The Interview: Movement Mortgage’s Steve Schutt Discusses Rates, Niceville Housing Market

Steve Schutt of Movement Mortgage

Steve Schutt is the Loan Officer at the Movement Mortgage Branch in Niceville, Florida. Steve has been a Niceville resident for more than 20 years, is a Loyal Florida Gators Alumni and a graduate of Niceville High School. He serves on the board of the Niceville Chamber of Commerce and is active in his church and community.

If you want to get in touch with him about mortgages – or just want some advice, check out his website here:

Who is Niceville's Steve Schutt?

“I’ve been here doing mortgage lending in Niceville. Since 2004, we had a family business, and the purpose of the family business was to help me figure out my way into the business community here in Niceville. And allow my mom to step into something when she retired from civil service. So it did that. How I got into the mortgage business, I just kind of made it to the right place at the right time. And so that’s where I found myself, and I’ve been able to build a pretty successful team and business since then.”

Home Prices and Mortgage Rates Are Up. Why?

“The trends year over year, everything is higher, rates are higher year over year, home value is higher year over year. But the interesting thing too, though, is the amount of homes that are on the market is higher, the amount of time that this thing on the market is higher, but when they close, when they do actually like come to fruition and everything closes on down on that purchase, that that sale price is still higher than where it was last year.”

First of all, really bad is where we were okay; rates were high, insurance was high, and home values were rising. But there wasn’t a whole lot of supply. And so people were having to buy homes sight unseen, they’re paying over asking price or having to pay for their own closing costs. So that was really bad. That doesn’t exist in today’s market today, which is bad. So we still have home prices that have gone up, which means expensive homes rates are higher, insurance is higher. But people aren’t having to fight, in order to have the opportunity just to get into the home to get it under contract, they can actually go and look at four or five homes and make a decision as to which one may work for them. But yeah, the three big things right now, homeowners insurance is a big one, that if you’re buying a home, you really need to do some research on that. The insurance has the opportunity to be such a significant variable [from] home to home. So that’s a big thing.

Longevity, how long you’re gonna live in the home, that’s a really big one too, that needs to be considered. Because the longer you live in the home, real estate goes up. So even if it takes a little, a little dip or whatnot, if you’re gonna live in the home for the next 10 years, you’re going to do well in the home. And then the real big one is just that the the lowest price on the home is not necessarily going to be the best deal for the home. We, as consumers, are worried about what’s this going to cost us on a monthly basis. We weren’t able to get our minds wrapped around the fact that I’m buying a $500,000 home because we have confidence that in 10 years it’s going to be worth more than what we pay for it. So it’s an investment. But on a monthly basis, that’s what’s coming out of my paycheck every single month. And so there’s lots of different options for people to be able to get that a lot lower than what they may think that our current environment because of the other factors driving up the price.

How Do You Reduce Your Monthly Payment On A Home, Other Than Buying A Less Expensive One?

“It’s not always the price of the home. It’s not always the deal on the home. You may have a home that’s a $500,000 Asking price, and you want to come in and offer them 480,000. Well, that’s going to get the price down a little bit. And that’ll have some impact on your monthly payment.

But if you can structure with the seller to have them pay $20,000 In closing costs, so instead, they’re going to net $480,000, which is what your offer was, but now you’ve got $20,000 to play with to do some different programs that we have called temporary buy down programs.

Take today’s interest rate – if it was seven and a half percent, and the seller is willing to pay for you to have a temporary buy down. For the first year, you only pay on a four-and-a-half-percent interest rate; year two would be a five-and-a-half percent interest rate. Year three, six-and-a-half, before it gets to seven and a half. And the idea is that payments can be significantly lower in year one And two than it would be if you took the going rate today. That payment is going to be way lower than if they just lowered the price of the home by $20,000. And the goal would be that in the next couple of years, when we believe interest rates will come down, you then refinance into a low-interest rate and you have that lower payment for the longevity of the time you have the home.”

Are Mortgage Rates Going To Come Down Any Time Soon?

“So, the rates are the highest they’ve been in two decades. We do believe that they’re settling. Rates tend to, whether they’re going up or going down, they tend to settle in certain ranges. And they’ve settled into a peak range. Even The Fed looks like they won’t be increasing rates this month. And the percent chance that they will do in December is dramatically lower than just a few months ago when people are trying to predict this stuff. And mortgage rates aren’t necessarily directly tied to the Fed funds rate. But they certainly can follow suit. And so yeah, we believe that we’re in the peak right now. And most economists believe that sometime within the next year or two, certainly within the next three years, that we’re going to see interest rates come down pretty significantly from where they are right now.”

If You're Thinking Of Buying Investment Property in Niceville - Should You Wait Until Later To Invest?

“I think it’s all a numbers game, right? So if you’re a cash buyer on an investment property, you’re gonna be able to get that thing to cash flow a lot easier than somebody who’s trying to put their toes into the investment property world with maybe a minimum downpayment. So it’s all a numbers game, some people may. Maybe they don’t have a ton to put down on an investment property. So they can, but they have a bunch of reserves or they make enough income where other areas where they can absorb a loss every month until that rental property starts producing cashflow as rents go up several years down the road from now, or when they can refinance and get rates down. So I really think it just depends on the person. But I also think that there’s opportunity out there. It’s rare, but it used to be non-existent. Now, I do think there’s some opportunities out there for both investors and in primary residence homebuyers to find better deals than what they may have been able to over the last couple of years.”

“I personally think that it’s a fantastic time to be a homebuyer right now, I do think that it’s not for everybody. But the reality is, you have to pay to have a roof over your head. That’s, that’s just the reality. And so if you’re going to be somebody that knows that you’re going to be in [your] home for a decent period of time, five, seven, certainly 10 years – Even if real estate values flattened, or maybe even dip a little bit, they always come back around. You can look at any chart you want to over a 10-year period. And home values are always equal to or higher than where they were 10 years before, I don’t care what period of time you look at that in, it’s always going to be higher. Right now, rates are a little bit higher, right. And we don’t have insurance as an issue. But the people that can get into homes now, they’re able to get the seller to negotiate with them to replace a water heater replace a roof, pay closing costs to do the temporary buy down, which is a huge advantage to buyers if they can structure that correctly. So you get into the home, you’re able to get the seller to pay some stuff for you. And then in a couple of years, insurance we believe will come back down and interest rates certainly will come back down. And so you’re able to get the payment where you want it to be before all that stuff happens. And then a bunch of people come back into the market. Statistically speaking for every half a percent change in interest rate, a million homebuyers either enter or leave the market. So as rates are going up, you’re losing buyers, as they come down. If it’s seven half percent, now they come to five and a half percent. Statistically speaking, you’re gonna have 4 million new home buyers in the market. That’s competition that drives up prices. That makes availability a challenge again, so for those reasons, I think now’s the right time, especially if you’re going to be in the home for a while.”