Fear and Lending in Las Vegas: Mortgage Pitfall with Gregory Cook

Unlock the door to your dream home as we navigate the vibrant and ever-shifting sands of the Las Vegas real estate market with the expertise of Gregory Cook from Castle and Cook. This spring heralds more than just the high pollen counts; it brings a whirlwind of activity with a tighter inventory of homes and a bloom in mortgage applications. Tune in to ride the wave of increasing home sales and price adjustments, and discover whether you can still charm concessions from sellers as competition heats up.

As the complexities of the homebuying journey unfold, we dissect the unique challenges that lawyers face when leaping between firms — an often-underrated game-changer in maintaining loan qualification. Hear firsthand about the underwriting minefields, from expired credit reports to the sneaky impact of HOA fees, and learn why keeping your lender in the loop could make or break your purchase. Moreover, we're spilling the tea on why opening new credit lines amid your homebuying quest might just be the riskiest game of Russian roulette you'll ever play.

Wrapping up with a flourish, our weekly real estate roundup ensures you won't get blindsided by mortgage lending pitfalls. We give you the lowdown on keeping your financial house in order, from the perturbing effects of large pre-closing purchases to the subtle nuances of soft credit pulls. Stay sharp and prepared as we equip you with the savvy to preserve your all-important debt-to-income ratio and sail smoothly to closing day. Remember, a stitch in time saves nine, so subscribe for your weekly dose of real estate wisdom and join us every Thursday at 9:30 AM.

Transcript

Speaker 1: 0:15

Hey, las Vegas, welcome to Vegas Realty Check. I'm your host, tiana Carroll, and thanks for joining us again for another episode of Local Las Vegas News. Today we have a very special guest, actually a returning guest. If you've been here before, then you know that we have Gregory Cook from Castle and Cook. He is one of our preferred lenders, worked many, many years in the business here in the valley and is quite knowledgeable. Matter of fact, you've come about once a year to the show and sort of give us an update of what's been going on. How have you been?

Speaker 2: 0:45

I've been good, been good. Yeah, I think this is about five times, five times for me, something like that, yeah.

Speaker 1: 0:49

Wow. So more than once a year, because I think that we're in three and a half years now of the show. That sounds crazy. It doesn't feel like it's been that long, but it has. So today we got all of these alerts. We're here in Vegas that spring is here because the pollen count is insane and the weather bug was sending me notifications all morning that there's allergens in the air. They did not have to tell me. My eyes were swollen when I woke up. Red itchy. It got you. Huh, it got me. I don't need those alerts. I'm jealous of people who need the alerts like oh, there's pollen. Oh, I don't have allergies.

Speaker 2: 1:24

It doesn't affect me, it'll find me soon enough. So, yep, spring's in the air and we both got our spring colors on. I know we're matching today.

Speaker 1: 1:31

So if you're on the listening side of the podcast you will not see, but we are in our burgundies and blues. We look quite dapper. We had it feels good outside. I got to wear short sleeves and a spring dress today which is crazy that winter's over because it felt like a flash in the pan.

Speaker 2: 1:47

That was quick. It was quick, I loved it. Plenty of rain, good snow around the area, so it was very nice. I'm not ready for it to end.

Speaker 1: 1:53

Yeah, so this is where you were here in April and we were still wearing sweaters and stuff because we had this weird winter that just drug on into the middle of our spring. That's not happening now, not this time. Nope, not this time. It could come back.

Speaker 2: 2:08

It could come back.

Speaker 1: 2:09

We're supposed to get a little more rain. I know you like the rain this year. I do, I do, we need it, we need it, we do. It's been helping the lake and all of the plants everywhere. All the plants in the valley look like it's spring. I've been out showing houses. I've seen blooms on plum trees and apple trees already.

Speaker 2: 2:25

Our fruit trees in our backyard are already sort of budding a little bit. But I love the rain because it means snow for the mountains. I'm a big skier. Kids snowboard.

Speaker 1: 2:34

So we had an avalanche this year at Lee Canyon. We did. That was crazy, that was interesting. I've never seen that before. I've never heard of that here. Yeah, yeah, all that rain definitely affected us.

Speaker 2: 2:45

I think that 120 inch base at Lee Canyon which is that's insane.

Speaker 1: 2:49

That's mammoth. Yeah, that's cool, that's cool. So we got this amazing winter snow, and then this early spring. I feel like I love Vegas even more, okay, so before now, instead of just talking about Vegas spring weather, we do talk real estate, and you've been here plenty of time so you know that we always go over the numbers for what happens in our real estate market. And our first, we talked about our single family homes. So last year, let's see, you would have been here April of last year that would have put us around 5000 homes on the market, right? Do you remember that? I don't.

Speaker 2: 3:21

You're like no.

Speaker 1: 3:22

Yeah Well, April of last year would have put us just under 5000 available homes on the market. So right now we have 3351 homes available on the market. So it's a little different market than last time we saw you.

Speaker 2: 3:36

It is. It is, but warming up, I mean obviously getting hotter, getting busier. There was a percentage that came out for the mortgage bankers association that applications, loan applications, are up 40%.

Speaker 1: 3:52

Yeah, and that's great news. I definitely feel it. So do I.

Speaker 2: 3:56

So yeah, it's just that rumor, that. Well, first of all, rates did come down a little.

Speaker 1: 4:01

Okay, it went down.

Speaker 2: 4:02

It went back up, but just the rumor that rates were coming down got plenty of people off the fence, as it should.

Speaker 1: 4:07

Yeah, and so we're seeing that in our sold numbers this year this week, because now there are just 449 sold units last week and that is an increase from the week before and the week before that. So each week we are seeing more homes being sold, each week here in Vegas, which is definite factor that spring is here. If it's not the pollen in the swollen eyes, it is definitely the sold numbers and the price decreases. So there was 350 price decreases this year.

Speaker 1: 4:39

So last year in April when you would have been here, the prices would have been I mean, the drink here would have been a lot lower. I would assume there would be less than a hundred at this time last year. So that was coming off of the rates going up for the first time. Then people sort of got used to it and then people thought that value was appreciating. So then they started raising the prices and they level out and each week we've been seeing about that 350 on those price decreases. So those are the numbers talking about our market. That's what you're seeing because you're seeing an increase of applications.

Speaker 2: 5:16

And the offers are getting accepted, you can still get in and get some seller concessions paid for. As the market gets busier, that's going to get tighter, whereas when it starts getting 5, 10 offers on the table, which some properties already have, they're not going to offer those concessions in March and April or poise to be very busy yeah this end of February, beginning of March, is one of those strange markets where half the homes are going under contract with multiple offers.

Speaker 1: 5:49

I have had a couple that have gone under contract above list price. We're seeing that again. On the flip side, I have one where sellers were offering concessions to get the house moving to buyers. It's just all over the road right now and it really is in the negotiation. Seeing those seller buyers to come to terms is so important in this specific market right now. Not that it's not always important, because it is always important, but usually everything sort of flows in the same direction, but now it's just like a chaos, a tornado of what's happening in our market.

Speaker 2: 6:26

No, it's important, and they have good agents like Tiana and Trish that know what's going on in the market and can negotiate appropriately. So, yeah, experience and being in the market counts.

Speaker 1: 6:37

So you are a lender and every time you come here we talk about stuff. If you haven't seen his videos in the past. We've talked about FHA and conventional. If you don't want to go down, payment assistance all of that stuff.

Speaker 1: 6:52

If you want, you can go back and check out those and see what's going on with the basis of the loans. But I think today we had the idea to sort of talk about some pit bulls, because once you do get into a contract and you get or first you get your pre-approval letter, then you get into your contract there can still be some pit bulls that affect the contract and your availability to buy.

Speaker 2: 7:13

Yes, right, so at least what I do with clients is I'll send out a do's and don'ts list.

Speaker 1: 7:19

Nice, do do this, don't do these items.

Speaker 2: 7:23

So as a lender for 21 years I've seen it all the normal stuff and then things that surprised me are like I can't have a do's and don'ts list that has 30 items on it, but maybe the 10th one is a good deal, but maybe the 10 most common that you see out there.

Speaker 1: 7:37

All right. Well, I think we're going to talk about at least five of the most common that are on that do's and don'ts list, because it is a little heartbreaking, if I'm being honest, when you have a client that does go into contract. They've got the pre-approval letter, they are thinking they're moving forward, and then in the underwriting process that's the process in the loan where they go through everything with a fine tooth comb and verify employment and make sure that everything you told them is correct and things like that Then they that is protected in our valley in what's called a loan contingency. That's part of our residential purchase agreement and the money your earnest, earnest money deposit is protected in there. I like to do 21 to 25 days. That seems pretty standard, wouldn't you agree?

Speaker 2: 8:23

Absolutely yeah. So it's strong enough for the lender and but also doesn't scare the seller away. You know to to know that they likely have a strong loan on the table.

Speaker 1: 8:32

Right, so that 21 to 25 days you're protected, your EMDs protected, during that underwriting process. However, there are some times that that can blow up during a contract and during the underwriting process and some of those things we want to talk about. So that way you don't make those mistakes. If you get into a contract and you want to get it to finish, because that's what we all want, let's get that house. So let's talk about those pitfalls of underwriting. So, first and foremost, employment.

Speaker 2: 9:04

Yeah, so that's 90% of that. 95% of that's on the lender. We really need to, you know, have all of your employment information available, have verified it, so most of that should be taken care of. The only things that I've seen over the years. You know something that surprises is the client. You know, during the time that we pre qualified them and now they're in contract, they change jobs or they change job classifications.

Speaker 1: 9:33

Job classifications is a big one.

Speaker 2: 9:34

Job classifications is a big one, especially if they went for something like I'm salaried or hourly to I'm going to make more money, but now I'm commissioned.

Speaker 1: 9:41

Right yeah, contracts change everything.

Speaker 2: 9:44

Yep, so when you, when you change that job classification type, it's we need one to two years to look at that what that commission or bonus space is going to be like. And yeah, definitely it can be a big problem.

Speaker 1: 9:57

Yeah, so changing jobs in the same classification. Say, I am a lawyer and I move law firms.

Speaker 2: 10:05

So if you have a typically in that type situation, they'll have a contract. I work for ABC law firm. Now it's XYZ and Mrs Smith is going to come over as a lawyer and her salary is going to be 150,000 a year. That should be okay. It's when they're coming over and their salary is much lower. But maybe they're looking for the upside of now. I'm going to make bonuses off of lawsuits and that sort of thing, and now we don't have that history. So yeah, that can also present a problem.

Speaker 1: 10:35

Yeah, definitely. What about any other red flags in the employment that you discuss with people?

Speaker 2: 10:41

So there'll be times and again it's for us to verify this. But a client will say well, I was pre-qualified based on full time, and so the lender's like, okay, 40 hours a week, but full time for some employees it's 32 to 36 hours.

Speaker 2: 10:56

Yeah, I just thought, wasn't verified which, as it should be, a good loan officer would verify that then it can be the difference between qualifying for 350 and 325 and it can be a problem. Or there are employment verification sites that have a cost and some loan officers don't want us, they don't want to put out that cost for that, without knowing the deals going through. And now they find out, oh, my client doesn't work 40 hours a week or their tips are less than we anticipated, because I have two paychecks and everything looks great. But when you do a one to two year average, if you didn't get that paid, that $45 for a verification of employment, it can surprise you. After you spent $600, $700 under Praisel, after you spent $500 on home inspection, it's very little for a loan officer to just do that extra step.

Speaker 1: 11:45

Yeah, and that's why it is so important to make sure that, when you're shopping around, you get yourself a good lender. It's every bit as important as getting yourself a good realtor.

Speaker 2: 11:54

Good local lender. If they're out in the cloud in their different state or one of these big websites, they don't. I work here. I have to look Tiana and other realtors in the eye and stand up for what I did. But when you're in another state and just some website shortcomings happen. I've seen it a lot.

Speaker 1: 12:14

Yeah, yeah, I have too, which is such a shame because ultimately, it's going to be the buyer and seller that pay that price, and that's terrible. So there are also some other pitfalls that show up in the underwriting process, like late payments.

Speaker 2: 12:30

Late payments. If you have a credit report, for instance, that has expired, and sometimes clients will go dormant and then all of a sudden they're like, hey, I want this house and they write an offer and now, for some reason, the credit report can't expire while you're in contract. So if your credit report expires on the 15th, then we're going in the contract on the first and I say, hey, we got to pull new credit report and now something late popped up that can drive your score down. Yes, absolutely.

Speaker 1: 13:01

Yeah, and that happens. Sometimes people get a pre-approval letter and then they're sort of dipping in and out of the market instead of going full steam ahead.

Speaker 2: 13:09

That prequel letter expires and then, when it's time to repull, absolutely get those prequel letters refreshed if it's been a while, for 40, 60 days can change a lot.

Speaker 1: 13:20

Yeah, well, in this market it can change everything. So that actually um goes into my next question, because some of the things that can affect that loan that people don't even think about tend to be like things like homeowners insurance or the HOA of the community. So those are things that you want to give. Well, I want to give to the lender from the jump. I want my lender shopping for my clients homeowner insurance immediately with the homeowner, so I know about that. And then HOA that's a factor.

Speaker 2: 13:53

Two of them are. Both of them are important. We do estimates on homeowners insurance, but if the client has filed lots of claims in the past sometimes those little chips on your windshield, or maybe you filed a claim on a previous home for a small leak or something like that and we estimate that it's going to be $60 a month and then we find out that it's going to be $150, then that can definitely change things.

Speaker 1: 14:17

Surprise.

Speaker 2: 14:18

Or you've been shopping in Las Vegas and now you're going into contract and a property in Perumpf that has flood insurance and the property can have an extra $150 a month in flood insurance and that can absolutely change things. We have that Vegas doesn't have many flood zones.

Speaker 1: 14:37

Yeah.

Speaker 2: 14:37

But Perumpf does. It's a very close market. There's becoming that commute and if you're shopping for $300,000, you have to add in another $150. You have seen it $200 in flood insurance. You may not qualify Homeowners association absolutely same thing. I'll always add in a factor for homeowners association. It's just a conversation between the lender and the realtor. But if we're shopping for homeowners association at $55 and you go to a guard gated community or to a townhouse and now it's $150 or $200, same thing, it can affect that.

Speaker 1: 15:10

So just that communication? Yeah, definitely affects the purchasing power and we don't want any pitfalls. We want this to run as smoothly as possible.

Speaker 2: 15:20

Smooth, relaxed process. No one wants to be getting ready to hire a moving truck, or you're thinking about decorating and that type of thing, and then all of a sudden it's oh, we have a problem. But again, good experience realtors and lenders figure out those before the contract or very quickly within the contract period.

Speaker 1: 15:38

I like that you brought that people start thinking about decorating, because one of the pitfalls could very well be either opening up like a new line of credit, like you're going to- RC Willy, because you want new appliances or furniture, any of that? Tell me how that's going to affect the deal.

Speaker 2: 15:56

Absolutely, and then definitely on my do's and don'ts list, I'll let them know. Hey, just because you're going to Best Buy or RC Willy or whatever and getting that one year same as cash, when we see it pop up as a soft, as an inquiry, we can discuss inquiries. Okay, we need to, we need to account for it, and we don't know necessarily like, oh, I'm going to pay it off the 11th month or right before it's closed. We don't know that. We can't guarantee it. So if you just bought a $4000 washer, dryer, refrigerator package and threw in the couch and we need to look at what that new $5,000 liability is, and if it's $125 a month, we're going to add it. As long as I've been doing this, half the time it's been okay. Sometimes it's been a problem and we're either paying something else off or we have to cancel it.

Speaker 1: 16:43

So yeah, yeah, I have a horror story with a client who has an apartment full of new furniture and TV. She bought it all before we close, which, in my defense, I did tell her I too have a list that says don't open lines of credit, be on time for everything, don't change employment. And she just got excited. She figured it was a good deal.

Speaker 2: 17:05

Don't cosine for your kids car or your for your best friend's car. You know, we see it's like. Well, it's not my liability, they're going to make the pay for it. I'm just helping them out. Yeah case closed. $500 $750 new liability that have to count against you and yeah, typically a problem.

Speaker 1: 17:21

Yeah, so in the underwriting process you do have the ability to sort of explain or dispute things, correct. So there's slim instances where if you did have somebody previously as a co-signer, that you would have a letter of explanation saying this person makes the payments, they can show that the money comes out of their bank account, and then that could be sort of washed from the other Absolutely.

Speaker 2: 17:41

A lot of people will co-sign for their adult children's car and they're making the payments for 12 months. We can verify that. Then we can remove that liability. Well, a lot of people may not realize is it right, before closing lenders, verify your employment that it's the same as it was in the last 30 to 60 days? And then we do a soft credit check in query and sometimes we just see something normal, you know, hey, you went rate shopping, you know, with someone else, not a big deal. But if we see, you know, you know Finley finance or RC willy, we have to verify that it's. You know, it's just a soft inquiry but we want to make sure that we aren't accounting for something that we weren't aware of. Usually it's just a simple explanation, but yeah, that one rare. It says it can be a problem.

Speaker 1: 18:26

Yeah, we don't want to see any inquiries people, no, no, don't sign anything, don't apply for anything that is not happening, don't drop cash into your account.

Speaker 2: 18:35

Oh, I had $10,000 and you know my save from a refrigerator, the. We don't know where that cash came from to us. Maybe it's a loan from somebody like that. Yeah, cash is, you know, just dropping cash in somewhere has also caused problems.

Speaker 1: 18:50

We like our money seasoned. Yeah, we want it sourced in season. That is very important, all right, so how does the appraisal especially if it comes in low effect to that? Is that a pitfall of mortgages?

Speaker 2: 19:03

Yeah, a low appraisals and they're happening a bit again because as the market heats up and you're talking about, you know, five, 10 offers over list and you know that sort of thing. A $350,000 offer in the appraisal comes in at 340. You only get, you know, your loan to value based on the appraisal price. Right.

Speaker 1: 19:24

So it's not a seller's wish list, it's appraisal price, right After appraisal price.

Speaker 2: 19:29

So you know it's in the RPA and in the contract to either negotiate it Some people split it, sometimes a seller says I want my price and you need to come up the difference. Or in the worst case, you know, unfortunately you have to cancel, but you can contest the appraisal. You know good agents can say well, these are where the comms are coming from. This is why I think the properties is superior and so they'll contest it and their appraisal will certainly take a look. And sometimes they come up and sometimes they're not able to get there and then it's negotiation time.

Speaker 1: 20:03

Yeah, I've been really, really lucky to be across from pretty great appraisals most of the time, and I do have appraisal appraisers that are at least open-minded enough. They're not the Gestapo out there saying no, I say it's this, and so if I have something that I'm like, hey did you know that there was a brand new AC in here that's going to bring value and that can change. So absolutely, yeah, all right, any other pitfalls of lending that we should know about. But then and we covered the top five, yeah, those are the basics.

Speaker 2: 20:33

You know, I've had someone in the past that retired, you know, and it was like, well, I'm going to make really, really good money in retirement. Well, that retirement hasn't hit yet and now we have to verify that retirement. So, again, that's more of a change in classification, things that were not disclosed, you know. We need to know if there's an IRS lien that we're not aware of. Oh, I'm disclosed debt.

Speaker 1: 20:59

That was on my notes, did we?

Speaker 2: 21:01

not talk about that.

Speaker 1: 21:03

Oh, I'm glad you brought it up.

Speaker 2: 21:07

Red. You know hard line red stops. Do not pass go our IRS tax liens, regardless of what they are. If you're in a tax lien repayment, that's fine as long as you've had, you've been paying on it for at least three months. But then we do need to add it to your liabilities. You know you owe $8,000 from two years ago and you're paying $200 a month on it. That needs to be added into your debt to income ratios. The other one that's a little bit more of a risk, you know, is that you're paying $500 a month in child support and we didn't initially see it. New credit report something popped up. Those are definitely something else we have to add into a liability and it can present a problem. Yeah, yeah, I think that's one of the importance of doing shows like this, where we can at least help educate the public. So that way, if they're not paying, they can't pay for it. So that's a good thing. So that's a good thing.

Speaker 1: 21:56

Yeah, so that's a good thing. So that's a good thing. And then we have a lot of other things like this where we can at least help educate the public, so that way, if they do fall into a situation where they don't have a great realtor or a great lender, they at least have a sort of playbook on what they should be looking for as a consumer. Yeah, absolutely yeah. I love that, and I do appreciate you coming out every year and talking to our guests about the kind of innovation when it comes to lending, that you offer all sorts of different products for lending, because there's a gambit right, we have some government backed FHA, the VA, and do you do a lot of USDA?

Speaker 2: 22:42

A lot, no, but it's out there with again. Promf is and actually small parts of Las Vegas do qualify for USDA.

Speaker 1: 22:49

I was going to say does it's things zoned county? Do that? Does that qualify for USDA?

Speaker 2: 22:54

Sorry, say that again.

Speaker 1: 22:55

Do properties in Vegas that are zoned county? Do those qualify for USDA?

Speaker 2: 23:00

I, there's a map and you put in the address and you look at the map and I think even parts of South Summerlin, part of that, and even Enterprise Spring Valley a little bit. So just because you know I don't do a lot of them, I don't know where the boundaries are, but it is another zero down.

Speaker 1: 23:17

I was going to say that.

Speaker 2: 23:18

Income qualifying loan, like down payment assistance, there's income thresholds. But yeah, another good, you know government insured back product like FHA and VA.

Speaker 1: 23:28

Yeah, and then of course, conventional.

Speaker 2: 23:31

Conventional, absolutely. You know jumbo loans are, you know are becoming more popular again. So again, they've always been popular. But jumbo loan and non-conforming loan is really anything just above. For Nevada it's 766,000. So if it's a $780,000 loan amount it's considered a jumbo loan.

Speaker 1: 23:50

Yep.

Speaker 2: 23:53

So you can do HELOCs and HELOans with those jumbo loans too to help with that qualification Cause, really, jumbo loans you're starting at about a 10% down payment but there are, you know, there's seconds that you can add on to that to alleviate some of those pains. Because the criteria for jumbo loans are a little more stringent than you know the lower criteria. You know credit adversities they're more strict about. But yeah, those jumbo loans and helox and helons are very popular right now. The helox and helons really.

Speaker 2: 24:28

Just the difference is the heloc is a line of credit. It's an adjustable rate. You know, with credit card interest rates from 22, 26, 29%, If you have debt but nobody wants to refinance their first, of course you've got a two, three, four, 5%. You know interest rate in your first you're not going to want to refinance. The heloc or helone is a great way to take equity at your house to pay that off. In fact it is. And you you know with rates. You know anywhere from the eights to 12 and 13s. It's obviously half or a third of what credit card interest rates are.

Speaker 1: 25:02

Yeah, can you imagine if home interest rates were 29%? I could not. Nobody would own a house. Be like we're renters for life, what's up.

Speaker 2: 25:09

Absolutely absolutely.

Speaker 1: 25:11

All right, Greg. Well, I appreciate you coming on the show. Somebody does want to talk to you about getting a loan. How did they get a hold of you?

Speaker 2: 25:18

Gregory Cook. With Castlin Cook Mortgage, I can reach that 702-324-6229. And I tell people I'm available at 8 AM to 8 PM. I don't work bankers hours and I work as hard as our fellow agents. And yeah, please reach out to me, we'll take good care of you.

Speaker 1: 25:32

Yep, I can verify that. I have worked with Greg many times and he is very knowledgeable, he is kind and he is so good with the clients. Just communication is so key, keeping everybody in the loop, knowing numbers and I know I can always just send you. This is what my property list price is, and this is what the HOA is and this is what our taxes are. What can we do? Yep, you always run those numbers. Excellent. So we are here every Thursday talking everything real estate and real estate news. My name is Tiana. If you want to have a conversation with me, you can call me at 702-379-9948. Like I said, we're here every Thursday 9 30 AM. If you find content or value in this content, make sure you join our tribe by like, share, subscribe, hit the little bell notification so you know when we go live. We are here every week and we'd like to see you next week. Until then, vegas, have a great week. Thank you, bye.