5 Critical Steps to Know Before Purchasing Your Next Home!

S1 E19 – 5 Critical Steps to Know Before Purchasing Your Next Home!

Rick Ripma  0:00  

Are you thinking about buying a home, but you have a home to sell? What do you do? We're going to talk about that today with the Gurus

Announcer  0:13  

Advisors Mortgage Group is proud to present in Indys Real Estate Gurus hosted by Rick Ripma, the hard working mortgage guy, please contact Rick for all of your mortgage needs at HardWorkingMortgageGuy.com That's HardWorkingMortgageGuy.com. Now, here's the HardWorkingMortgageGuy, Rick Ripma.

Rick Ripma  0:41  

I'm Rick Ripma, your hard work and mortgage guy and I'm Ian Arnold, with Advisors Mortgage Group and this is Indy's Real Estate Gurus, thank you so much for joining us today. We truly appreciate it. You know, we're talking about we're going to talk about housing and selling your you know, buying a house it what do you do? How do you set that up? Especially if you have a home to sell? You know, or you have a current home? What do you do? You know, what are the options there? And there's so many people in that position, that I think it's a very relevant thing that we talk about. And we're going to specifically talk about it in this market. Yes, correct. Because this market is a little different than other different. Yes, very, very much a different a different setup. But before we get into that, I want to talk about the the actual real estate market, you know, what's, what are the numbers looking like, because we're going to refer to some of this as we go. And this information is coming from MIBOR, which is the Metropolitan Indianapolis Board of Realtors. And they put together every month they put together the market analysis and they show us what's going on in the market. And I think that it's extremely important. Some of the pieces I just pulled out really, real quick was the the median home price in Indiana and Indianapolis and metropolitan area, I believe it's 16 counties. And you know, Marion County and the 16 counties surrounding every place that MIBOR is a part of or is over. And the median sales price for for May was $287,625. That's up 4.6%. month over month. So from April to May, it went up 4.6%.

Ian Arnold  2:35  

That's awesome. Especially if you currently own a home right now.

Rick Ripma  2:39  

Yeah, it's it's funny, because they're talking nationally, they're saying, Well, you know, we're looking at some of these places are saying, you know, we think the appreciation this year is going to be 5%. We're so far above that after the first five months of the year, right? That I mean, we'd have to decrease in value to do that. And I don't hear anybody at this point in time, I'm starting to hear murmurs from people who don't know what they're talking about, who don't understand the facts of what's going on, which we've talked about on the show several times, actually, probably many more than several. So it's not really a market that we're worried about. But the median price, as we said, went to $287, 625. Now to put that in and context, the national average went up to $407,600. So we're still very affordable.

Ian Arnold  3:28  

Yes, easily. I mean, just like we talked the other day about the prices in San Francisco and Boston. I mean, they were double and four times as much us.

Rick Ripma  3:40  

Not that they don't earn more income, but I do. Yeah, it's it's a huge difference. So we're still very affordable here in Indianapolis, close sales. This is all part of how well this is going close sales for May of 2022. month over month over APR was up 10.4%. That's 3336 home sales. That is tremendous. In April, we had 3021. So we're we're up 315 home sales. And it's an it's not it's not something that you wouldn't expect because we're hitting that market. This is a normal market. We see this every year. We see the an increase in homes coming on the market. We see an increase in sales, it's called our spring market

Ian Arnold  4:31  

is what we've been talking about the last couple of months is this would be the time if you're if people are looking to buy this is when houses start going the market during that spring, summertime you start seeing a lot of houses hit the market.

Rick Ripma  4:43  

Yeah. And it's a great time to buy. It's a great time to sell this market strong for a seller anyway. And there's more there's more homes coming on the market, but there's also more people, maybe not more people but there's still more people looking to buy homes than there are people looking to sell homes. that's what's creating, you know, we have we have a buyers a seller's market right now.

Ian Arnold  5:04  

Well, the other really the days on the market has dropped again. Yeah, it was 16, could you do that, then it would drop to 15. And now it's 13 days on the market

Rick Ripma  5:14  

days. That means that when you put your house on the market, the average sales within 13 days, that's less than two weeks, that's unbelievable. And then normal. They say a, what do they call it a balanced market? Is is six months on the market? That's crazy. Very, yeah, that's the experts. I don't know sometimes I'm not too buying into some of these experts. But that is a that is a crazy number. And that's down 13.3%. So that's 13 days on the market is down from 15, which is a drop of 13.3%. Still, that is that is very significant. Our month inventory is point seven, meaning that we have enough homes, with the homes we have on the market, they should they should all be sold and point seven months.

Ian Arnold  6:00  

And the thing to also think about is with all those houses coming onto the market, as we talked about, it didn't change from last month, it stayed the same. Yeah.

Rick Ripma  6:10  

That's That's crazy. And I think this is another piece that we should look at, you know, nationally, the the national average month inventory is 2.6% or 2.6 months, 2.6 months, we're at point seven, the Indianapolis market is much stronger than the national market. Our existing sales went up 10.4%, the National existing sales dropped 3.4%.

Ian Arnold  6:35  

Do you think that could be because our average price is much lower than others around us? I mean, I know we're in the Midwest. So it certainly

Rick Ripma  6:44  

could be it's hard to say why I'm exactly why I think that we are getting a tremendous amount of people coming from the west coast coming from Colorado, at moving here. And because our prices are so they can get so much more home here than they can where they where they live, and when they don't have to work where they like to work in

Ian Arnold  7:07  

the office too much. Right? You know, but that's changing. Yeah, you're starting to see some companies that say, Oh, you have to come into the office now. So it'd be interesting what happens where there's some of those people that came from California or wherever moved to another state? And then they're like, Oh, you gotta come back? Do they stay or and find a new job? Or do they go back

Rick Ripma  7:28  

here, maybe they'll never be asked to go back. Tesla said, everybody has to come back. But I think a lot of companies, and I'm sure that many of the people who moved here had a pretty good idea, they wouldn't have to be going back into the office, they wouldn't have moved.

Ian Arnold  7:38  

Yeah, you would hope so

Rick Ripma  7:40  

you got to think that's the case. So as we look at the market, if you look at MIBOR, the Metropolitan Indianapolis board or realtor numbers, it's really we have a very strong market, there was the pending sales, I thought these are a couple other numbers I wanted to talk about pending sales, went up by 16.5% went from three 3400 to 3960. The price per square foot went up, it went from $162 a square foot $168. That's a point 3% increase. The act of inventory went up. This is what we talked, there's more homes on the market. So it went up 14.9%. What went from 1998 to 2295. So we are seeing a few more houses on the market. But they're selling very, very quickly. It's not something because Oh, there's more houses on the market. I can wait and see. You can't wait and see. You gotta go Yeah,

Ian Arnold  8:38  

forward. I mean, I've had several houses, let's just say in the last four months go sell in my neighborhood, they put it on for offer, they put it up for sale on Friday. And they accept they go ahead and go ahead and get all their offers. And on Monday they make their decision. They don't wait. So this whole little just sitting around. Oh, well, we can go look at that house next weekend. No, that's you can't do that today.

Rick Ripma  9:00  

Yeah, and you know, it's I think it's the hard part. I think there's several things that are rather difficult. That's one of them. You have to go you see the house and you better be able to make a decision very rapidly to lead to that just real briefly. If you're if you're gonna go look at houses, what we're going to talk about this but what do you need? Oh, you need a pre approval letter got to have a pre approval letter. You can't make an offer on it. I'm gonna look at it. If you have any, you know, you'd need something like that You're out. You're thinking about looking at houses, you're thinking about selling your house, you want to talk about it, talk about the pre approval, how we go about that just go to HardWorkingMortgageGuys.com  That's HardWorkingMortgageGuy.com You can get all our information off of there, give us a call, send us an email, send us a message off the website. All of that works.

Ian Arnold  9:43  

Yep. And also the other nice thing is is well, one we had a fantastic Father's Day special and just so in case and I understand people will get busy. If you didn't miss it or you want to listen into your other shows. We're on our podcast is called Indys Real Estate Gurus. And we're basically on everything. So look us up under Indys Real Estate Gurus, and you can listen to all of our past radio shows.

Rick Ripma  10:09  

Yeah. And you know, I heard I think you found it. Some of those, you have to use an apostrophe? S, some of them you don't correct. I would try if you're out there looking at it, just try it without if it doesn't, if can't find it, try it with because we're pretty much on every single podcast provider there is. I mean, we've tried certainly tried to sign up for every single one of them. And I haven't we've been accepted by everybody. We've we've gone to sign up.

Ian Arnold  10:36  

Okay, Rick. So we did this for the NBA Finals. So I know we got a little distracted with Father's Day special last week. So but the NHL is going to have their finals and everything. And so what do you think the average house price in Denver, Colorado is for the avalanche?

Rick Ripma  10:59  

In Denver? Yep. I would guess 625

Ian Arnold  11:04  

Close 589. So figure out how to be up there. Yep.

Rick Ripma  11:08  

I know. Denver is expensive it is.

Ian Arnold  11:11  

Now here's the one that really shocked me. So the other team that's in there is Tampa Bay Lightning for their third year in a row. But what do you think their average house price and remember, Indianapolis now less than that the surrounding areas? Just Indianapolis, aka Marion County is 220. So do you think Tampa Bay?  480? 278.

Rick Ripma  11:35  

I always guessed 480 because it's on the water.

Ian Arnold  11:38  

Yeah, I thought it'd be much higher. And I said this couple of family members and they're like, Well, why are we living here? So if you are looking to move to Tampa, let us know because we can do loans in Florida.

Rick Ripma  11:51  

Here's the thing. Tampa was a great, great area. But right now people are like, wow, it's hot here.

Ian Arnold  11:56  

Oh, yes. Could you imagne down there.

Rick Ripma  11:58  

It's really hot down. That's good for the snowbirds. That's right. Well, after the break, we're gonna go over the top five things you need to know before purchasing another home or your next home.

Unknown Speaker  12:11  

Advisors mortgage brokers licensed by Indiana Department of Financial Institution equal housing opportunity. NMLS 33041 Rick Ripma NMLS 6649

Rick Ripma  12:19  

Hi, I'm Rick Ripma. With the hard work and mortgage guys and advisors Mortgage Group, where we believe delivering the best mortgage for you is why we exist and it's how we all succeed.

Unknown Speaker  12:28  

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Ian Arnold  12:32  

and hardworking mortgage guys, we believe in custom tailored loans, not the one size fits all

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We believe in offering the same quick online process that the bookstore mortgage companies brag about whether you're refinancing or buying your first home,

Rick Ripma  13:02  

we believe there is the best mortgage for you and we believe we are the team to deliver it find us online at hardworking mortgage guys.com.

Announcer  13:14  

Brought to you by advisors Mortgage Group, where we believe the more you know about financing a home, the less stressful buying and refinancing will be.

Rick Ripma  13:23  

Welcome back. And thank you so much for joining us today. I'm

Ian Arnold  13:26  

Rick Ripma, your hard work and mortgage guy and I'm Ian Arnold with Advisors Mortgage Group.

Rick Ripma  13:30  

And if you would like to get a hold of us you have any mortgage needs. You want to talk about mortgages, pre approvals, pre qualifications, your credit, any you know your first time homebuyer just need some basic information, go to That's HardWorkingMortgageGuy.com That's HardWorkingMortgageGuy.com. And you can look us up there, we do have our podcast on the website also. So you can look it up there you can go to if you want to hear the show, you can't hear it all you want to listen, we are on that all the podcasts set up so you can do Indys Real Estate Gurus. And some of those have apostrophe s on Indy's and some of them don't. So you just have to kind of play around with it. So,

Ian Arnold  14:11  

first, we have a question or the week Ah, okay, so let's not forget that the question week is by a Debt Crusher mortgage, which again is by us where we help you relieve your stress, stress by consolidating your debts into your home. And makes, especially in this economy makes it a lot easier to go month to month and get through that for some people makes all the difference in the world. For others. That

Rick Ripma  14:36  

doesn't make any sense. But, you know, we, we believe that the best thing to do is talk with us correct because we're not going to try to get somebody to do a mortgage that it makes no sense for them to do a mortgage. We want to show them the documentation. What we want to do is we give you the tools that you need. We're going to put it all together and a debt consolidation format on a the It lays it all out, you can actually play with it. It's, it's, it's user friendly. It's what do they call that interactive. And you can do that. And you can see if it makes any sense for you. So it's

Ian Arnold  15:12  

the nice thing also, is we will look at you right in your face and be like, hey, look, this doesn't make any sense, right? You should just scrap this or might want to think about different things. Or we've also had the other, this is going to be a life changer for you.

Rick Ripma  15:26  

Right? Yeah. And most people know that if it wasn't when they see it, most people know. But if it's not up to us, we just want to make sure that you have all the right information to make the correct decision for you. That's the that's the key for us.

Ian Arnold  15:39  

So last week's question was what is as big as an elephant but weighs nothing at all? The answer is a shadow of an elephant.

Rick Ripma  15:47  

Yeah, it makes total sense.

Ian Arnold  15:49  

All right, so why did the teddy bear say no to dessert? Get your answer next week?

Rick Ripma  15:57  

That's a good one. Your kids? Do they? Are they able to answer all these?

Ian Arnold  16:01  

My son tries but doesn't really my daughter just laughs and runs off? But? So we get these questions quite a bit. So I tried to put five of the critical questions that we get asked about if somebody already owns a home. What if they're thinking about possibly moving on getting a upgrading or even downsizing? What should they be looking at? So, Rick, I'll start with that. So the first thing is, is where to start the process. And as I tell people, it always starts with you just talking to us, because then we can lay stuff out. And then we can we can either get your pre qual and we'll go through the differences or get you a pre approval. And those are two different things. But the first step is always to us, and then to a realtor, because first is all about the finances. And that's what we handle is how are you going to afford it? What can you afford all that stuff. So that again, starts with us. So and the nice thing is, is you don't have to do it right away. So let's say if you're thinking six or 12 months down the road, I'm thinking I might want to do this. Well, that's what that's what we can do is almost like a prequal, we can get gather your information, we don't have to run credit. We don't have to, we'll just take your information from what you give us. And we can just put plug numbers in. And we say, hey, look, yeah, this actually looks like if you wanted to sell your house, possibly. And if we got this, you can put it to this new house. And then you have that, and then your payments would change $300 a month. Are you okay with that? And then that can get you to think in you can sit down discussion with the wife or the husband, whichever. And then go from there.

Rick Ripma  17:50  

Yeah, there's several things there that you talked about number one, you know, every survey, I've seen that when they've surveyed real estate agents, they all say the very first thing you should do is get a pre approval letter. Yes. But the very first thing most people do is they call a real estate agent. Yeah. Okay, they're not doing it in the right order, the very first thing they need to do is get a pre approval letter. Now, like you said, if you're six months, eight months a year out, that doesn't mean it doesn't make sense to talk to us. Number one, I have seen many, many people who said they're six months, eight months a year out, and they buy a home within a month, Correct weeks. So it depends, because the right home can just

Ian Arnold  18:25  

pop up, and especially in today's market, you like we said you can't wait, yeah, you're gonna be

Rick Ripma  18:29  

watching the home and thinking I want to buy that home I want and all of a sudden, there it is. And now you're ready. What all I know is, is that it does move up many, many, many times their timeframe. But like you said, we don't have to run credit. But on the other side, we it may be critical that we run credit, maybe you have maybe there's somebody who has credit issues Correct. All right, we can, we can help with credit issues. And it doesn't have to be major problems. I'm not saying that you have to have a 500 score, you could have a 710 score. And if we get a little bit of time before you go buy a home, we can get that score up so that we can get you can get a much better rate much better terms for your mortgage.

Ian Arnold  19:12  

Yeah, I mean, again, that's what you have to look at. I mean, you have to look at the money you're spending if I can save you 10 to $20 by moving you up 10 points. And your credit. Well, yeah, let's do that. Yeah, this

Rick Ripma  19:26  

it's not just 20 bucks, you're talking 20 bucks a month, 20 bucks a month for 12 months. That's $240. And if you had that mortgage for 10 years, that's $2,400.

Ian Arnold  19:38  

Yeah, it adds up quickly. You just don't really you don't really think about it. But yeah,

Rick Ripma  19:42  

and it also makes a difference on your homeowners insurance for many companies makes a difference on if you go get a job. Credit scores matter in today's world. Yep. And sometimes there's, in fact that I think 50% of all credit credit reports have erroneous information on them. Some of that erroneous information doesn't matter. There's does. So if there's any indication that there's any credit score, difficulties, we want to work on those, we want to help get that taken care of so that you can move forward. And that's sometimes obviously there's nothing there. There's nothing to worry about if you know you have high credit scores, and no, we don't want to run your credit, credit is only good throw on a mortgage, we run it, it's good for four months, 120 days, and that's it. So we have to make sure that we don't want to continually run it, we really want to close on the credit we run, unless there's credit score issues, then we want to get those scores up so we can close on the higher score.

Ian Arnold  20:36  

Alright. Now the other good question I get is, should I fix up my current house if I want to sell it?

Rick Ripma  20:43  

You know? That's a tough? That's a good question. All right, and you got to go with your real estate agent to a point. But on the other side, like in this market, personally on this market, if I were going to sell my home, I wouldn't do any work to it, because it's going to sell and it's going to sell Yeah, what average time is 13 days?

Ian Arnold  21:05  

Yep. I mean, the way I've always looked at it is It depends on what it needs. Like if you're talking about paint in each room. Alright, that that may not do too well. But let's say your floors all broken. And are their carpets all completely stained up. All right, yeah, you might want to do a little bit of stuff. But if you don't have that, then don't don't invest a lot of money is basically what I was. I don't know. I mean, if you want to remodel your kitchen, I mean, is it fully worth it? I don't know that you definitely want to talk to your real estate person. But your realtor but I don't know if I'd invest a ton of money.

Rick Ripma  21:45  

Yes, but you know, we both years ago worked in the car business, right. So we understand the selling of cars and selling of houses is not significantly different. Now you have a car come in, and it's dirty. And it's it's a it's a mess. And and you run it through your shop, and you get it all cleaned up. It makes a huge difference. Presentation presentation. Ie I even saw were even professional used car managers who look at cars every day, the difference between you bringing that car in dirty to have it appraised and clean makes a difference in the value of the car. Yep. So you do want paint as an easy thing to do. But clean your house. You know, clean it, make it spic and span make it feel clean and neat. It will it will help in this market. This is the other thing we actually wanted to go over and I forgot is a percent of asking price, the percent of we're selling our houses for 102.4% of the asking price. So if you're asking $100,000, you're the average purchase price is 102,400 $2,400. Higher than you asked on $100,000 house that in and of itself tells me that you know if you if you just make it clean and neat. So it's nice to walk through. I would be very leery personally of doing anything major to my house to make it to thinking it's going to make it more sellable unless somebody listen to a top agent knows what they're doing. Listen to him. Correct. Okay, listen to him. But I want to know why and make sure it's the right thing for me to do.

Ian Arnold  23:25  

Okay, so the second one, or the next question would be, can you get pre approved for a second home while you're still at your first one? So this one, there's a little there's a couple of different scenarios, but just let's go with right now that can you get approved for a second house? Like if I have a house right now?

Rick Ripma  23:44  

Yeah, the easy answer is yes. Yes. I mean, all the same numbers, everything has to come. It's are you going to sell that current the current home before you buy the new one? Are you going to want to keep it we look at that if you are going to keep the current home and buy before you sell it or you're going to make it a rental property, then where's the downpayment coming from? It's one of the things a lot of people forget I'll talk to them you probably do the same thing. And they say we want to sell or we want to keep our house want to buy without without contingent, which is a huge thing in our market today. And it's like okay, so where's your downpayment? How much money do you have for downpayment if you don't sell your house? They never thought of that. Yep, some people's like, oh, yeah, I got money in the bank, no problem. Others it's like, I don't have any money. Well, that's a problem. Right? That is so then we have to go down different paths. Sorry.

Ian Arnold  24:29  

No, no, you're good. Because what we've we've seen some people do is pull out a small home equity line and then use that as a downpayment. If they wanted to keep that first house a

Rick Ripma  24:38  

lot of people do that. The another one that's a really good option is if you have a 401k and convert many 401k is the one one of the things they allow you to do is borrow against it for your for a house to buy a house, so you can go and borrow that money. If you sell your house right away. And in this market, you probably will if you're going to sell it not keep it as a rental property. Then you can put that money back in there's usually a time And from what I've seen most of the time, I don't know your, you know, their 401, K's or any of that, yeah, normally see about six months, you got to get it back in there, but check with your 401k People find out what it is. That's a great way because you can borrow that money from yourself. We don't even count the payment against you because you're your money.

Ian Arnold  25:15  

Yep. And then we briefly talked about so but what happens if you have to sell your house, so you can't afford two payments? Like you mentioned earlier, you can put on contingent that I sell my house. And that can work, especially in today's market, I don't think it'd be too hard to do something like that. Just because how fast some of these houses are selling. I mean, so let's just say, hey, look, I put an offer on this house, hey, this contingent upon me selling mine? Well, again, houses are selling in 13 days, I don't think you'd have an issue. Right? Let me long as your house is ready. Hey, let's go ahead and put it on the market. And again, these are questions you knew you had to have things lined up if you want to do something like this. Yeah, the

problem is, the problem with that scenario in this market is the seller. If they get six offers, yep. If you're contingent and four of them are non contingent, then you're off, your offer goes away, every agent I've talked to says that what they do in this market is they look at the, whatever offers they get, and they get rid of the ones they aren't going to even look at. And a contingent offer is one of the first ones it is the first one to go. So you really have to try to do it non contingent. So a lot of times we just have to figure out a way to do that. It means that you're taking some risk if your house doesn't sell but in this market, what kind of risk is that? That's kind of what you were

correct. Yep. And then the last one we get and you touched on a couple of times is what if you just want to rent out your old home, you can and then buy another one which you can do that. Now when you do change it to a rental you do have to have what is it like six months saved up of payments for it and everything like that, but you can easily go ahead and get it as long as mathematically it works out if your income and everything you can

Rick Ripma  27:13  

definitely do it, you do have to have six months and it has to be both houses’ payments, principal interest taxes, insurance, homeowners association dues, all that stuff. But on the positive side, we can use a retirement fund as reserves, even though you don't touch them can't touch them, we can use those as reserves. So we're in pretty good shape. So it is one of those things that they can do. And it is a great way to do it. I have a customer doing that right now. That's they want to keep their they are keeping their current home as a rental. And they purchased another home, as it all works out perfectly for them. The other thing about it being a rental is we can use what the rental income is going to be based on what the appraiser says to qualify. So a lot of times they can qualify even though they may think they can't. But we are running out of time. So just wanted to thank you, everybody, for joining us today. We are truly grateful to you. And we want to let you know next week. Amazingly, next week is July 4. That's amazing to me, and we're going to talk about VA and for the veterans out there, but we think that the VA Loan Program is an awesome program. We really think that should be a benefit. If you have any questions you want to talk with us go to That's HardWorkingMortgageGuy.com That's HardWorkingMortgageGuy.com Thank you for joining us. Have a great weekend.

Announcer  28:33  

Branch NMLS number 33041 Rick Ripma NMLS number 664589. Ian Arnold's NMLS number is 1995469 equal housing opportunity, some restrictions apply?