1.
“What are some creative — but fully above-board — financing options available today that buyers might not know about?”
2.
“Can you share examples of how you’ve helped buyers who thought they couldn’t qualify find a financing solution that worked?”
3.
“Are there specific loan programs right now that are particularly helpful for first-time or lower-down-payment buyers?”
4.
“How flexible are credit unions compared to traditional banks when it comes to qualifying guidelines?”
5.
“What strategies can buyers use if they have good income but limited savings for a down payment?”
6.
“Are there any assistance programs, grants, or forgivable loans that buyers should be asking about?”
7.
“What advice would you give buyers who are worried about interest rates but don’t want to keep waiting on the sidelines?”
8.
“In your experience, what are the most common misconceptions buyers have about what it takes to qualify for a home loan today?”
9.
“Can you walk us through how a creative financing package might look — maybe using a real-world (anonymous) client example?”
10.
“For buyers who are self-employed, gig workers, or have non-traditional income, what legitimate options are out there to help them qualify?”
11. (bonus)
“What steps can buyers take now — even if they aren’t quite ready — to set themselves up for the best financing options later?”
[Michelle Rene]
Hey there everyone, this is Michelle Rene with Windermere Coeur d’Alene Realty, and I am here with John DeLuca with ICCU, and I’m going to introduce John in a moment, but I just wanted to let you know what we’re doing and why he and I are talking today, is because I feel like there’s so many roadblocks right now, it’s a little difficult for buyers in our market. Of course, we’re in the North Idaho, I’m in Coeur d’Alene, that’s the area that I service in the surrounding cities, with Windermere Coeur d’Alene Realty, and the thing is, I think there’s, while it’s a challenging market, I think there’s some options or opportunities that come because of that challenging market, or ways that you can sort of get around, you know, some of those challenges. So that’s what John and I are going to discuss today, some creative financing options, and I know in the past that kind of used to be a buzzword for like scammy, it’s not, these are above board, they’re legit, so John’s going to go over all that with us.
So anyway, John, if you could take a minute and just kind of introduce yourself and give us a little background on who you are, how long you’ve been in the biz, what do you do?
[John DeLuca]
Absolutely, thank you Michelle. Yeah, my name is John DeLuca. I am a native of Coeur d’Alene, Idaho, born and raised here.
I’ve been in lending, residential lending for 26 years now. I’m with Idaho Central Credit Union. I’ve been with these folks for about seven years.
Best lending experience I’ve ever had. I wish I would have discovered the credit union culture and experience earlier in my career, but I’ve occupied just about every corner of residential lending that you can. I was a wholesale lender, I was, I own my own brokerage, I’ve worked for the big box banks, you know, like Wells Fargo, Bank of America, and I’ve worked for the mom and pop shops, and so I’ve had exposure to just about every different approach you can have to residential lending, and so thank you for the opportunity here to kind of shed some light on this challenging and unpredictable market.
[Michelle Rene]
Yeah, well, it’s challenging, right, because one, prices are high, and you know, I think some people thought, well, I’m just going to wait it out and wait until, you know, prices kind of crash down a little bit, or at least go down, you know, a good chunk. Well, that didn’t really happen in our area, and then, of course, the interest rates, I mean, obviously they fluctuate, so, you know, we’re not going to get into, like, the exact numbers right now. The point is, it’s, you know, when you have the high prices and the higher than people are used to interest rates, I think a lot of people think they have to wait, they have to wait, wait, wait, and so one of the things I’m kind of on a mission to help people understand, well, there might be, maybe you do have to wait, that might be your answer, but let’s explore some other options and see, you know, is there something else we can do, like maybe get some seller credits or pay less or buy something maybe lesser value than you would have bought before, so those are some kind of obvious things, but in terms of financing, so my first question is, like, what are some, you know, creative but fully above board financing options available today that someone could at least explore and look at?
[John DeLuca]
Great question. Being part of a credit union, I have a lot of tools in my bag to be able to help people, so when you say creative, I take a look at the entire picture and nowadays, taking a look at the entire picture, the income and the liabilities and the down payment and the closing costs and the timing, it’s like a Rubik’s cube and you have to look at all the pieces. Creative, here at the credit union, I’ve done things like we’ve refinanced people’s cars to get a lower interest rate on and a lower payment, maybe extending their term or a lower interest rate on their car to bring that payment down to give them more buying power.
We take a look at people that have funds available that they wanted to maybe put down, maybe take and reallocate those funds for paying off consumer debt, paying a car down or paying a credit card off because when you have a 30-year term, it’s $6 per thousand when you finance a house. On a 30-year term, it’s about $6 per thousand and, of course, on a revolving credit card or an installment loan like a vehicle, it’s going to be a lot more than $6 per thousand, so you can greatly increase your buying power by reallocating those funds or you don’t have any funds to reallocate. There are a lot of different programs that allow for down payment assistance, either 100% financing or a first and second mortgage combo that allows to help out with the down payment and the closing costs.
A lot of them where the buyer only has to bring in $1,000 regardless of the price. Yeah, and we’ll get into- That’s awesome. Yeah.
[Michelle Rene]
Is that in a perfect world where their credit’s amazing, they’ve got debt to income is all dialed in?
[John DeLuca]
That’s a perfect world, but we can even work with an imperfect world, specifically through IHA. Idaho Central Credit Union, we’re one of the largest broker. We broker more loans to IHA than any other lending institution in the state.
[Michelle Rene]
Idaho Housing, right?
[John DeLuca]
Idaho Housing, right. And as long as you have a 620 credit score, we can provide down payment assistance and closing cost assistance. So you might just mention if they have perfect credit, if everything lines up, that’s easy, but we can even make not easy work.
[Michelle Rene]
And if I remember correctly with Idaho Housing, you have to make a certain amount, but there’s also a limit, right? So you kind of have to be in that range for income.
[John DeLuca]
For income, right? Currently it’s under $160,000 is the maximum you can make in the state of Idaho for being able to get the down payment assistance.
[Michelle Rene]
And by the minimum, I mean, you have to be able to qualify for whatever, but then you can’t make, your income can’t be over X amount. And you’re saying 160 for a couple?
[John DeLuca]
Yep, exactly.
[Michelle Rene]
For a couple? Okay.
[John DeLuca]
For a couple of family, yep. Household. A household.
So is that for a single also? Single person? Yep.
For single household. There are other programs, if you drill down within IHA, they have some very specific programs where you have to be within 80% of the AMI for some of their preferred programs, but just speaking, you know, globally from a federal, yeah. Yeah.
160,000 is kind of the cap for their programs that they allow.
[Michelle Rene]
And is there a downside of going with Idaho Housing? Like, are the rates a little higher or?
[John DeLuca]
No, rates are great. The rates are fantastic. There’s really no downside.
I’m glad that we have the capacity to broker to them because they got really narrow. They used to be open for everybody, but then a couple of years ago, they became very exclusive with who they do business with. And luckily we’re one of their value partners.
[Michelle Rene]
Okay. Awesome. Good to know.
Okay. So my next question, can you share some examples of how you help buyers who thought they couldn’t qualify for financing with a solution that worked for them?
[John DeLuca]
Lots of them. I mean, lots of people call in, they think there’s a lot of misconceptions out there. And you kind of alluded to that.
Some people think they have to be on their job a year or two years before they can use that income to qualify. I just did a loan for someone who doesn’t even start their job for 60 days, but we had a watertight job offer letter that had no contingencies. And so we’re able to get them a house with no money out of pocket.
And they didn’t even technically start their job yet. So there are so many different ways to be creative. But I just had someone that I helped get a townhouse and it was, this was very specific because we have here at Idaho Central Credit Union, we have portfolio money, meaning it’s our own money.
And so we kind of write the rules. Now, I just had a situation where I helped someone buy a townhouse that they couldn’t occupy right away. So technically speaking, it was a non-owner occupied transaction, but because the timing was so close that we’d portfolioed the loan and then ran it as an owner-occupied property, which much better terms, much lower interest rate, much lower down payment.
But we’re able to take a look at the situation, portfolio it and make a real world decision. Whereas unfortunately, sometimes with underwriting guidelines, logic doesn’t always apply. You know what I mean?
[Michelle Rene]
It doesn’t fall in this exact parameter.
[John DeLuca]
So sorry. Exactly, exactly. So sometimes we’re able to step out of that box if it makes sense and make loans that other people wouldn’t, just because again, we don’t have to, you know, we can see the forest beyond the trees.
[Michelle Rene]
Okay. Okay. So can you talk about like low down payment options or no down payment options?
We’ve kind of already discussed Idaho housing, but what else you got?
[John DeLuca]
Yeah, USDA has some fantastic programs with no money down. We do a lot of work with USDA. That’s becoming a more and more, that’s a shrinking pool just because it’s rural development.
And here in Kootenai County, rural is becoming a lot more difficult because we’re expanding so much.
[Michelle Rene]
So let me just pause real quick on that topic. So some people might not understand. So most loans are just kind of, it’s out there available if you qualify and hit all these boxes.
With USDA, it’s based on the location of the property, right? So that’s what you’re talking about.
[John DeLuca]
Thank you.
[Michelle Rene]
It’s done where it’s located.
[John DeLuca]
Exactly. It has geographic locations as well as income parameters. So we don’t, you know, I do those loans, not a lot, because it has to be, all the stars have to line up.
But specifically, we here at ICCU, we have some portfolio product that nobody else has. We have a 40 year loan. It’s a 40 year M, meaning that we stretch the payments out over 40 years.
So it makes the payments a lot easier to make, number one. And it’s a hundred percent financing with no mortgage insurance on a 40 year term. Yeah.
No prepayment, no arm. Yeah. No, no balloon.
It’s amazing. And it’s as long as you have a 700 credit score. Yeah.
And then we also have a five-year arm, same thing, 100% financing, no money down, no mortgage insurance, 100% financing. And it’s a five-year arm. The benefit of that, a lot of people hear arm or- I know, you’re like, the red flags are going up.
Just, yeah, just the rate mortgage, especially if you’re, if you, if you live through the subprime craze, where they had those, those really prohibitive, you know, two-year arms, it’s a five-year arm. And the philosophy behind that, why some people choose that and they wouldn’t maybe in a normal economic environment, is this is, rates are going to go down. That’s totally opinion, that’s speculation.
And so people want to get in with a much lower rate on that five-year arm. And then sometime in the next five years, you’re pretty much betting that rates will go down. But yeah, we have several products that allow for 100% financing on the five-year arm and the 40-year with no mortgage insurance, the buyer only has to bring in a thousand dollars of their own money.
[Michelle Rene]
The seller can- If they’re not comfortable with the arm, they can do a fixed option for that 40-year?
[John DeLuca]
100%, absolutely. And the, and the reason why someone would choose a five-year arm over the 40-year is because the five-year arm has a much lower rate. But, but both are, but both are available.
[Michelle Rene]
Okay. Okay. You said something in there.
Oh, back to the USDA. Does it, can you do those on the reservation? That’s no problem.
[John DeLuca]
Or is it? We, we don’t, we don’t lend on the reservation just because of, yeah, specifically as, as an institution, we don’t do any loans on the res just because of the, the, the title work, the title verbiage. It, it’s not something that we’re comfortable with.
[Michelle Rene]
Okay. Okay. That’s cool.
I know I threw that one in there. It just dawned on me. I think someone was looking.
So, okay. How, how about can you just talk about the difference in flexibility or programs or whatever? I know you can’t speak to the other institutions, but like, why would someone look at a bank versus a credit union or vice versa?
[John DeLuca]
Yeah. Yeah. And I, and I, like I was saying at the top, I, I, this credit union experience has been, has been amazing.
What we offer that banks don’t, and then maybe brokers don’t, number one, we service all of our loans, except for our government loans, like FHA and VA, those we, we sell, we, we service all of our loans. And so you’ll always make a payment to us. Number one, number two, we can, like I mentioned before, we can sometimes take a situation that doesn’t fit completely in that Fannie Mae, Freddie Mac box.
And we can, we can portfolio that use our money and do make sense decisions. We specifically, when it comes to things that aren’t quite, if like, if you’re a couple of months shy of, of, of, of hitting a certain mile post for it to be usable in the, in the, in the Fannie Mae Freddie Mac role, we can make, we can make judgment calls on that, but that’s where we have our flexibility. And then also being able to work directly with our underwriters.
This is the first place I have ever worked in my entire career, where I can call the underwriters and talk to them about and say, and, and go over the file and convey the human story. Every other place I’ve ever worked, and this is true of every, I’ve said everywhere I’ve ever worked, you just send the file in and then the underwriters look at it. And it’s like a resume.
It’s like a, it’s an anonymous resume. They look at it and go, well, these facts don’t line up. So stamp, turn down.
Whereas I can call my underwriters and I can say, Hey, Brian, I just talked to Michelle and here’s the situation on paper. It looks like this. Here’s the full story.
So we can talk about it and we can do, we can, we can work with the client. Sometimes it’s just about starting the conversation and maybe it’s, we can’t buy right now, but now that we’re talking, do this. And in two months, three months, I can absolutely help you buy a house.
Yeah.
[Michelle Rene]
I think that’s such an important part of this process. I think a lot of people think they’re not going to call their lender until they’re like, they found their house or at least, you know, they’re, they know like every all, all the stars aligned, everything’s ready to go. And now we’re getting them involved.
I feel like they could, you guys can, should be involved way early in the process, even if they’re not ready to get a game plan going and say, okay, well, you know, it’s not looking great for us right now. We need to work on our credit or we need to save some money or whatever the situation is. Maybe it’s going to happen in a year.
And obviously they know interest rates, you know, will either go up or down or, you know, something will change there, but at least they have their game plan to know, okay, these are five things we need to work on and, you know, checking each one off the box. I just think it’s, it’s like part of your own financial planning, not just like, Hey, I need to go apply for this mortgage.
[John DeLuca]
I could not agree more. I have a long list of, of, of project clients that I’m working with that like a lot of people don’t realize that cash doesn’t exist in the, in the, in the world of lending cash literally doesn’t exist. If you have a hundred thousand dollars in your gun safe, it literally, I, we can’t recognize that until it’s been in an institution in your name for 60 days, period.
I have a situation right now with some folks, they literally have a hundred thousand dollars in their gun safe and they want to buy a house. I’m like, no, I can’t use that until it’s been in a bank for 60 days. And they had no idea.
So now we’re game planning and we’re talking. I said, take that money, put it in the bank. And in 61 days, we will be race ready to buy a house.
They had no clue.
[Michelle Rene]
I had a client who called me and he’s like, I want to buy a house, like literally with cash. Like I have bags of cash. And he said some, you know, colorful words, but he’s like, they won’t let me buy a house.
I have the money, but you can’t just like walk into the bank and say, here’s, you know, 500 grand.
[John DeLuca]
Yeah, it does. Yeah, no. And again, misconceptions, because most people have two to five mortgage events in their life, either buying a house or refinancing.
And it’s, and the rules change so much. That’s why it’s good that, you know, you and I working together as a team, we become trusted advisors. Right.
[Michelle Rene]
And, you know, I mean, not, not everyone’s in that guy’s situation, right?
[John DeLuca]
Yeah.
[Michelle Rene]
Floating around more, more so kind of what I was alluding to is, you know, if, if you’re really like, if it’s not an option for you right now, it’s so good to get the plan in place so that you know, what you’re working toward, it will kind of change your behavior sometimes on the things that you do. So if you know, oh, we’re trying to save whatever your numbers, you know, we’re trying to save 50 grand right now, or 100 grand, whatever your numbers. And maybe you won’t, you know, take that big trip, or maybe it will be, you know, a little more modest than you had planned, because you have this plan in place.
And, and you’re working, you know, step by step to reach your goals. So anyway, I just like to bring that up, because I think it’s some people think about, like, when they’re going to go, go for their mortgage. One, they think, oh, I don’t want them to, you know, all these people to be pulling my credit.
Well, it doesn’t cost you anything one to sit down with someone and map out a plan. And also, you don’t need to pull their credit. I mean, a lot of people kind of know what their credit is.
So if you’re, if someone comes you and says, Hey, I have a whatever 720 credit score, or a 640, or whatever the number is, then you can kind of game plan with them, right?
[John DeLuca]
Like coach and coaching. Absolutely. And nice thing is here at ICC when I take an application, the first thing I do, I do a soft credit poll.
So I go all through repositories, but it doesn’t count against their score. And it doesn’t show up. It’s a soft credit poll, it’s kind of a 30,000 foot view, look at their liabilities to know what options are available.
So there’s ways around that, too. But you’re right. Or even even if they even if they don’t want a softball, we can just again, start the conversation.
[Michelle Rene]
Yeah, yeah. Okay. All right.
What about assistance programs, grants, forgivable loans? What should what should buyers be asking about? What should they know about?
[John DeLuca]
What should they know about they should know specifically about the IHA program, that is the best down payment assistance. Of course, we have the 100% financing through Idaho Central. But if you if you have less than a 700 score, there’s a ton of options available specifically through Idaho housing for the assistance programs, down payment assistance grants.
There’s even you know, tax exempt programs for a lower interest rate. But it all goes back to the loan officer and it goes back to how, how, how knowledgeable that person is, how much time they have in the chair and and experience because when you know, when I was new, you know, 25 years ago, I’d get a loan and I wouldn’t know what to do with I would go is this conventional or FHA. But now, given that I have a quarter of a century of knowledge and seeing applications every day, I can look at it and go, okay, I have 12 options for this person, given my conversation with them and their situation, option A and B is definitely the best.
And then I talked to the client, and I let them you know, hey, A and B, here’s we should do this, or we should do this. And here’s what the numbers look like. And then, you know, using technology, I can send them cost estimates.
And we can break that down and make a decision together.
[Michelle Rene]
Okay. Okay.
[John DeLuca]
But as far as like grants, or, I mean, when you think about forgivable loans, they’ve, they’ve really gone away from the forgivable loans as far as there, there are some that are available, like niche products, like I’m doing a loan for someone now who belongs to a Native American tribe, and they’re being given a grant. But again, that’s super nichey. They don’t, yeah, like IHA used to like have forgivable grants, like, oh, hey, we’ll give you X amount of dollars for your down payment.
And if you stay in the house for seven years, we won’t, you don’t have to pay it back. They don’t do that anymore. They, they have now yet their second mortgages that you can use for down payments and closing costs, but you got to pay them back.
[Michelle Rene]
Okay, gotcha. Um, well, but related to first time homebuyers, um, what is what’s the minimum down payment like for FHA or?
[John DeLuca]
Well, is it three and a half? Well, three and a half, three and a half percent, but through IHA, you can, you, we can do the down payment assistance for the down payment and the closing costs. And IHA requires them to bring in one half of 1% of the purchase price.
So if you’re buying a $400,000 house, you’ve got to have 2,000 of your money. And then through, uh, through IDO central, our first time homebuyer, a hundred percent financing, we only require a thousand dollars of the client’s money.
[Michelle Rene]
So a thousand bucks, you’re getting into a house and you’re getting, is that market interest rate?
[John DeLuca]
Like, would you be getting the same type of interest rate if you were to go with a little higher on the 40, but it’s a longer term and there’s no mortgage insurance. So it ends up benefiting you because the absence of that mortgage insurance mitigates that slightly higher payment with a slightly higher rate. But then the five-year arm is much lower than conventional, still a hundred percent and no mortgage insurance.
[Michelle Rene]
So what about the IHA option?
[John DeLuca]
IHA option rates are a little bit higher, but not substantially like probably a quarter point higher than if you had the three and a half percent yourself.
[Michelle Rene]
Okay. Okay. So if you have a three and a half percent, if you have a little money down, you can, it might be better to go because of the interest rate with like an FHA.
Absolutely. Yes.
[John DeLuca]
Yes. Skin in the game. Definitely.
If you have a vested interest in your, your coming in with your own funds, it does make for better terms for sure. Yeah.
[Michelle Rene]
Okay. But look, you can get in for one half of 1% through.
[John DeLuca]
Oh no. I, people all the time they call, I gosh, I talked to some guy the other day. He’s like, what do you have for down payments?
I don’t have much. I’ve only got like 40 grand. I’m like 40 grand.
Holy cow. That’s 39 grand more than the last guy I talked to. So let’s get you a house.
[Michelle Rene]
Nice. Okay. Talk to me about, you know, we, we mentioned obviously interest rates are such a big topic.
They’re in the news like literally every day you go up and down and then there’s some crazy thing that happens. And I don’t know, people I think are a little nervous. And so they’re just kind of sitting on the sidelines, but what about for the people they’re sick of sitting on the sidelines?
They know they want to get in. What advice would you give them?
[John DeLuca]
I always lead with the, my father was a real estate agent. He used to use this expression all the time. And I thought it was corny at the time and I haven’t used it for years, but it’s come back and it’s relevant.
And again, it’s really corny, but marry the house, date the meaning, find a house that you want to live in, that you want to raise a family in, that you want to fix up, that you want to, that you want to own because interest rates are, are, this is temporary. This is a chapter. This is a chapter, but buying a house specifically in the Pacific Northwest, in the Coeur d’Alene area, we’re still appreciating like crazy.
And then you can look it on, you know, every website will tell you that we’re still appreciating. We are not in a depreciating market. So it’s a mistake to sit on the guidelines, sidelines.
And like you said, Michelle, I’m gonna wait for prices to go down. Prices aren’t going down because the supply and the demand curve, supply is here. Demand is here.
Everyone’s moving here for our weather, our politics, our water, everything where this is utopia, but it’s a mistake to wait because from an investment perspective, we just keep appreciating. If rates go down and they will, my opinion is, and this might be yours too, prices will go up because again, with the supply. So more competition too.
There you go. More competition, more bidding wars like we saw during the COVID times. So I really think that it’s, it’s a mistake to wait for the rates to come down because they’re going to be, we’re going to be in this high rate environment for a little bit.
Like you said, every time we turn around something, a new report, the CPI report comes out, the bond market, the terrorists, the war across the pond, everything affects our market. And it seems to negatively affect our market. And even when the feds are promising that, hey, we’re going to make efforts into lowering the federal lending rate and hoping it trickles down, and then America’s holding their breath.
And then to your point, something happens and rates stay kind of where they are. So I think it’s better to buy now, hope your home is going to appreciate. And then when rates eventually come down, because they will, because they always do, you can refinance and get a much more comfortable payment, but you secured a home, one of the hottest markets in the United States.
[Michelle Rene]
Right. And to your point about, you know, we’re making some assumptions here, but I feel like they’re educated assumptions about the growth here, the supply and demand. You know, I’m sitting here in my office on First and Sherman, and right now, this minute, there’s two cranes, giant cranes, and there will be a third here pretty soon.
I mean, there’s so much development here, right down on Northwest Boulevard, another one, you know, it’s just, there’s people obviously, you know, the demand is there. So they’re building the new construction and gosh, there’s so many things I wanted to touch on. Anyway, the point is, it doesn’t seem like or feel like based on the current market activity, things are just, you know, prices are going to drop off the cliff.
That’s probably not going to happen. Probably also not going to happen as interest rates going way back down where they were in the, you know, threes, and even sometimes in the twos, right? So, you know, are, will they go into the fives and fours?
I don’t know. But it’s, it’s like, if you’re able to make it work based on whatever today’s current rates are, and I have some tips on how to get those rates down, just from like, in my role as an agent, but if somehow you can make it work, there’s also the longer term tax benefits to individual purchasing, right? So that stays with you.
You know, as you own these properties, and maybe even you have a game plan to live in it for a year or two, or however, you know, short period of time. And then if you have the resources to buy something else, now you can maybe rent this one out. And now you’re starting to do like a wealth building process.
Maybe it’s not one or two years, maybe it’s five years, and then you do that, right? But as far as like, battling the higher interest rates, I don’t know if, you know, we had it in our notes to talk about this. But one of the things that I think people don’t realize is when you go to make that offer on a house, you know, we can, but one of the things that I think people don’t realize is when you go to make that offer on a house, you know, we can ask for whatever we want, right? It doesn’t mean they’re going to give it to us, but we could always ask in the offer for closing costs to bring down a rate, right? To buy down the rate.
So if you can explain that to people in a minute. And I’ll just say, I just want to add that that’s, you know, with sellers that own the house and it’s a resale home, but if you decide to go new construction, there’s even kind of some more almost, you know, assumed benefits of that with the builder offering closing costs. So you can use those funds, right?
So can you speak to that? Like if a builder says they’ll give you $10,000, how can that be used?
[John DeLuca]
Yeah, I’m glad you brought that up. It’s called buying the rate down with discount points. There’s so much vernacular that goes around with lending, you know, discount points, origination points, buy down.
So essentially what you’re doing, you’re essentially just buying the rate down by pre-paying a little bit of interest. And if you can use the builder’s money, all the better. So let’s say that you qualify for a rate of, you know, I’ll just make up an example, six and a half, and that’s a free rate, meaning that that’s the rate you get without any origination or buying it down.
But in that example, the builder gives you $10,000. You can use that to buy the rate down. It fluctuates on what the buy down options are, but in that scenario, you might be able to say, you know, buy it down to maybe 6% and you have a half point better rate using their money to pre-pay that interest to buy the rate down.
There’s also a 3-2-1 buy down. I don’t want to get too far in the weeds on that, but suffice to say you can use other people’s money to make your financing terms much better. And that’s something that a seasoned agent like yourself can help your buyer negotiate.
[Michelle Rene]
Right. And then, but sitting with you, maybe they use a portion of those funds toward the rate buy down or a portion or and a portion toward the actual closing costs, right? So they’re coming in with less money to take out.
[John DeLuca]
Absolutely. And then again, then that goes back to, you know, experience and being able to see the whole picture saying, okay, we’ve got, you know, $10,000 from the builder that we can use for buy down and closing costs. Let’s take the money that you were going to put down perhaps as a down payment or for your closing costs.
Now that we have a lot of those covered, let’s pay down maybe some of your consumer debt and increase your buying power and then still utilize that builder money. So many different ways to twist the Rubik’s Cube.
[Michelle Rene]
Okay. All right. In your experience, what are the most common misconceptions that buyers have when it comes to qualifying for a loan?
[John DeLuca]
All the time, down payment, down payment, down payment, down payment. Everyone thinks that they’ve got to have, you know, a lot of people still think they have to have 20% down. I want to buy a house, but I don’t have 20% down.
A lot of people think that, you know, that they need, it’s all over the board, but 20% is the most common misconception. And that, which we’ve covered, you know, greatly that we can help you there. You don’t need that much to buy a house these days as far as liquid cash, number one.
Number two, credit. People think that if they don’t have like a 780 credit score, they can’t buy a house. We can work with down to, you know, a 620 credit score with FHA and even lower than that with some compensating factors.
But you don’t have to have perfect credit. You don’t have to have a ton of money in your pocket to buy a house. And then third, job time.
A lot of people have misconceptions about job time. They think, you know, gosh, you know, until I’m on this job a year, I can’t buy a house or, oh gosh, I just started. I’ve only been on this job a week and I’ve had five jobs in the past two years.
As long as you don’t have any gaps in there and there’s no variable income components, we can work with that all day long. And it all goes back to communication. Like you and I work together as a team with the client, what they want and how we get them there.
It’s all about the conversation and establishing that relationship that maybe it’s now, maybe it’s later, but it’s all about starting the conversation.
[Michelle Rene]
Yeah. Yeah. And getting some planning.
Okay. And obviously every situation is different, right? So there’s no, none of this is like cookie cutter.
This applies to everybody. There’s the things you’ve already mentioned, like, you know, credit score and down payment. And, you know, we touched on debt to income a tiny bit, but the other thing is people have different kind of, like the job situation is evolving a little bit, right?
Like we have maybe some part-time, you know, one person’s part-time or maybe they’re doing some gig thing, like, I don’t know, Uber or some side hustle business. And then you have maybe a W-2, you know, one of the spouses is W-2 or, but I just think like this gig economy is such a big thing now. So can you address like, how do you handle, you know, some of that when it’s mixed in with W-2 versus does it matter if it’s self-employed, you know, where do you start?
What do they need to know?
[John DeLuca]
That gets tricky. That’s a lot. That’s a big question.
[Michelle Rene]
That’s a big question. I know. Sorry.
[John DeLuca]
Yeah. Yeah. It’s a big question.
It gets, when it comes to self-employment, again, that comes back a lot. It comes back to experience, being able to take a look at maybe somebody who’s an S-corp or they’re a Schedule C and they have a very diversified income. So you have to really take a look and break down and know what you’re looking at to get every penny of income out of there.
But going back to like the side hustle stuff and the gig income and the 1099 and maybe self-employment with W-2, it goes back to, again, it goes back to experience and knowing what you’re looking at and what can work and what can’t work. And knowing what can’t work because I believe in delivering good news and bad news at the same speed. If I look at it and go, hey, I’ve got this, you know, I got this W-2 job here and I’ve got this, you know, it’s kind of seasonal gig here and I’m driving Lyft over here and I’m doing this and I just started doing this.
I can look at it and say, no, that’s going to work. The W-2 income is going to work. All this side stuff.
I don’t have enough history to be able to present this to the underwriters to say, number one, this will continue. Number two, this is what they make because even the borrower couldn’t tell you what they make because it’s different every week, day or month. So, but if there is a situation where like self-employed, I run into this all the time.
People are self-employed and you look at their Schedule C or their S-Corp and you take a look at everything and their gross receipts, the money they take in, they take in a ton, but they’ve got a very creative tax professional. So you get down to the bottom and you’re like, okay, well you took in, you know, half a million dollars in gross receipts, but your income is zero or your income is negative a hundred bucks. And they’re like, oh yeah, because then I don’t have to pay taxes.
Well, unfortunately, most people, and unfortunately, I am in that category. I can’t really work with that. I can’t create income when nothing has been shown on your taxes because we pull tax transcripts and that’s what we use.
But I have a lot of relationships outside of the credit union. I refer people all the time. I’ve got friends that are brokers, peers that are brokers.
There’s bank statement programs. Again, these are not, this is not something that Idaho Central Credit Union or I can offer, but I can refer people. If you have, if you’re self-employed and you run a lot of money through your bank account, but your taxes show zero, there are still programs for you.
It might be a little higher interest rate. It might require more of a capital investment. You know, that, that, that you, you kind of get into a world where you’re going to have a lot of skin in the game and a slightly higher rate, but you’re also that same person who doesn’t pay any, really any taxes.
And so there’s give with the take. And it goes back to what dad always said, no free lunch.
[Michelle Rene]
Yeah.
[John DeLuca]
But, but, but there are options.
[Michelle Rene]
That’s something you can necessarily, you could not necessarily help them with, but you can point them in the right direction of some reliable people that you’ve worked with in the past that can maybe help them in their situation. Right. Okay.
[John DeLuca]
Exactly. Just like when people call and they want to buy a manufactured home on leased land, we don’t do that, but I have people that I can refer them out to. So if that’s what they want, and that product type is not something that I can help them with, I can at least direct them somewhere that I can trust.
[Michelle Rene]
That’s set as real property. I’m sorry? Can you do a manufactured that’s set as real property?
Yep. We can do a hundred percent financing on that. Oh, okay.
Yeah. Nice. Yeah.
There was something else that came up. Oh, you had told me, do you want to talk about this? The, so if the interest rate goes down, you have a program.
What’s, what’s that about?
[John DeLuca]
Well, it’s something specific to ICCU. It’s called our rate modification, rate modification. This is available with our portfolio loans.
And when I, when I mentioned portfolio loans, again, that is where we use our own money, like our jumbo products, our land loans, our bi-weekly loans, our first time homebuyer loans, the 40 year and the five-year arm. If we use portfolio money, as soon as that loan funds, for the life of that loan, once a year, you’re able to take advantage of whatever the market rate is for $500 total. There’s no requalifying, no appraisal.
So literally let’s say I, I buy a house right now and the interest rate is, you know, 6.75 and I buy the house. And then a year later, the rates drop on that exact same product to 5%. I can call up my loan officer and say, what are rates on that?
Hey, rates are at five. I’ve got 6.75. You can write one check to ICCU, fill out one piece of paper, and then your rate is now five for the rest of the term of the loan. And you can do that once a year, once a year.
Yeah. It’s something no one else offers. And it’s specific to our portfolio loans where it’s really beneficial is the jumbo loans.
Cause if you have a $2 million loan and you can refinance it once a year for the life of the loan for 500 bucks, it’s crazy. That’s awesome. Yeah.
It’s a great feature.
[Michelle Rene]
You mentioned land loans. So do you do any land or does it have to have the services on it or?
[John DeLuca]
Great question. We do, we do land, raw land. It doesn’t have to have any improvements, no water, no septic, no perc test, no nothing.
The only things we don’t like in land are if it’s commercial, it’s only commercial. Our commercial department does, but not the residential side. Two, if it’s income producing, like if you have a big chunk of land and you’re leasing it out to your neighbor who has cattle, we don’t like that.
Number three, if it’s, if it’s, if there, well, certainly if there’s no access, but if there are no improvements available ever, then, you know, like, like off grid, um, we don’t do that. Like, like if you want, like, I want to buy, I just had one that someone wanted to buy 15 acres up in Pritchard. And, uh, so can you get an improvement to it?
No, no, it’s going to be all off grid, cistern well, and, and solar panels. We don’t do that. We like to lend on buildable lots, but I would say 99% of the ones that cross my desk are buildable.
So, but yeah, 20% down only.
[Michelle Rene]
Oh, 20% down. Okay.
[John DeLuca]
We have 30 year terms, 30 year terms with 20% down, no improvements. Okay. Nice.
That’s great.
[Michelle Rene]
Are improvements, are the terms different?
[John DeLuca]
Uh, no, if there were improvements, yeah, that’s good. I mean, it’s, it’s, it’s, it’s better for the buyer because then you don’t have to roll the dice hoping that, you know, you’re going to find or that it’s not, you know, 500 feet deep to find water.
[Michelle Rene]
Yeah. Okay. Awesome.
Well, I learned something new in this call. I didn’t actually know you guys did manufactured at all.
[John DeLuca]
Yeah. Yeah. Double wide on real pro as real property is, um, yeah.
As long as they’re, uh, they were built after July 1st, 1976 and they’re a double wide all day long.
[Michelle Rene]
Okay, cool.
[John DeLuca]
Yeah.
[Michelle Rene]
Notice look at the pen.
[John DeLuca]
I’m holding a little ICCU pen. I like it.
[Michelle Rene]
All right. John DeLuca, super helpful information. Is anything, should we, is there anything we should touch on before we sign off?
[John DeLuca]
No, I get that covers it. Uh, just, yeah, just, uh, yeah. Give me a call.
And again, it, it really does go back to the conversation and the relationship. Don’t be afraid to reach out to your real estate professional or your, your lending professional to just have a conversation. You don’t have to do an app.
You don’t have to pull the credit. You can just have a conversation. And you know, uh, the, between the, you and I, I mean, the years of, of service that we have in the years of experience, we can really help like you you’re like, Oh gee, you know, under my belt, but not as many as you are.
[Michelle Rene]
I’ll get in touch with you.
[John DeLuca]
Uh, Oh, best way to get ahold of me is, uh, my cell phone, which is 2 0 8 7 1 9 1 0 1 6, or email me at, uh, Jay DeLuca at ICCU.com. And you can find me, you can find me on the ICCU.com, uh, webpage too.
[Michelle Rene]
Yeah. You’re not hard to find. It’s not like John Smith.
So yeah. DeLuca is kind of easy, but when you, when you Google that with ICCU, he’ll come right up. So anyway, I’ll obviously I’ll put the links in, you know, wherever I’m sharing this, but, um, awesome.
So thank, so thankful that you took the time to do this. I think it was helpful maybe for some people.
[John DeLuca]
Yeah. That’s always great talking to you.
[Michelle Rene]
Yeah. There’s so many more options out there maybe than they really thought.
[John DeLuca]
It there. And again, even if there aren’t right now, we can, we can find it together.
[Michelle Rene]
Yeah. Okay. All right.
Thanks, John.
[John DeLuca]
My pleasure, Michelle.
[Michelle Rene]
Okay. Take care.
[John DeLuca]
Take care.
I am a lifelong native of Idaho and my family and I are proud to call this beautiful state “home”. I’ve been in the mortgage business for 26 years and I love working with people to realize their dream of home ownership. Here at ICCU we have the perfect combination of team, products, and a member first philosophy to provide you with an unbeatable home buying experience. Give me a call or send me an email and let’s get started. I look forward to exceeding your expectations and getting you into your first or next home!
