Subscribe
Share
Share
Embed
Real Talk with Sterling Real Estate Group is your go-to resource for all things real estate. In our episodes, we break down the latest market trends, share insider tips, and provide expert insights to empower your property journey. Whether you're buying, selling, building, or investing, we're here to help you navigate the dynamic world of real estate in New York's Capital Region and beyond. If you have any questions or topics you’d like us to cover in a future episode, we’d love to hear from you! Reach out to us at info@sterling518.com.
Lisa Licata (00:37)
Hi, welcome to Real Talk with Sterling Real Estate Group. And today I'm honored to have in our presence my friend Rick Murphy from Ballston Spa National Bank. And today, right, Rick, we're gonna be talking about the new normal. The new normal. Yes, we are. interesting. So Rick, before we get started, could you tell our listeners a little bit about you? Okay, I work at Ballston Spa National Bank. I've been in the industry for I think about 30 years, if not really close to 30 years, so long time.
And I've kind of seen all the markets come and go, but been at it for a while. You've been through a lot. Yeah. You've been through a lot. And that's great. That's going to really lead in to my first question that I have for you, that you've been in the mortgage world through very, very different markets. How would you describe the mindset buyers need to have going into 2026? Well, think it's changed from, you know, I've got to get a low interest rate.
back during COVID to rates are stabilized where they are now and this is where they're gonna be for a while. So the new normal is not rushing out to get your new best interest rate and I get 2.75 or 3%. Rates are higher, they're double that and now it's about payment. And going out and looking at payments versus I got this low rate.
And that's what's really I see people doing now is what's the payment? What's the payment? Yeah. Can we afford it? Is this the price range we need to end? And also just the soft costs. Now people are focusing on taxes and homeowners insurance. offset that high interest rate. Because I used to talk to people about payments and rates and they wouldn't even care about taxes. They'd be like, yeah, well, don't forget when you make a payment, we factor in taxes as far as when you're qualifying somebody.
So, but now it's like, and here are the taxes. They actually tell me before I even get a chance to tell them anything else. So I've noticed that's definitely been a change I've noticed. But it's all about the total payment versus- The interest. Yeah. mean, people still shop for an interest rate. It's easy to shop these days online. the big national banks are out there with the rates. But it's about the payment.
Right. So that's the mindset, right? That buyers should be focused on not the rate, but the total payment. And are they comfortable paying now? I mean, obviously get a good rate. Yeah. But I think it is. It's about the payment. Are you comfortable or, you know, are you financially able to make that without, you know, strapping yourself where you can't do anything else? Exactly. Yep. Exactly. Yep. But there's always the option.
that they could refinance if the rates start to drop. So that's a big thing is, you know, a lot of folks think that, you hey, rates are going to go lower again. And whether that's true or not, no one knows. So, I mean, I doubt we'll ever see 3%. If we do, there's a lot, there's big things going on that we do, other worries, other problems. you know, they've got a, I mean, they've got, when it comes to that part of it, it's just, the new normal is now.
and we're going into it and it's going to be this way. We're going to be six percent or variations of six percent for a while. So the other options are looking at like adjustable rate mortgages. Right. Yeah. Yeah. The arm. They call it an arm. And the arms, you know, today, you know, say they're in the fives and the fixed are in the sixes, whatever it is. It's a good strategy to go into an arm, a lower rate. If it's a five or a seven year arm, thinking that rates are going to come down and I could just refinance the loan.
It depends what your mindset is. And like said, no one knows that answer. you could take your chances and go and get the lower interest rate with the arm, but if rates never go back down or go up in the next five years or seven years, you're gonna go that direction. So the fixed is always the safest. First time home buyer, I always see them taking the safe rate.
If they talk to their parents, they're going to go for the fixed rate about, you know, that that's what they're going to do is it's the that's that's the old school. Yeah. Old school. Yeah. I mean, that's it's a big step, right? Oh, yeah. Even if you have bought and sold a couple of times, it's still a very stressful. Yes. Process is even, you know, is there agents, you know, the agents on both sides, the lender or the attorneys, you know, everybody works together to try to make it as smooth as possible.
yeah. Sometimes, you know, there's always bumps in the road. There's a lot of hands in the fire. yeah, and everyone just, you know, tries to work together. Right. To, you know, to get the parties and, know, into the home. So question for you. We talked a little bit about the new normal, right? So we know this is the new normal, these interest rates. We've been about that. How should buyers really start to prepare?
I just want to piggyback off the first question. So, you know, we don't know what rates are going to do. Every January, I go to New York City to a conference called Inman Connect. So it's all the who's who in real estate. And two years ago, they really because they have their hand, you know, in this market, they know everything going on. And they predicted when the rate cuts were coming and by how much.
Okay. And they were spot on. Wow. All right. Last year we went, they said, I can't remember, maybe there would be one or two rate cuts and we had one or two rate cuts. Right. We have the two this year. Yep. So it'll be interesting in January what they're going to predict. So as long as I've been going to that, they really have been spot on. Right. other, you know, different things that
has nothing to do with the banking side of real estate, but the real estate side, everything they said that was gonna happen and when it was gonna happen actually happened. So I will share that information with you when I come back to see what they're predicting. So we don't have a crystal ball, but- No, I mean, all I do is read. I I don't know anything about rates. I mean, I just read what people think they're gonna do. People are smarter than I'll ever be as far as rates go. So I read what they have to say and-
If the rates if they do the Fed cuts the rates again great You know a lot of times what happens is the Fed cuts the rates and mortgage rates can move up a little bit they do and because it comes off the bond market not that not the Fed rate so that's happens actually usually I think But you know if if these guys are right we get another cut that would be great if we get the rates into the You know the mid fives that would be huge
Like our market has a lot of people where they got their 3 % mortgage and they're not going to sell their house and go to a 6 % mortgage. So what's that number that gets them to say, you know what, I can do five and a half. What's that number that gets them to move? Right. Because they're looking at that total payment. Yeah, exactly. exactly. I'm going to piggyback off another question, then we'll come back to this. I've seen come through the office in the last three or four months where sellers have that 3 % interest rate.
and the buyer is now assuming that mortgage at that 3%. Right. So I don't know. I know... most banks don't have that assumption, some ability, but some some are right. And I see it more, you know, that the seller has to move out of town. Gotcha. So they're not like selling and then, you know, doing a higher interest rate. And we know sellers that have that 3 % interest rate kind of are staying put. Right. But we do see the market, you know, opening up a little bit more.
But yeah, I've seen that. I mean, the assumption thing is tricky because you've got to have the equity to buy, you know, if the loan is, you know, $200,000 and sell the house for 250. Yeah. You got to have that $50,000 to make up the difference. Right. So those are few and far between. And most of the banks I know don't offer their loans are not assumable. OK. A good majority of them. Yeah. I have to go back and look to let you. Right. To actually see, you know, what banks were doing it.
But yeah, I mean, especially with the appreciation, I'm just thinking this deeper, but yeah, it's with the appreciation that's happened in last three or four years, that's probably tricky to come up with that kind of money. Yeah, yeah. Especially if you get into the first time homebuyer people that are out there. I mean, typically they're not coming in with 20 % down or 50. You'd be surprised.
Well, no, I am surprised. I do see it quite a bit. in the early 30s are cash buyers. Yeah, where is this money coming from? In the Saratoga market around here, I hear so many cash buyers. I'm like, I don't get it. I mean, great. Well, their house is probably paid, they sold, they went to an apartment for a little bit.
and are just waiting for the right house to come and they can pay cash. Downsizing to 800,000 in our house. What do we like to say? Right sizing. They're coming out of five, six bedroom homes. They're empty nesters now. So, you know, it's a lot of equity in those homes so they can do it. And they're making the right investment. Well, we've had new construction in the area and they're coming in building a brand new house, which is fantastic for an older couple with cash.
Yes. It's, mean, great. That's a great thing. Yeah. I it's not great for the mortgage business. But it's a great thing for the buyer. Right. So, so back to the question, we know this is the new normal, but what does that mean for people and how should they plan? So, you know, if you're, you know, there's two different types of buyers. You got your first time home buyers in your, your third or fourth house, whatever it is, or second house. So, you know, if you're a first time home buyer, I mean, well, actually, if you're anybody,
⁓ You want to plan it from the mortgage side is just you know getting some information getting yourself set up right and you know sitting down with somebody pick pick a mortgage person whoever it pick one you pick me of course, but But you sit down and go through the numbers. It's all about that It's the numbers and you go through the numbers figure out I've got this money to work with I my credits, you know, get your credit score and
Figure it out. Just go through some scenarios of closing costs down payments You know, that's that's the first step right getting yourself basically pre-qualified And that's where you want to start if you're a first-time homebuyer You really have to sit down with somebody because you know, you just you don't it's you there's so much to learn You don't know, you know If you if you don't have a lot of money and I'm the typical first time homebuyer is not coming in with a bunch of cash a bunch of money So to sit down and figure out
Gee, I have 10%, I have 5%, I have no money, or whatever it is. And that's okay too. I mean, there's programs for almost everybody. There's grants out there, there's all kinds of stuff. So there's a way to find a house. The one thing the banks can't figure out for you is credit score. like, no. How to fix it. Yeah, I give advice how to fix it. But if you come in with, hey listen, I got 5 % to put down and we run your credit and the credit's.
not financeable, then the next step is gonna be let's look at how to fix your credit. Right, so that was my next question. So you're gonna help them, like guide them in how to... Yep, and there's credit repair companies. I mean, there's things I can look at to give some of my recommendations. I'm not a professional credit repair person, but I know some. You know the basics. Even some simple things. I know a few times with buyers, for some home buyers, they got that initial credit card.
and that's what they've used to establish credit. But for whatever reason, they're maybe not using that, they got a different card, and they want to close that account. Don't close that. Don't touch anything. That's the one that established your credit. No, the key is don't close anything. If your credit's relatively new, don't touch it. Just keep making payments and use it and pay it. That's the thing is...
don't just not use it, because you have a credit card and you think it's good for your credit. You've to use your credit to build a credit. To build a credit. Yeah, that's important. I have people coming into the US, engineers coming in that don't have credit yet, and they get a credit card, and they don't use it. They don't use it. I'm like, well, that doesn't help. Yeah, because they don't want to the debt, but use it paid off. Right. So yeah, and that's probably one of the key things. Well, the other thing is just thinking, just, you
getting deeper into that is that you know got to look at how much credit is extended to you. So if you have a credit card that's only got you know a $2,000 limit and every month you're going to a thousand or a fifteen hundred or even two thousand a month which for someone you know an engineer coming into town with a good income that's that's gonna happen. Yeah. That's not good either. So there's a 30 % rule in credit cards where you don't want to access more than 30%. 30 % of your available credit. Even though you're paying it off every month?
Yup, even though you're paying off, you're still accessing it. It's great to pay it off, but it's still doing some, it's not doing damage, it's just not helping like it should be. If you kept a balance above that, it would do some damage, but when it's brand new credit, for the example I'm thinking of, that's not gonna help. So another question for you. Oftentimes, first time home buyers, and sometimes it could be you're on your second or third home.
They don't think twice or really think through. ⁓ yeah, you know, we're under contract. We're closing a little bit and they book a vacation and they put the deposit on their credit card. They buy a car. that's always the, that's the industry joke. Yeah. Yeah. Right. Your neighbor doesn't use you. like, that's okay. You should buy a new car to celebrate. You see those jokes going around, but that, know, that's why it's important really that you get, you know, to the right.
loan officer to you know because I'm sure you tell people you know once once you go under contract or even though you're starting the shop do not put anything on credit you know at this point don't book don't touch it don't do nothing exactly right it's true you've got 60 days to close yeah don't do anything just just relax but if they don't get to the right person and they're not being educated right whether it be through their loan officer or their buyer's agent
I you know, it's obviously happened. I mean, people have bought a car in the middle of a transaction and they've done it and you're like, oh my God, now you don't qualify or just dropped your credit score or whatever it is. And it's not like your buyers can be like, hey, know, Rick, I just bought a brand new car. No, you find out about it when you pull up to the final walkthrough and you're like, did you guys get a new car? Yes, isn't it Well, that's the trick of new construction. You got to almost a year, depending on the builder. you got to live your life in that year.
Just live it carefully. Let's touch base, like smartest mortgage strategies that you're seeing buyers use right now to make homeownership work. Well, you know, we've got, there's seller concessions. There's things that people can do to, if you're short of cash.
to get into a house. Do you want to talk a little bit what a seller concession is for maybe some of our listeners that are not sure? So a seller concession lets the seller of the house pay your closing costs and it's negotiated into the contract into the price of the house. you and you can do, on a 5 % down, you can do 3%. So it definitely helps. You're kind of financing that into your house basically. Right. But it's called a concession.
And that's what it is. It makes it closing costs. It's only to cover closing costs in what they call prepaid, which are your upfront taxes. When you go to close, a lender is going to collect basically year of taxes at closing to get things on track. So that's what that's allowed to cover, which it may not cover it all, but it definitely helps. That's the strategy I see the most. But in the market in last few years,
It was such an aggressive market. There wasn't a whole lot of seller concessions going on. Not when people are coming in with cash offers or half down offers. But that's, I think, what I see is the number one strategy. There's buy rate, buy downs where you give a bunch of money upfront and you buy a lower rate for two years. I know that was kind of big for a while. Yeah, that was big for a while. I was never a big fan of that idea, but it does work. I mean, you know, they all work in the right situation.
And it's so, but generally speaking, coming in with like saving your money, it's all about saving money. So it's coming in with five or 10 % down is always the best answer. Right. No matter first time or season. Yeah, it does. Yeah. It doesn't matter. That's always, it always boils down to that's one of the three big ones. So we already talked touch base about what are the biggest mistakes that buyers well,
What are the biggest mistakes that buyers are still making as we head into 2026? I don't want to just say first time home buyers or early stage buyers. We touched base a little bit on spending, what else do you see maybe out there of the mistakes that is prohibiting someone from getting into a home? I mean, the biggest one that I, out of the starting gate is not getting pre-qualified.
Because you call an agent up, you're like, hey, I want to see this house I saw. And you run out, and you start looking around. Everybody's excited you're looking for a house. And the biggest mistake I see is, I'll get a phone call after they've been looking for weeks. And I'll be like, do you know your credit score is 460? Yeah. Well, they're like, oh, yeah, I kind of had an idea, but I really didn't know. That is, in my opinion, the biggest mistake. The biggest mistake. Yeah, the biggest mistake. Other people.
I guess shopping pure interest rate is also a mistake just from my end of it from a mortgage standpoint because one of the things with mortgages is just getting closed, like service. So was just gonna say, it can't always be about. It's not about the. It's everything. Don't get me wrong, rates always important. Don't get me wrong. It is. But you've gotta get closed. You've gotta make it painless as possible. And those are also important things. So you gotta find.
mortgage person that you trust a mortgage person that was referred to you by someone that you trust along those lines But that's those are those are that's those are the two big mistakes. I see I mean the the unqualified person looking for a house It just kills me because it's such a waste of time It is and they don't know right, know, and if they have a good buyer's agent, you know should take them through Every single step of buying right?
And you see so often, somebody walks in, they're not pre-qualified, right? And they go out and they look at a house, they fall in love with it. They wanna make an offer. So it's like, okay, we gotta submit your pre-qual with your offer for the seller. like, you know- it, and then you find out that they are not qualified to get a mortgage. So now they're just absolutely deflated.
because their heart's broken of something that they Exactly. Or they see the house they love, they didn't get pre-qualified. You can't submit an offer without a pre-qual letter. So it's Sunday afternoon at four o'clock and I'm getting a call like, oh my God, I a pre-qual letter. We might get an offer tonight. And I'm like, okay, well, I'm not in front of my computer right now. me call you back in an hour. Or they got to just call whoever answers the phone first. It's in front of their computer on a Sunday afternoon. Yeah. And that's not the right way. No, it turns out it's a panic drill and they're not prepared.
You know, to spend some time, know, it's like all of sudden, I need a pre-qual letter. It's what I gotta have it, gotta have it, gotta have it. When, you know, let's talk about payments. Let's go back through the basics again to make sure you're comfortable with what you're doing. Cause you're, you're, you know, you don't even know the payment yet. That kind of stuff. So I have to, I have to agree that is the biggest mistake is not getting pre-qualified. you know, for listeners, even if you're not planning to buy a house in the next 12 to 24 months, that's fine.
but go start the process now because there could be something that pops up in your credit report and you're like, ⁓ I didn't know I had owed a dentist $15 Exactly. It happens a lot. And it's now on my credit report. You can address that now instead of waiting or the potential of losing out on the house that you Exactly. You find you just shopped for three weeks, unfortunately not pre-qualified apparently. Yeah. But now you see this house, you finally love it and you're like, shoot, I gotta fix this.
So now you have time, they sit down? you know, to get people like that, like to talk about, you know, payments. I like to go through a couple scenarios, like, hey, what do you have to what do you have saved? Okay, well, you say you have $50,000 saved, well, you're gonna need 10 to 15 for closing. Oh, I didn't realize that. Like those are the things where so your down payment is going to be different than what you thought it's going to be. So you're walking around saying I'm gonna have 20 % to put down when actually it's 15. Right. And we got to talk about, you know, PMI.
PMI something that you need if you're putting less than 20 % down Some banks have what will do as little as 10 % down such as my bank yup, Ballston Spa National Bank.. So, you know there's but that's but those are the things you want to go through so they like I said You're out looking for the house. You're ready to go and you're comfortable, right? Which is huge huge comfortable not it's not a knee-jerk reaction, right? You know and it's important to right we talked about you want to have the right lender
that you feel comfortable with. You also want to have the right real estate agent on your team that knows what they're doing, that can walk you through some difficult bumps in the road that may come up that no one was anticipating for. And that's usually, you're like, what, what, how, what? you know, when everyone's come. That's when the therapist comes out, right? Yeah, you want to a step back and say, okay, you know, the agent is qualified and experienced to get the buyer.
through that. And the same with the listing agent. you know, the listing agent, you know, is also working hand in hand with the buyer, with the buyer's agent trying to navigate through some of these, you know, speed bumps that come up. it's, you know, and your attorney, right? go to contract. it's everyone They do a lot now. do. Attorneys are doing more and more within the deal. So, yeah. So I think it's just having, you know, the right team in place will ultimately get you into the home, you know.
that you love. So I know we're going to talk about- Well, I to add to one thing with that. I mean, for example, you may recommend a couple of banks and you know them, you know how they work, and it's important. And if you got to make a phone call, you know who to call. I don't know how you feel about, know, someone comes in, they're going to use so-and-so bank from Kansas City and you don't know anybody there. And you're like, well, great. You got to use that bank. then when
snags do happen. They're on their own because you really can't help them. You don't know who to call. But that's back to building a team. You want to have the right team where you know you can get help. And a good agent, they know what banks have what they're looking for. Some banks have great end loan, new construction loans. Go there. Get a good deal. And some banks, it's going to be a government loan. I know they do a great job on FHA. Go there.
It's good to have a team that you can work with. Especially if I call you, I know you're going to answer the phone. And I know if you don't answer it right away, I know I'm going to get a call back. soon as know time, we obviously don't pick up the phones when we're working with other people. But I can comfortably say, hey, Rick, I need you. Can you call me when you get a chance? soon as you're free, I know that phone calls. Versus trying to chase a lender from another state.
And they're not going to A every right at the closing table. It's that's that goes back to the whole it's a it's a process and you've got to get closed. Right. And that's you get the right attorney on both sides, whether it's the bank attorney, the bank has their attorney and the borrower has their attorney, the seller has their attorney. Make sure the make sure that it's a bank that uses the good attorney and the borrower is, you know, hopefully takes one of your recommendations on an attorney so you know, maybe it could be the same person.
Yeah. But that's it's like building that team and you got to get to the closing. And that's where it really falls apart. The times is getting closed. Yeah. Like all of a sudden this pops up or we forgot this or we didn't disclose this or whatever it is. Or out of state banks require something. We're like, we don't need that here, but they can't adjust their policies. I do a lot of rescuing of out of state banks, the national lenders where it's like, oh my God, we can't close. You got, you know, we got 10 days to get closed. And so it turns into a fire drill. Right.
Which I'm okay with that, but it's nice to not have that. But there is that unnecessary stress and a speed bump. Right. Oh yeah. So, and we usually, I know we talk about, you know, using out-of-state banks and these are the risks that you take, but again, they're only focused on that rate. Exactly. But now, all of sudden, they're like, you know, we really should have listened to you and not to say, you know, this is... And sometimes it's just too late. ...from the experience, so...
you know, we're going to do what we can to get you through this. And that's when, you know, like you said, well, you know, I've had people say, he'll assume I've pre-qualified them, but they're like, I found a better rate at name, you know, some giant bank, whatever it is. And I'm like, all right, well, I get it. I'm just, but keep my number. And anything happens, you know, you gotta be positive. I can't be, know, it can't be that guy. So you're like, yeah, keep my number. Anything happens. Let me know any questions. You have any questions at all? If you want to go through their closing quest with me, I'll help you out, whatever it is. But
You do get that phone call sometimes where it's like, my God, these guys are crazy. then got 10 days to pull this. Right. then, then, then for our office, it's a fire drill, which we're happy to do. Don't get me wrong. Right. But it's so much easier just to go through the process right up front. But yeah. So be really well prepared. It doesn't matter if you're going to start looking now or three years from now, get prepared and get yourself in a budget and how much you're going to put, right? Put away for your down payment.
any debt that you have, you know, because I mean, lot of people have student loans, credit card debt, you know, find a way to get those really either paid off or really paid down. Yep. And paying more. Right. If you're making the minimum payment, you're just going to be stuck in that. It pays forever. Yeah. I mean, so you got to just, know, if you're saving for a house and you're going to make minimum payments, that's okay, as long as you still qualify. Right. Well, the big three things are down payment, credit score and qualifying for a loan. So, you know, you got to touch all those bases.
But if you make minimum payments, that's up to you. As long as you're saving for a house, that's your goal, which is what's it's all about the goal. That's okay, I'm like, but unfortunately, it's not going to go anywhere. You're going to make that payment for a long time. Right. So with that, if listeners take only one action after this episode, excuse me, to set themselves up for success in 2026, what should it be?
one action item. I'm sure... Well, of course, it's get pre-qualified. That's the action, get pre-qualified. And then there's the big, the three, it's down payment. Let's talk about what you've saved, what you haven't saved, what you can save. I can't save anymore. Whatever the answer is, that's the big one. Credit score, let's look at your credit. If it's great, then great. And then there are things that just, your income. And you just you got to figure out your income.
You know, you've got self-employed borrowers where it's a little more detailed and what they qualify for based on their write-offs, you know, those type of... So those are the big three. And that's if you're going to look for a house, those are the things that get pre-qualified and we'll go through all that, figure it out. Then you're on your way. It's like, you know, you got the answers.
A lot of times I run scenarios, people are out shopping, they're pre-qualified, looking at different houses, different taxes, different... Oh yeah. And I do a scenario sheet to show them closing costs, to show them the payment, to show them the funds to close. And I've done that for multiple houses for people that are out looking. You good idea of the area now to start focusing in on for taxes. And I like doing that for people because they like it and they're excited now, they know this is good, I can do this, I got the down payment.
Everything works, and they're out making an offer on a house. Right. Right. So that works. I know we don't have enough time today, but I know Ballston Spa National Bank has all different types of programs that are out there. You touched base on a few, but next episode we'll have you on. OK. So maybe we can talk about all the different programs. I think that's a great idea. But in the meantime, if someone's in a particular situation, call. Yep. ⁓
They can call you now, right? Right now. My phone's right there. we're going to wrap things up. But why don't you tell our listeners how they can get a hold of you? OK. My cell phone is the best number. It's 518-461-6116. You can call me, text me either way. we can start that way.
Even on Sunday at four o'clock. can call me at four o'clock on a Sunday. We're two room agents working 24-7. The trick with my job is you be in front of your computer to be effective. Exactly. I can't just have a random conversation. I mean, I can, but to really get into the numbers, I gotta have a calculator and a computer. call me anytime. I'm always available. Wonderful. And we're gonna have all of your contact information embedded into our show notes. Okay, cool. They'll be short.
So that wraps up another episode of Real Talk at Sterling Real Estate Group. And Rick, thank you, and we look forward to having you back. Thank you very much. This was great.