Financing Your Suncoast Dream Home: Insights with Oksana Middleton

In this episode of Jim Sells the Suncoast, Jim speaks with Oksana Middleton from Mako Loan Shark about navigating the world of real estate lending on Florida’s Suncoast. With seven years of experience, Oksana shares practical tips for securing the right mortgage and maximizing your buying power.

Episode Highlights:

1. Traditional vs. Non-Traditional Loan Options
   • Traditional Loans: Fixed and adjustable-rate mortgages for buyers with steady income and good credit.
   • Non-Traditional Loans: Flexible options like bank statement loans for self-employed buyers or those with non-standard income.
2. Timing Your Purchase in Today’s Market
   • Insights on current interest rates, the potential impact of elections, and the importance of assessing your own timing needs and market conditions.
3. Credit Scores & Loan Eligibility
   • Credit scores matter, but lenders focus on repayment history. Oksana’s programs can work with credit scores as low as 500.
4. Simplified Pre-Approval Process
   • Oksana breaks down the steps to getting pre-approved and shares how setting a clear budget early on makes the entire home-buying process smoother.
5. Preparing for Closing Costs & Down Payments
   • Tips on handling closing costs and down payments, including options from 0% to 20% down, depending on your goals and financial situation.
6. Debt-to-Income Ratio (DTI) Essentials
   • Why DTI matters and strategies to improve it, like reducing expenses or adding a co-borrower.
7. Home Equity as a Financial Tool
   • Leveraging home equity to make home improvements, pay off debt, or invest in more property.
8. Refinancing Opportunities
   • When it makes sense to refinance, especially if your interest rate is high.
9. Planning for Long-Term Financial Health
   • Oksana emphasizes budgeting and tracking finances monthly to stay prepared for any changes.

What’s Next?

Interested in buying or selling a home on the Suncoast, or connect with this week's guest? Reach out to Jim at jim.ahearn@gmail.com or visit his website, Jim Sells the Suncoast.

A Personal Note from Jim:

Hey there, I’m Jim Ahearn, your go-to real estate guide and host of Jim Sells The Suncoast podcast! 🎙️✨ Dreaming of Florida life? I’ve got you covered! As your dedicated buyer's agent, I’ll handle everything from walk-throughs to closing, making your home-buying journey as smooth as a Florida breeze.

Whether you're local or tuning in from afar, I’ll bring the Suncoast to you with virtual tours and expert advice. Let’s chat about your dream home and I'll connect you with all the right people to make it happen.

Ready to move to paradise? Drop me a line – I can’t wait to help! 🌴🏡

Transcript

Jim: 0:52

All right, and good morning today. I am fortunate to have Oksana Middleton, Mako Loanshark here to talk about the lending side of the business. She's Florida based and been in the real estate industry seven years first as a home buyer going into investments and then swapping over to the other side where she's seeing the activity and ways to leverage, especially other people's money into helping you find the home that you're looking for. Welcome and good morning.

Oksana: 1:20

Good morning, everyone.

Jim: 1:22

Yeah. My pleasure. Let's jump right in. I wanted to talk a little bit today about, if you're trying to get that lifestyle on the Suncoast, how do we afford it or how do we finance it and how can we do it? What are the different types of mortgage loans available to homebuyers on the Suncoast and how do they cater maybe to the different lifestyles?

Oksana: 1:40

Oh, sure thing. There's 2 types, to quickly identify that is there's a traditional and a nontraditional option. A traditional option is going to be what most people think of a fixed rate or adjustable loan options that are typically going to be backed by the government sponsored agencies they are going to have specific guidelines around things like your credit score, your income as well as down payments. Now, these are going to be great. If you have steady income and a decent credit history, but we know that not everyone's going to be fitting into those boxes. So that is where the nontraditional options for financing come in. These are going to be designated for people who might be self employed. For instance, like we know a lot of people move down to Florida to enjoy the lifestyle. You want to be able to, hit the beach, but also do a little bit of work. Having irregular income, some people are commission based, or people might even have some past credit issues. Now, non traditional options can include things like a bank statement loan. That's where I would look at your bank deposit instead of a traditional income verification, or even a private mortgage where we could be a little more flexible on the requirements. Essentially, these options are really to help open doors for people who might not qualify under the traditional guidelines, but are still perfectly capable of buying a home.

Jim: 3:14

Okay. Maybe somebody who's a, what we call a W 2 working for somebody getting a steady paycheck, they can check the boxes, go through a traditional style mortgage application and be backed by the government. And then, if you're 1099 or working some other way with your income or not even have an income, but maybe having something available to help support it, you have other means and methods to get a loan.

Oksana: 3:37

Exactly.

Jim: 3:39

Okay. How are the current trends in mortgage interest rates impacting home buyers on the Suncoast? And what should prospective buyers consider?

Oksana: 3:47

Honestly, I've been getting this question a lot, especially with the, elections coming up,

Jim: 3:54

right?

Oksana: 3:54

Everyone's asking, should I be buying it before the election or after the election? Personally, I recommend to consider a few factors. Now, we know that elections often bring uncertainty, especially around Policies that might affect the economy, interest rates, housing regulations, so some buyers would prefer to act before the election to avoid potential changes that could impact their housing affordability as we know, supply and demand more than the electoral outcomes. So if the demand remains high and inventory low prices are going to continue to rise, if there is a dip in the market due to economical or political uncertainty, waiting could make sense. But most important is just consider your personal situation. Do you have a need to buy right away? Are you relocating for a job, for example? Is there an expanding family and so on? Or are you actually able to afford to wait? And also, is it a buyer's or seller market in your area, right? In general, if you do find a good deal, I would recommend to buy before the election.

Jim: 5:12

So I guess it comes down to, it depends, right? You know what your personal factors are. And I know it can be very hyper local. I know looking at some zip codes, they're definitely in a buyer's market and other zip codes right next to it or in a seller. Let's shift gears a little bit and tell me, how does a credit score specifically impact someone's ability to secure a mortgage?

Oksana: 5:35

Honestly, I have programs that can go as low as 500 credit score. Now, what the most important factor is not the credit score, but actually your repayment history, because that is what's going to be weighed out the most with the lenders.

Jim: 5:55

So that's just really a starting point. Reach out. There's a lot of other factors involved.

Oksana: 6:00

Yeah, it's not a limitation. That's all I will say

Jim: 6:05

walk us through the mortgage pre approval process. And what's crucial for it to be a smooth transaction?

Oksana: 6:13

Absolutely. So the process can feel overwhelming at 1st and trust me when I tell you, as I've. Been investing in real estate. I've purchased plenty of homes. So It feels very daunting, but it's actually pretty straightforward once we break it down So it is going to start with a pre approval That's where we're going to look at your financial situation. So your income anything Debts, your credit score your cash available for like down payment, and that's going to help figure out how much you can actually borrow. In a sense, we're setting your budget now from there. Once you found the home that you love, we get into an actual formal application stage and that's where we're going to submit all your paperwork to the lender. Once the lender approves, they're going to issue a commitment letter. And then we move to the underwriting process, which in a sense is just a fancy way of saying that lender double checks everything before their approval. And then once every box has been checked, the loan is funded. And that's where you guys get the keys to your home. Now that does sound overwhelming, but that's why I'm here and I will guide you through every step.

Jim: 7:32

Yeah, I think people they're making the biggest purchase of their life and you do that maybe one to three times where real estate professionals are doing it probably hundreds of times. Listen to them follow through, it's not as daunting as you said, but there are certain things you have to do and you have to hit the timelines. You have to hit the commitments that are listed in there. Okay. Making sure that you follow through that checklist. What should home home buyers know about closing costs and how can they prepare for them?

Oksana: 8:05

Great question. Honestly, I think the most important thing for people to understand is you don't actually have to have everything figured out before you talk to a mortgage broker. My job essentially is to work with you to find the best solution. Now it's going to be helpful to know your credit score and your income and how much you are comfortable with paying each month. But beyond that, I am here to help you with all the details. The earlier you get pre approved, the better it's going to give you a clear idea of what you can afford. And it makes the whole process. So much easier once you have the financing in place Now i'm sure you've dealt with plenty of cases where the buyers fall in love with the house But they're not pre approved and then they find out they can't even get the one that they need And what I typically do with my initial conversation with the buyer is I try to figure out their buying power before we even begin the application process. So I find out what they currently pay, what their new payment goals are, and the cash that they have available. And then I explain to them the cost of money and within about 15 minute conversation, you're going to know your buying power without doing any paperwork.

Jim: 9:28

Yeah, I think that saves quite a bit of disappointment where, you go out and you look for that house and then when you do the numbers, you're like, wow, I'm not even close. So having that framework of knowing exactly what you can do, there's a lot of options within the framework, but you got to know the framework. And when we look at that, how does the down payment impact the terms and options for a mortgage loan?

Oksana: 9:52

There are multiple options. I have programs anywhere from zero down payment to, 20. The 1 thing to consider is the more money you borrow from the lender, the higher your. Interest rate is going to cost the riskier. You're alone, you know That's how the lender is going to assess you So the more you're able to buy up front essentially is going to help you in the long run.

Jim: 10:21

What advice would you give to a first time home buyer? on the Suncoast as they navigate the mortgage market.

Oksana: 10:28

I would say don't be afraid to start the conversation. There is a lot of flexibility out there with alternative financing options. And even if you think you guys are not ready, talking to a mortgage broker can help you understand the exact steps that you need to take. It could be working on your credit, saving for a down payment, or even exploring non traditional options. So there is a whole ownership path to almost everyone.

Jim: 11:00

Would you say that it's very different than what our parents faced when they came in and it was 20 percent down and you got your loan and that was your option. Now working with people and talking to them, you have 0 percent down, 5 percent down you could go traditional and 20 percent down,

Oksana: 11:18

that is correct. So I actually immigrated to United States a little over 20 years ago. So my mom was the first time home buyer herself when we got into it. So just to actually have the opportunity as an immigrant to be able to own a house within the first year of moving into the country was mind blowing. And that just speaks volumes to the opportunities available for home ownership.

Jim: 11:49

So how could a Suncoast resident enhance their chances of securing mortgage approval whether it's local market conditions or unique circumstances?

Oksana: 11:58

Again, I would just say start the conversation with the mortgage broker. That way we can assess a baseline of where you're at and what you need to do to improve in order to have a higher buying power.

Jim: 12:13

What role does debt to income ratio play in mortgage applications? And how can buyers optimize that?

Oksana: 12:20

Debt to income ratio does play a huge role. Typically any Traditional options. You would have to have a debt to income ratio of 49 percent or lower. Otherwise, they would not approve your loan. So we would have to go and look for non traditional options. Or again, we would need to see how we can offset. Your debt to income ratio by either bringing in an additional borrower onto the loan or reducing your housing expenses. For example, a lot of purchases with condos are unfortunately a difficult problem due to the high fees. Unfortunately, the condo associations that carry flood insurance, they don't have full policies. Initially, when you get that calculated, that could offset your housing expenses to be even higher because you didn't initially plan to have flood insurance, did you? So these little things can make or break it for you.

Jim: 13:29

How do the different mortgage terms 15 year versus a 30 year affect long term home? Homeownership costs.

Oksana: 13:38

Essentially, the biggest thing I would say is going to be equity. Now, do you plan to be in your home long term? If you don't, I would recommend going for a 15 year because you're able to recoup your money quicker. Now, if you don't plan to reinvest that money and you plan to stay in your home. pretty much for your lifetime and potentially have a family generational home, then you can go for the longer span.

Jim: 14:09

Okay. Let's talk about the concept of points in mortgage lending and when might it be advantageous for a homebuyer to to pay them?

Oksana: 14:19

Great question. So going back to the DTI ratio. For example, if we're pricing something out and the DTI ratio is too high, we could end up reducing that by purchasing down

Jim: 14:38

basically prepaying some of those expenses.

Oksana: 14:41

Exactly.

Jim: 14:42

Okay. Can you clarify the requirements and benefits of mortgage insurance?

Oksana: 14:48

I'm not certain on that, but the, typically you will have to pay mortgage insurance if you put down less than 20%. For the whole purchase now, you can either actually prepaid up front, or you can actually just break it down over the life of the low. Again, going back into your financial situation. Are we trying to make something work? We can again, prepaid that mortgage insurance.

Jim: 15:19

What are some of the common misconceptions or mistakes that residents have about mortgages or what are you seeing that, people don't know until they actually sit down and talk with you?

Oksana: 15:32

That's a very good question. Oftentimes just as a mortgage broker, I'm definitely seen with a negative side. Again, depends on the society that you were brought up and because some people see mortgage as a form of debt, so they don't even want to be associated with a mortgage. I personally see it again as an opportunity. There is so many real estate investment opportunities within the Arsancos, and just to have an opportunity to live in such a beautiful area is just mind blowing.

Jim: 16:14

Okay, how does mortgage refinancing work, and what scenarios might prompt a homeowner to consider that option?

Oksana: 16:22

Great question. I'm actually working with some people that are going to be using some refinancing and even home equity line of credit to rebuild their, some of the damage that they've got within our recent hurricane that has hit. Refinancing is amazing. If you, for example, purchased a home in the last two years and you purchased a home at a higher rate, Like around 7 percent right now. Benefit. The rates are very beneficial for you to refinance, which can also help you lower your monthly payments. And I know with inflation hitting us all hard, we can almost, benefit from a few dollars,

Jim: 17:05

Is there a standard spread that you look at for how much does the rate have to come down to refinance? Or is it really just have to do the calculations each time and see? What makes sense?

Oksana: 17:17

So actually there are guidelines mortgage brokers In order for us to provide you with a deal it has to be favorable to the borrower And at least reduce your expenses by one and a half percent.

Jim: 17:33

Okay What advice do you have for suncoast homeowners? Interested in leveraging home equity as you just talked obviously there's some times where maybe you need to do repairs You how else can they use it? I know some have used those to invest in additional property for investments. But what are some of the steps or how can we manage that?

Oksana: 17:53

Great question. Some of the ways to manage that too is you can actually pay off credit card debt.

Jim: 17:58

Okay.

Oksana: 17:59

And, we have holidays coming up. We all know sometimes we could acquire a little bit more than we anticipated. Or for example, you want to, make some upgrades to your home, right? So you already have that equity, utilize it, upgrade your home, and then get it reappraised and guess what? The improvements you've made are giving you even more equity. You can pull that out and invest in another property. And it just keeps on giving from there. I have a very easy refinance process. It could be done within a five minute of application and then can automatically show you an approval, or even if it does deny you, I will still review that process and still look at all the options that you may be eligible for.

Jim: 18:47

Okay. How can Suncoast homeowners effectively manage Financial challenges that can impact their ability to meet mortgage obligations.

Oksana: 18:56

Great question. I think the biggest thing is setting the budget and staying within that budget. I personally monitor my finances every month so I review my Bank statements. I review my credit card statements that way I can see if there's been any Changes to my financial situation and I can account for that if You're going to be needing some improvements trying to set a budget and put away Little by little rather than having to run into a huge expense when you do end up getting into that situation.

Jim: 19:36

What strategies would you recommend for any homeowner interested in paying their mortgage ahead of schedule? And when is this approach beneficial?

Oksana: 19:45

Yeah, that's possible. I know that there are options of making two mortgage payments a month, which can help you pay that off a little quicker. But again, what is your long term goal, right? Do you plan to keep that property or do you plan to stay there long term?

Jim: 20:03

Perfect. Looking ahead, what emerging trends or changes do you foresee in the mortgage and housing market that buyers and sellers should be aware of?

Oksana: 20:12

As our Southwest Florida Suncoast location is always a popular destination. Honestly, I think that we're still going to continue fairly steady with the real estate market. I think we're definitely going to have a lot more nontraditional options for mortgages.

Jim: 20:35

Awesome. Oksana, thank you for coming on. I want to thank you for coming in and giving some of that wisdom. I know, when I talk to my daughter, it's one of those daunting things. She's Oh, what do I have to do to buy my own home? So having those resources and steps, Huge help. And obviously we'll put the show notes for anybody that's interested or ask questions. They can reach out touch base with you. And we'll go from there. So thank you again for coming out and spending the morning with me.

Oksana: 21:02

Thank you, Jim. I'm always here to help anyone navigate the world of real estate finance.