market. For real estate guidance, contact the LivPortland team to get started on your journey. Let’s make your homeownership dreams a reality! 

Thank you for listening to this episode. Stay up to date on the latest trends and insights by subscribing to our podcast and following us on social media.

For more information about buying or selling in the Portland Metro real estate market, please visit www.LivPortland.com or contact us directly.

We appreciate your feedback, so please leave a review and let us know what topics you would like to hear more about.

Transcript

00:00:08:18 - 00:00:35:21

Joe Reitzug 

Welcome to Off the Record talking real estate with Joe and Makayla. If you're interested in the Portland, Oregon real estate market and what the unvarnished inside scoop. You've come to the right place. Thanks for giving us a listen. Okay. Welcome, everyone. Thanks for joining us. And, today we have a fantastic show for you. And I'm so excited to introduce my good friend, Mr. Todd Gydesen from Vantage Mortgage Group.

Joe Reitzug 

How are you, Todd?

00:00:37:12 - 00:00:39:10

Todd Gydesen

I'm doing great. Thanks for having me.

00:00:39:12 - 00:00:47:14

Joe Reitzug 

Yeah, absolutely. Always a pleasure. And then, as always, the better half of the show. Makayla Mast. Hi, Makayla. How are you?

00:00:47:16 - 00:00:58:05

Makayla Mast

How are you? Oh, I'm doing good. Except I'm in a Covid hunker down, which is kind of a bummer, but I'm happy that they Makayla Maste this and we can still do this.

00:00:58:11 - 00:01:21:06

Joe Reitzug 

Well, all the best for a quick recovery for everyone in your household. Let's jump into this. There's been so much going on in the world of real estate recently, and also with the Federal Reserve making their statement about dropping the fed rate down a half point. People are all on Twitter about what is going on, what this means, and all sorts of good stuff.

00:01:21:06 - 00:01:38:14

Joe Reitzug 

So we thought we would do a show today with our resident expert on that topic. Mr.. Get us in here and just kind of figure out what it means for everyone. And hopefully you guys can get some good information from this. As always, we will have in our show notes anything that we talk about here that's a visual or whatever.

00:01:38:14 - 00:01:54:18

Joe Reitzug 

You can always go to Livportland.com in the upper right hand side click on our podcast. You'll be able to see what we're talking about here. So I got to ask what's your take on the half point drop. Were you expecting that. Was that a surprise?

00:01:54:20 - 00:02:17:18

Todd Gydesen

I think a lot of people were expecting somewhere between a quarter and a half point drop from the fed. I really believe that the market, the mortgage rate, had already had that built in. I think it would have been a huge disappointment if it didn't come. And, so, I mean, we've seen a couple of people come out, one thing, from the Nar chief economist explaining that, listen, the better improvement on mortgage rates has already happened.

00:02:17:18 - 00:02:37:14

Todd Gydesen

They don't expect a lot of great improvement going forward until we see some more economic markers, like inflation data, job loss data, those type of things moving forward. So, you know, yesterday my phone's blowing up with people that were currently in contract with the we have closed down opportunities, which means you're locked at this rate, but a better rate comes up.

00:02:37:14 - 00:02:56:18

Todd Gydesen

You can get it. You know, just in in a nutshell, it's a little more complicated than that, but but the point is, is that everybody. Does that mean I get a half point better? And the answer is no. No, the answer is that the fed rate mortgage rates are very different and that, your mortgage rates have already been moving and the fed rate adjustment.

00:02:56:21 - 00:03:06:21

Todd Gydesen

So, you know, the old adage of mortgage rates move first, fed rates move second has been true so far. Of course, we're only 24 hours into the.

00:03:06:23 - 00:03:22:00

Joe Reitzug

It always amazes me how people think that the two are tied at the hip and like, yeah, it's a corollary thing like, okay. Well that must mean we're getting a half point drop in mortgage rates and it's like, well, that's not exactly how it works.

00:03:22:02 - 00:03:22:13

Makayla Mast

I know it.

00:03:22:15 - 00:03:26:23

Todd Gydesen

You know, they want to they're in the middle of the transaction when.

00:03:27:04 - 00:03:28:13

Todd Gydesen

We all want it.

00:03:28:15 - 00:03:52:18

Makayla Mast.

So it's kind of funny if people have been sitting and waiting and waiting and waiting for this big meaning, and we've been trying to tell them for weeks now. Come on, now's a good time. They've dropped, but they just haven't believe that. So here we are. They're still better than they were. So. So, Todd, where do you think interest rates need to be in order for a healthy or a real estate market here in Portland?

00:03:52:19 - 00:04:17:02

Todd Gydesen

I think, you know, I mean, with rates here in the low sixes, pretty close to six for, you know, a just a standard second time buyer. Excellent credit. Single family primary residence purchased 20% down here in that low six range. Really close to six firfor st time buyer programs that are down. You know, if you're a first time homebuyer on your income needs is under certain thresholds.

00:04:17:02 - 00:04:33:14

Todd Gydesen

You could be in the mid fives right now. So so I think I think there's a lot of good news out there as far as interest rates compared to where we've man, you know what really I think moves the needle for people is going to be what's the monthly payment. Right. And can they get that. So I think we'll be talking about that a little bit more later.

00:04:33:14 - 00:04:41:13

Todd Gydesen

But that's that's what moves the needle is where does it get a payment into your comfort zone for what's available that you want to live in?

00:04:41:15 - 00:05:03:21

Joe Reitzug

Yeah. And I've been, talking to so many more buyers who, are more, interested in that payment amount versus what they can actually qualify. And it's so good to see because, you know, in years past, it was, oh, I can qualify. I'm, I'm pre-approved up to 700,000. And it's like, okay, well what's your payment going to be at that?

00:05:03:23 - 00:05:06:06

Joe Reitzug

I don't remember. It was pretty good though.

00:05:06:08 - 00:05:07:21

Speaker 3

It was like,

00:05:07:23 - 00:05:23:10

Joe Reitzug

Maybe we should worry about the payment for. So I think the public's starting to get on board with, okay, how much am I going to be paying a month on this? And is that my comfort level? So that's good to see. So I have to ask, with the recent drop in interest rates, how much more does this allow people?

00:05:23:10 - 00:05:34:10

Joe Reitzug

I mean, what is a drop from where we were at seven and a half or so, down to 6%? I mean, that's pretty significant, right? And how much impact does that have on a payment?

00:05:34:12 - 00:06:00:12

Todd Gydesen

Well, you got to think that's about, you know, I mean, just looking at $100,000 mortgage, which there aren't any out there. But if there were, you know, going, that's $2000 a year, 1500 or 2000 a year per 100,000. So, you know, at a $500,000 mortgage, you know, what is that, five times a thousand, $5,000 a year or $450 a month lower in payment?

00:06:00:14 - 00:06:18:23

Todd Gydesen

Just going to one point better. And remember, at some, you know, two years ago, at this point, we were in the, you know, the eighth, high seven low 8s. So it's it's good news. It's more affordable. The question starts to become a, you know, again is it affordable or not.

00:06:19:01 - 00:06:42:19

Joe Reitzug

Right. And I think there's a lot of people out there right now that are in kind of a wait and see mode, even though they might be in more of a comfort level. There's all those external factors, you know, the election and this and that. And, you know, there's actually a lot of job concern as well, especially on the West side of Portland, out in the tech district with, Intel and Nike and some places like that.

00:06:42:19 - 00:06:58:01

Joe Reitzug

If you if you don't have a job, if you're not comfortable with your job, it doesn't matter what the mortgage payment is it. That's a hard thing to get over if you don't have job security. So, hopefully the rates keep dropping and we can see more of a savings with that. But, yeah. Interesting times.

00:06:58:05 - 00:07:28:01

Makayla Mast

I think we talk about this a lot on our podcast, but it never hurts to say it again. Todd has a great website, Vantage Mortgage Group, and they have a live rate calculator on there. So you can go in there and punch in numbers for your own scenario and just see what it's going to look like, for that monthly payment, because I know a lot of people serve on Zillow, and Zillow has those built in calculators, which are great, but they don't update their rates very often.

00:07:28:01 - 00:07:29:00

Makayla Mast

So a lot of times.

00:07:29:03 - 00:07:52:10

Joe Reitzug

And they don't allow you to plug in your personal information, not, you know, personal, personal, but your your situation as in regards to price and down payment and this and that and the other. So I love that website. . You guys have done a fantastic job with that. We'll post that on our, we'll post a link to that, in our show notes so that people can check that out.

00:07:52:12 - 00:08:01:02

Todd Gydesen

Yeah, it's there for use. And again, we don't bite. So if you got some questions while you're on there, if you need any help, you know, I'm not going to hound you. Just him.

00:08:01:04 - 00:08:02:10

Joe Reitzug

He doesn't bite very hard.

00:08:02:13 - 00:08:11:19

Todd Gydesen

We want to Make sure that you digest that information properly and that it's not taken wrong. So, you know, it's very important to get accurate and good information for your situation.

Todd Gydesen

Speaker 1

That's a great tool. 

Makayla Mast

So I'm excited to chat about this one because this is a conversation we're having a lot. But it's fun to bring you in the loop to Todd Gydesen. So we're seeing a lot of move up buyers right now. And people are so concerned about, you know, being able to sell their home and move directly into a purchase without having to do what we call a double move.

00:08:33:13 - 00:08:41:06

Makayla Mast

How can we tackle that on the lending side of things to Make  that a smooth transition for people?

00:08:41:08 - 00:09:05:15

Todd Gydesen

So, buying prior to selling is what I'm thinking we're talking about here. And so there's a whole bunch of ways to do it. And, and some of them are straightforward, which is what's called a cross collateral loan. One of our lenders or a mortgage broker, we've got 40 different lenders and all their programs, and it's kind of a great situation for us to be able to offer all of these things, rather than being tethered to one set.

00:09:05:17 - 00:09:25:01

Todd Gydesen

We've got them all. And, one of the lenders has across collateral Loan, which says, hey, you've got a bunch of equity in this property. How about we leverage that so that you can buy this new property? And then when that other property closes, we'll pay the new loan down and and knock your mortgage payment down. The great news on that program is you don't have to qualify for all the payments.

00:09:25:01 - 00:09:48:12

Todd Gydesen

You just get to qualify for the new payment on the new house. Once the dust settles. So we project that out, and that's off the time. The biggest piece is, is I can afford the new payment once all the dust settles. But I can't afford all three of these payments. 

Joe Reitzug

How long do they give you to sell that first property?  

00:09:48:14 - 00:10:10:02

Todd Gydesen

Right now there's there's not a not limit, there's no not a market time limit.

There are some other programs that do have market time limits there. You know, buy before you sell types of programs or 2 or 3 lenders with those. But now we're getting into a situation where, where they're, the lender is going to provide you with basically the equity for the new purchase, and they're going to guarantee the sale of your existing house.

00:10:10:02 - 00:10:29:12

Todd Gydesen

But if your existing house hasn't sold and for six months, depending on the program you use, they buy it from you at a reduced rate. And so so that puts a little bit more stress. And then also they charge two and a quarter to 2.5% of the sale amount for that type of stuff. So the key thing in all of these is what are the fees.

00:10:29:12 - 00:10:48:12

Todd Gydesen

What's the what's the what is what's the the budget piece to this. Right. So but there's a bunch of different ways to get it done. And if you have the income that allows multiple payments and you got a home equity line of credit and then a new mortgage, and then again, pay things off as a house sells, there's there's just a whole bunch of ways to go.

00:10:48:14 - 00:10:55:19

Todd Gydesen

And I think, you know, understanding your situation a little deeper and knowing all the options is going to be what's key for you.

00:10:55:21 - 00:11:23:18

Joe Reitzug

Yeah. From a real estate broker side. You know, there are so many different strategies you can use as far as, you know, possession and different things to make that all work seamlessly. And this is one of those scenarios like most. And we talk about this all the time. But having the conversation as early as possible with your lender, with your real estate broker, and just understanding what the different options are and getting a strategy that works for you is what's important.

00:11:23:18 - 00:11:50:10

Joe Reitzug

Because having that plan with something like this, is critical. But also until you have the conversation with someone like Todd Gydesen or Makayla Mast, you're just not going to know what you can or can't do, right? So, so that's a big one. I want to jump to the future. Todd Gydesen, you know what do you think the future holds for the housing market from the from the lending side in the next 6 to 12 months?

00:11:50:10 - 00:12:04:09

Joe Reitzug

Everyone ask us, and I'm sure they ask you all the time. Well, what do you see in the next year? You know, or so. And it's always hard to put a finger on it and it changes all the time. But I'm just curious what your take is right now.

00:12:04:11 - 00:12:32:14

Todd Gydesen

My take is I think that, as the economy falters and it's going to a little bit here and we're going to see some ground loss, we're already seeing signs of that and seeing some action on that. Bad news for the economy is good for interest rates. So the question is, is when does that tipping point reach where where the good news and interest rates is outweighing the bad news in the economy and quelling those fears you talk about or and put things into an affordability zone where where people can act right.

00:12:32:16 - 00:12:52:21

Todd Gydesen

So there's a bunch of people right now in houses that, refinanced or bought the house 3 or 4 years ago during the Covid scenario. And, those people are in two and a half, 3.5% interest rates, and they're not going anywhere. I mean, it doesn't Make  sense, right? And, so, you know, why why go pay double for the for a house just because you want to lose a bedroom or or do you want to get it?

00:12:52:21 - 00:12:57:12

Todd Gydesen

You know, but all these people are still getting married. They're still having kids. They're still having divorces. They're still.

00:12:57:13 - 00:12:58:23

Joe Reitzug

Life  Happens.

00:12:59:00 - 00:13:27:00

Todd Gydesen

All these things are still happening. So I got gotta think that there's some built up, pent up demand out there that we just honestly haven't been seeing for the last year and a half, two years. So, you know, it's not like people quit having babies, right? So, so that, you know, the thought is, is that in my mind is that at some point the scale tips on affordability to the point where it's back in play and it's back in vogue to have the conversation.

00:13:27:02 - 00:13:28:00

Speaker 3

Right.

00:13:28:01 - 00:13:49:05

Joe Reitzug

Right. And I you know, like I said a few seconds ago, having the conversation cost you nothing. And it gains you all sorts of knowledge about what you can and can't do. And you know, what your options are and that type of thing. And, you know, it pays to be able to know exactly what you can do. And I don't know if you see this as well, Todd Gydesen, but it it's so funny.

00:13:49:07 - 00:14:11:19

Joe Reitzug

A lot of times when we have these conversations with people that are like, oh, well, you know, we're not thinking about doing anything for a year or so or this or that. We just want to figure out what what it looks like right now. You have the conversation, you lay out the options, and they're like, oh, so we could do something right now, or we can do something if we do x, y, z.

00:14:11:21 - 00:14:21:21

Joe Reitzug

And just that realization is, you know, kind of always kind of a chuckle for me. It's like, yeah, good job on you for having the conversation right?

00:14:21:23 - 00:14:55:13

Todd Gydesen

Yeah. I think the biggest thing that I keep coming back to is, I don't know that it's too early to plan. And, you know, if it's like planning, look at the you look at the purchase you're Making and, and look at the, the magnitude of it's a half million dollars minimum probably in this area. So you know, planning for that is not bad, even if it's a year or two out, knowing your options and knowing your sticking points and knowing your target savings and your target payment and, and, key metrics that are going to get you where you're comfortable.

00:14:55:15 - 00:15:01:01

Todd Gydesen

That's not that's there's nothing embarrassing about talking about that in advance and planning for.

00:15:01:03 - 00:15:09:01

Makayla Mast

Couldn't agree more. So, Todd Gydesen, what advice do you have for first time home buyers right now?

00:15:09:03 - 00:15:28:07

Todd Gydesen

It's exactly that. It's planning, you know. What are you trying to do? Where are you trying to be? What are you comfortable with? Money out of pocket. What are you comfortable with? Monthly. And what does that reversion to for you? Right. What's available in the market? And as Joe Reitzug just said a minute ago, you know, I get into these conversations with people that have a little bit of money saved.

00:15:28:09 - 00:15:47:09

Todd Gydesen

They've got great income and great jobs going on, or growth in their income in their jobs. That's putting them in a comfortable situation. And and now we go backwards and we say, hey, that translates to a $450,000 house. You know, Joe and Makayla you can say, hey, this is what's available in the range you're looking for out there.

00:15:47:11 - 00:16:03:11

Todd Gydesen

And we still haven't done anything. We still haven't spent the money. We still haven't credit. We still haven't anything. All we've done is had a conversation and said, this is a reality that could happen for you or we're not quite there yet. Worst case scenario, there's nothing out there at that price when we've got to wait for things a little bit.

00:16:03:11 - 00:16:06:14

Joe Reitzug

So. Right, right.

00:16:06:16 - 00:16:15:08

Joe Reitzug

Good stuff. Anything else you want to add, Todd Gydesen? Is there any hot news or anything that, we missed that you'd like to include on this?

00:16:15:10 - 00:16:34:22

Todd Gydesen

I want to talk on affordability for just a minute. Here's where things are different than 4 or 5 years ago. There a lot of down payment assistance programs out there. So if your hurdle out there right now is that you don't have money for down payment, you've got the income, you're really confident that you've got good credit.

00:16:35:00 - 00:16:59:05

Todd Gydesen

You can afford a house that's available in the area, but you just don't have the down payment. We need to talk because there's options out there. Some, reading something from Rob Chrisman the other day is a, you know, an industry pundit and somebody that that, provides advice and, and a talking about lack of a better term, but at this point is there's over 2000 down payment assistance programs in the United States today.

00:16:59:05 - 00:17:26:00

Todd Gydesen

Some of them are local and specific, and other ones are more general. And, and, national. So, so knowing what those are and having access and being able to tap into that to get that down payment is going to overcome a lot of the hurdles that some people have these days. So that's number one for affordability. Number two is knowing area, immediate area, median income for your area and where you sit in that scale.

00:17:26:00 - 00:17:55:11

Todd Gydesen

Because if you're below 80% of it, there's reduced interest rates for you if you're a first time homebuyer. So there's some great things out there right now, that are, that are really going to help people who just have hey, listen, we need a better interest rate or lower payment or we need down payment assistance. Those things are actually available.

00:17:55:13 - 00:18:17:13

Joe Reitzug

We have that data. Media in come and salary  around Portland metro, Hillsborough. You know, Oregon City can be all the different places, in town here. So we'll post that for you. Head to the notes, check it out. And like Todd Gydesen said, you know, who knows where you stand with that. But there is a ton of help in the feeling I get is especially from the federal government.

00:18:17:13 - 00:18:40:23

Joe Reitzug

Is that the economists know that first time homebuyers affordable housing drives a large portion of our economy, and the more they can do to stimulate that, the more they can do to make it easier for people to get into a home of their own, the better off we're all going to be. So I expect, a lot more of those programs to be coming down the pipe.

00:18:41:01 - 00:19:01:18

Joe Reitzug

And, we'll certainly talk about them on here. We'll have Todd Gydesen on again. And, and when interesting stuff comes up, we'll have those conversations. But, you know, you just got to keep your eyes open. And like we talked about, make sure that you're having the conversations with a professional like Todd Gydesen and Makayla, to find out exactly where you stand and what the options are.

00:19:01:19 - 00:19:16:03

Joe Reitzug

And there's really no harm in it. Doesn't cost you anything, even if you, you know, have your credit pulled. That's not going to hurt your credit. You know, everyone thinks, oh, I don't want to do that. It's going to hurt my credit, man. Not so much. So unless you're getting your credit pulled every day for like two weeks or something, right.

00:19:16:05 - 00:19:36:05

Makayla Mastayla

Which you would not want to do. But yeah, I'm, surprised at the, affordable housing developments that have been popping up all over Portland. Seems like there's just more and more and we had a buyer that was interested in looking at those, and I was also surprised at how easy the process was. You didn't have to fill out this application and wait.

00:19:36:06 - 00:19:58:01

Makayla Mastayla

You know, for the government to get back to you and let you know whether you qualify, you can actually make  an offer and then you just have to submit this form, prior to closing it. And all it requires is that, you know, there's you make 140,000 or less per household. So pretty reasonable in my opinion. It's a lot of opportunity.

00:19:58:19 - 00:20:04:05

Todd Gydesen

Yeah, it's a little known gem out there, and it's something and I think a lot more people could be taken advantage of.

00:20:04:07 - 00:20:16:03

Joe Reitzug

Nice. Very nice. All right. Well, I couldn't, in this episode without offering condolences to Makayla for what happened last week. And for us.

00:20:16:05 - 00:20:17:19

Makayla Mast

Rude.

00:20:17:21 - 00:20:23:22

Joe Reitzug

Todd Gydesen and I felt horribly for you. I really.

00:20:24:00 - 00:20:25:12

Speaker 3

Hope that, if back there, you.

00:20:25:12 - 00:20:27:12

Speaker 1

Know what you should feel about.

00:20:27:14 - 00:20:30:18

Speaker 3

00:20:30:20 - 00:20:37:06

Speaker 2

You had a good time. You were at the game with family and friends, and that's fantastic. And I'm so glad that you guys had fun things.

00:20:37:09 - 00:21:01:06

Makayla Mast

I did have fun, but we did lose and it was Covid superspreader event. Now I really thankful. That I had well, to Joe Reitzug tell you that he changed one of my passwords to McKayla loves the ducks for last week. Oh really? He's really been hitting me and he's one of.

00:21:01:08 - 00:21:26:14

Joe Reitzug

Subtle jabs here and there. Go a long way and it's all done with love, Makayla. You know that about whatever. So all right guys. Well hey thank you Todd for for taking the time. We always appreciate your expertise and your insights as always McKayla good seeing you. I wish we were in studio together here, but, all the best to you and your husband and, a quick recovery.

00:21:26:16 - 00:21:33:18

Joe Reitzug

So. All right, guys, that's all we have for today. Thank you so much, everyone, for joining. Have a great day. Take care.

00:21:33:19 - 00:21:35:06

Todd Gydesen

Thank you. Bye.

00:21:35:08 - 00:21:48:09

Makayla Mast

Thanks for joining us today. If you're interested in finding out more about Joe, myself or the Livportland team, you can go to Livportland.com. Thanks for giving us a listen and see you next time on the Off the Record podcast.