124. Real Estate Financing

In this episode, we're going to talk about paragraph three of the track one to four family residential contract, which is titled Sales Price. It's a very short section in the contract. It has three subsections, A, B, and C, that are all basically consists of a total of four lines. And yet, there's a lot of stuff to cover on this section today. It's not just the sales price, it's a sales price plus the financing. And then there's a lot of other stuff that comes into play with that. So we're going to talk about financing. We'll talk about the agenda that come into play with financing under the track contract. We'll look at the pre-approval process, which lender to use, what criteria should you look at, then the loan application process itself. We'll look at the types of financing. Then we'll get back to the contract, and then we'll look at the appraisal process. So we've got a lot of stuff to cover in this episode. So if we look at this section of the contract, it says Sales Price. Subsection A says Cash portion of sales price, payable by buyer closing, and then you fill in the blank. Section B says some of all financing described in the attached either, and then you check one of the boxes. Either the third party financing addendum, the loan assumption addendum, or the seller financing addendum. And the two that we're going to, that I'll talk about, or the third party financing addendum, and the seller financing addendum. And then the one that we're really going to focus on is the third party financing addendum. And then the section, subsection C says Sales Price, which is some of A and B. So A is the cash portion, B is the finance amount, and then C is the total sales price for the property. So pretty basic in terms of filling in three blanks, and then checking one of the boxes. But yet there's a whole lot more that falls into line with this. This is kind of the time where, if this was in a movie, where there'd be a flashback, you know, back to when the, the guy or the girl was, you know, 40 years younger. And it's like, you know, it starts off in black and white. And so that's kind of what we're doing now is we're going back before we even get to this part. And we're talking about the whole process coming forward. As I mentioned, so we've got one, two, three, four. We've got four sections we're going to cover before we come back to the contract. And then we'll look at the addenda. And then we'll finish up with the appraisal process. And so let's go back to, let's go back to the start. So whenever you've got a buyer or potential buyer working with a real estate agent. One of the first things the real estate agent should ask that buyers have you been pre approved strike that have you been pre qualified. Let me make sure I get my terminology right. Have you been pre qualified. And if the buyer says no, then the next response by the real estate agent should be we need to get you pre qualified. And so a real estate agent should not show a property or should not begin showing properties to a buyer or potential buyer until they have been pre pre pre pre qualified. And the reason behind that is because until they've been pre qualified, you don't know one if they can even get alone. There may be so many issues on there in their in their credit history that they can't even get alone. Or two, you don't know how much they're qualified to actually borrow. So if you start showing properties, you know, you start narrowing it down. And let's say you're looking at houses in the $500,000 range and it turns out they can only get alone for $220,000. Well, then you as a real estate agent and voice did a lot of time, your time and the clients time looking at properties that they're not even able to purchase. You know, unless they just got some a cash line around, but that's a different matter. So we're talking about your average buyer coming in wanting to buy let's say to buy their first home. So they need to be they need to be pre qualified. Well, if we go back, let's go back in time even a little bit further back before the great recession. It was it was not uncommon for clients to be pre pre approved and that was that was sufficient and that was a real that was a real quick process. It's kind of like when you get if you if you haven't you will at some point, but it's like when you get one of these letters in the mail, you know, the envelope says you've been pre approved for a $100,000 credit card or $100,000 line of credit. And you're like, oh man, that's awesome. But then once you open it up, it says you still have to be pre you start to pre pre qualify for that loan or for that credit card. And then they're going to run your credit history and determine whether or not you and then they're going to look at your income and determine whether or not they're going to give you a credit card. And then if they do what you're loan them, it's going to be based on that information. So that's that's what we used to do. It's your your your pre approved check, you know, you were pretty much going to give you the loan. And you know, and then we had the time of, you know, right before the the great recession leading up to it of the Ninja loans or Ninja loans, which was no income, no job, no asset or no income, no asset loans, where these were there was no income verification, there was no employment verification, there was no no docs that were required for reviews, just like yes, you've been approved. And then we we entered the great recession and then the lending restrictions tightened and they tighten so much that there's a time where we're basically for, you know, about a six month period where nobody was getting alone. Nobody and then you had buyers that started looking and the problem was that where they used to they would have qualified for a certain loan for a certain property, you know, and within a price range. Now they couldn't because there was there was some issue in their in their credit history that the lenders were just saying no. And so that held up a lot of transactions and I didn't hold them up. It just prevented properties from selling like they had before as quickly as they had before you had a lot of buyers, but you had buyers who couldn't get qualified for a loan. So fast forward we we still have those lending restrictions in place, you know, 11 years later, 10 plus years later. And that's that's one of the issues with when we look at the enactment of law or laws that they go into effect and then there's this legacy effect where we're stuck with them for for the long term, you know, they don't get they generally don't get modified or overturned. They just continue in perpetuity. So we still have tight lending restrictions. I have seen some emails going out recently saying we'll do, you know, no doc loans. But I think there's a lot of asterisk tight into that. So what if you go through the traditional route with a, you know, credit union or bank or mortgage broker. There there's going to have to be income verification, employment verification and then they're going to pull your documents. So we'll talk more about that. So so the process now is the buyer has to the buyer needs to be pre pre qualified. And a lot of times a listing agent will ask or will require that pre qualification letter to be included with an offer that way they know that they've been pre pre qualified as opposed to go through the whole negotiations on a contract and then finding out that they can't, you know, get the loan. And there is an out provision in the in the third party financing and then them that will allow them to to terminate the loan because of that there's also the option period that we'll get to later in a later episode. But the so the issue is you don't want to take that property off the market for that period of time and a lot of times what we'll see is a 15 to 20, 20 day out period. If the buyer is if the lender is not able to to approve the buyer. There's another approval process, which is the property itself and we'll talk about that when we get to the appraisal process. So the the lender has to underwrite the buyer or the borrower and the lender has to underwrite the property. And so both of those have to we need a we need to check in in the box on both of those in order for that loan to continue forward. So so let's go with so we talked about pre qualify versus pre approval and a buyer needs to be pre qualified. And then the next and then the next question is what what lender do I use sometimes buyers have their own lender that they want to go to and that's fine. I think there's there's three things you want to look for in a lender and that is they they communicate effectively, which is important and you go well, duh, that's kind of a given, but they you would be surprised. At the level of service that exists out there. So you want a lender who's going to communicate effectively. They're going to be responsive. They're going to be timely. You're not going to be left in the air wondering what's you know what's happening. You know not being able to get a hold of somebody when you need an answer. So that's important. So they need to be able to communicate effectively. They need to do what they say they're going to do every time. And so if you got a lender that says, oh yeah, I'll get you. I'm gonna get you You know two and a half interest rate. I'm gonna you know I'm gonna do my best to make that happen and so they rain you in when when right now the market's gonna bear you know around 4% so And then they go, oh, I'm sorry, you know that you know this is the 4% is the best I could do you know and then at that point You're you're kind of committed So you want a lender who's gonna be honest who's gonna be truthful who's gonna do what they say they're gonna do So good lender would say I can't you know I can't tell you the interest you're gonna get let's run the documents Let's let's pull pull all the documents. Let's look at your credit history And we're gonna find that out and then we're gonna assess to see what loan options exist out there and what's gonna be the best option So you got somebody who's working for you. They're not just trying to to To go through the process and in close of transaction to make some money. They're they're there to represent you So they can communicate effectively they do what they say they're gonna do and then third they close on time and The last one is what holds up a lot of real estate transactions is the the lender is just not ready They've not gotten their docs over to the title company and it holds up the transaction and So those are the three things you want to look for in a lender They communicate it effectively. They do what they say they're gonna do and they close on time now There's three generally there's three types of lenders you can go through you can go to a bank like a commercial bank And they have loan officers and they'll they'll make a loan on on your you know on your on your purchase They'll they'll go through that process with you you can go through a credit union Which is like a bank, but credit union has members and it generally serves that local community sometimes they're regional and There there are credit unions that that I think are very effective and they're credit unions that I think are effective and You know, they're competitive with Each of the parties that are out there that are able to make loans and then the the third is a mortgage broker And so a mortgage broker is either an individual or an individual that works for a company That is that that's a mortgage broker and they receive their funds. So a bank will Generally lend on there to can lend on their deposits They also may have an outside source of capital coming in Maybe from an institutional level to loan you know for for a pool to to loan money from Credit union can also Originate loans from its deposits or may have an outside source and then the third is the mortgage broker and the mortgage broker Has going to have a effectively like a line of credit with Some somebody somebody, you know institutional investor an investor That that creates this pool of money for them and then the way it works is with Generally with all three they're gonna originate the loan and then that loan is gonna be sold off into the secondary market So that loan is what's originated in what we call the primary market and that's right here, you know locally And then that loan is then sold into the secondary market It's put into a pool of other loans and it's securitized and then it's and then it's sold to investors and then investors buy into this pool And that's a whole you know we could do like a I'll see if I can get somebody in on that, but that's a that's a whole Separate conversation in terms of how that plays out, but then what that does I'm actually gonna make a note on that so Okay, I made a note see if I can't get somebody in on that in a future episode And so the what that does though is it by selling off those loans it frees up that money that comes back down to the primary market Some more loans can be originated and so what it does is it creates this revolving cycle and so The the key then is like well, who do I go with you know and effectively the Bank the credit union of the mortgage broker are all gonna provide the same service They're gonna go through the same process. So it goes back to the three things I talked about earlier effective communication doing what they say they're gonna do and Closing on time that's that's what's important You want somebody that's that's responsive you want somebody that's that's gonna provide the highest level of service and so The real estate agents I think are are a great resource the residential state agents are a great resource to go to in terms of who to use Because they they have worked with that market. They've got those relationships. They've networked and so they've they've got a pretty good idea of who can produce and who can't and I think that's important I've got I've got one and I'm gonna I'm gonna reference this in a in a minute when we get to The types of financing that's we're gonna cover you the Loan application process and then we're gonna get it financing and I've got a video I'm gonna reference for you to watch I'll put a link of it link of it that video into the show notes But but I there are there are teams there are mortgage brokerage Or mortgage mortgage brokers that have teams and those teams provide a very high level of service and so I've got one One individual I've worked we worked with a number But there's some that I've told the client I said you know, we've got Josh segment with the legacy mutual Hit the Josh segment team with legacy mutual mortgage and he is the Generally been the number one producer in San Antonio in terms of volume and you go. Okay. Well, that's that's great He gets a lot of volume But he has also provide been providing a high level of service with his team for as long as I've known him and and if you what's interesting is he has been a coach All the way up to the national level for real estate agents and mortgage brokers and and the the things that he's been doing For 10 plus years now you're starting to see everybody else do it and I had I've got to ask him on these days You know the question was are they doing it because they've been taking his classes? You know, and that's that's become the norm. It's it's providing this level of service You have the level of engagement the level of service or if there's something else going on because when you when you start to hear Other mortgage brokers now and you're going man That sounds a lot like what Josh is doing and he's been doing that for 10 plus years and now everybody's finally catching up there's So it's when you've got a team that whole team has has roles and responsibilities and the responsiveness is just is just amazing So I think that's what's I think that's important Team a team that can produce and there's a bunch of teams out there in San Antonio And so a lot of times you're if you're working with a role-state agent They will likely make the recommendation But I've told I've told clients I said I said you know We have to qualify if we recommend somebody and why but I've said look if you if you don't use Josh I'm going to have you signed this piece of paper that says I told you so and so whenever you come into some issues and some frustrations That's all on your shoulders because you pick them not me and I made a recommendation for you And I'm going to hold it this piece of paper that says I told you so just remember that so it you know It the the buying process is a very Stressful and sometimes frustrating process and the role the role-state agent should be to create value and to minimize risk And part of that is minimizing those those frustrations and so a good real estate agent will be able to do that And so part of that is having that network of stakeholders to where you can pick up the phone and and there's a direct line of Communication that takes place and you get answers and you and you get action You know, or you get resolution I should say you know to any issues in a timely manner And so that's that's important So that's you know the the the worst thing you can do is get involved with a mortgage broker or bank or a credit union It's just not responsive and it adds to the level of stress and that transaction the I was gonna say something else on this Lost my trade and thought for a second here. It's So banks credit use mortgage brokers The team environment there's something on it'll come back to me the Yeah, it'll maybe you'll come back to me. I just I just lost my train of thought on that I was about to head there and And it fell right off so The next thing is then the loan application process so when you when you Contact a mortgage broker You're gonna fill out a loan application a lot of times to I wonder what I was gonna say. Let me backtrack real quick So there are there are a lot of online Lenders and the in the past I would say and this is from personal experience in the past There's always a lot of frustration with using an online lender and part of that You know people would come in and go well, but I can get a much better deal using this online lender and and I said yes, you get a much better deal But let me know how that communication that effective communication goes Let me know how timely and responsive they are let me know how not allable they are because you're dealing with somebody Outside of Texas and they don't understand the Texas laws and so you know You know somebody in Florida or Chicago or California and they're they're not understanding the the the Texas process for a real estate transaction And and so then it's it's you know by again by experience It's just one frustration after another after another after another and so I always that will so I always recommend people look to a local Lender either bank credit union or mortgage broker look to somebody that's local look to somebody where you can walk into their office And you can sit down behind a desk or at the conference table and you can have a conversation with them eye to eye If it's if it's somebody in Chicago you're calling an 800 number and you're another number if it's somebody that's local you You are a are now a person with an identity, you're a customer, and you're more than just a number. But I have heard recently instances where the online lenders have really up their game, and I've heard the level of customer service has been excellent. And so that's great. I like that. That needs to happen. We don't, whoever a bar uses, we don't need lenders that are going to add to the stress or frustration of a real estate transaction. So that's great. I would never talk anything negative about that. It's just when you pick up the phone and you make that phone call to 800 number and then you're talking to somebody somewhere else in the US and your number, what's your account number, that kind of thing. And so locally, the real estate agents can send a text to the mortgage broker and say, hey, I need to talk to you. I need to know what's going on. I'm going to come by and visit you. And oftentimes the response time is much better. So take all that for what it's worth. So the next process is then the filling out the loan application. And as I said earlier, so you contact the mortgage broker or the bank or the credit union. And you say, I want a house or looking at a house and I need to get pre-qualified or pre-approved, pre-qualified. I've got to get my terminology right. Pre-qualified. I know what the terminology is. It's just historically. It's always been pre-approved. So I need to get pre-qualified and what I need to do. And I'm looking for something real quick here. There's a meme and it just popped up today in Facebook and one of the Facebook groups for real estate agents. And it said, it's a dude with a serious mullet sitting by his pickup truck. And that real estate lady said, I need a pre-approval letter. But I told her the only letters I need are you S and A. And so that's some people thinking they go, well, why do I need all this? Why does it matter? Well, once you start getting into the loan process, you fill out the loan application. And I'll post a link to a loan application in the notes. That's a federal document that the borrower either one or more is going to have to sign off on. And so there are certain representations that are made in that document. And it asks for your income. It asks for your assets. It asks for your liability. Liabilities. It asks if you've been foreclosed on in the last seven years, if you've been in a few file for bankruptcy. So they want to know all this information as part of this loan application. So I'm going to post a note for that. And then within three days of filling out that loan application or that it could be simultaneously with submitting that loan application, if it's in the office, the lender is going to get the borrower a loan estimate. And I'm going to post a link to a loan estimate in the notes as well. And the loan estimate outlines the loan amount, the interest rate, monthly principal interest payment. It's going to outline the number of payments and the amount of those payments. And then it'll get into closing cost, estimated closing costs. And so one of the things that's changed back in the day before the great recession, we used to have what was called the good faith estimate or the GFE. And the problem with that document is that it was always a bad estimate of what the closing cost we're going to be. And so one of the changes to the law said that the lenders have to get accurate with these closing cost numbers. So that way the buyer has a better idea of what those closing costs are going to be. If they've got to come out of pocket more money for the closing cost or if they've got to negotiate that with the seller, then they need to know what those numbers are. So then we get into the loan cost. So if there's origination fee for that loan, we get into services that the lender is going to order that the buyer cannot shop for. And that's going to be things like the appraisal report, the credit fee, credit report fee. There's going to be a flood certificate fee, tax certificates. And so these are items that the lender is going to order for their, for their packet. And the buyer is going to pay for those. The borrow is going to pay for those. And then there's services that the borrower can shop for such as getting an inspection, getting a survey, the title policy. And then there's other costs that are tied into the transaction, such as the insurance, homeowners insurance requirement. And we're going to be looking at how much is that premium going to be? We'll look at mortgage insurance premiums or private mortgage insurance, depending upon the type of loan. We'll look at prepaid interest. That's the interest from the day of closing through the end of the month. And then with a mortgage, we pay our interest in our rears. So like with your rent, you pay your rent on the first day of the month. You make your car payment on the first day of the month. With mortgage, you pay your interest in our rears, which means if you closed on, say March 15th, you would pay interest from March 15th through March 31st. And then you would skip the month of April, and then you would have your first payment do May 1st. And that May 1st payment would cover the principal plus the interest payment for the month of March. So that's why you'd have prepaid interest from the day of closing through the end of the month. We're going to have escrow for the property taxes, and then there could potentially be other closing costs that come into play for that transaction. And then on the last page, we've got the lender's information, and then there's some comparisons for the loan. And then we've got the APR, the annual percentage rate that nobody understands. And then there's a notices to whether or not the loan can or cannot be assumed. And then there's some other disclosures. Whether the lender will service that loan or the loan will be sold off and then transfer to somebody else for servicing. And so with most of your loans that are not going to be portfolio loans, and a portfolio loan means that the bank or the credit union is holding that loan as part of their portfolio. It's going to show up on their balance sheet. So usually see that with shorter term loans. If you took out a seven-year loan on a refi or sometimes a 10-year, but anything more than that, they're usually going to sell that off. And so in that case, that's where the loan gets sold off in the secondary market, and then there's somebody else servicing that loan. One exception to that is usually if you go through Wells Fargo, if you originated a loan through Wells Fargo, they might end up servicing that loan even if it's sold off in the secondary market because they're a pretty big loan servicer. And so that's one way the banks can make money. So you get the loan estimate as part of this process. Lender is going to look at, they're going to pull all your documents. They're going to look at your W2s. They're going to look at your tax returns. They're going to look at employment history. They're going to verify your employment. And then whatever else they need is part of that transaction. The other thing they're going to do is look at the front end ratio for your debt to income and then they're going to look at the back end ratio for your debt to income. And what that means is this is a determinant of your risk associated with that loan. Let me just a second here. Let me get to my notes. Here we go. So the front end ratio, there's a range. And what I'm going to do is refer you over to Josh's video because he will get into that and he'll get into some of the numbers in terms of what those ratios are. But on the front end ratio, we're looking at the borrowers obligations on that loan. So the principal interest tax is insurance plus any short term obligations. If you look at the minimum credit card payments and things like that, then you're going to divide that by the borrowers gross monthly income and then that's going to give you a percentage. That's that ratio. And so they're going to look at that ratio to determine what that borrowers risk is. And then what this is, there's three aspects to underwriting a borrower. One is the collateral and that's the appraisal which I'm about to discuss next. There's the credit worthiness and that's based on the borrower's FICO score. That's the fair eyes at corporation score. It's like a credit score but it's a FICO score. It's a proprietary algorithm that determines your credit risk. That number changes but we generally look at where that borrower's FICO score is determining their risk and then it can also determine the borrowers interest rate and it also can determine how much the borrower has to make as a down payment. I'm on the other side. refer you to Josh's video because he gets into all of that. So, you've got collateral, which is underwriting the property. You've got the creditworthiness, which is looking at the borrowers credit, basically the borrowers credit score. And then we have capacity. And that's the borrowers ability to pay. So that's where we look at the front end and the back end ratio. The other terms for these are housing expense ratio on the front end. And then the back end is also called the total debt ratio. And so we're looking at what is the borrowers ability to repay that loan. On the back end ratio, it takes into account the same elements that we included in the front end ratio, but it also includes long-term obligations. And so these are generally items that are going to take longer than 10 months to pay off. So that could now be your car payment, it could be maybe student loans. There's other things that are going to be amortized out longer than a 10 month period. And so those are factored into the back end ratio. So there are ratios that the lenders will look at, both the front end ratio and the back end ratio, four different types of loans. So when you listen to Josh's video, look for the front end or for the ratios for both like the FHA and then the conventional and see what those are. And they change a lot. I think there's some consistency over time, but just pay attention to that when you watch that video. I think it's important to go through that. So that's the loan application process. And again, that loan application is going to be one of the first things that you see. And I've seen more and more instances of that loan application being available online now. I think there's lenders that even you can complete that using an app or using your smartphone. So now what we've covered is we kind of started off with the financing provision or the sales. Let me go back to the contract. I've graphed three of the contract, the sales price, which includes the financing. We looked at pre-qualifying a borrower versus pre-approval for a buyer. We looked at which lender to use. We looked at the loan application process, which includes the, which included the uniform residential loan application, the lender order, the docs looking at the front end and back end ratios. And the next thing we get to is looking at the types of financing. And here what I'm going to do is refer you over to Josh's video. The video is called Financing 101. And it goes, he does an excellent job, a job better than I ever could of covering the types of financing and all the elements associated with financing. So I had asked him if I could share that video and he said yes, they're the link to the video. So be sure to watch that. You're going to want to watch that. So then once we get our financing in place, now we come back to the contract. So we're filling out the contract. The borrower is going to make an offer. The buyer/borrower is going to make an offer on a property. And so they fill in their down payment amount. They should have this information from the, from the, from the, from their lender, either the bank, the credit unit or the mortgage broker is going to be able to guide them through that process in terms of, you know, what their down payment is going to look like, the amount of financing. As part of the contract negotiations, the, the buyer can ask for seller contributions towards closing costs. And there's some limitations on that. I think I'm pretty sure Josh covers that in his, in his video. And then, and then we look at if it's a, a loan that is being, being taken out through a, a bank, a credit unit or a mortgage broker, we're going to go to form, go back to my notes here, form 40-8, which is the third party financing in a dendom. The other two I had referenced was the seller financing in a dendom, which is form 26-7. And then there's also the loan assumption in a dendom, which is a form 41-2. And note, those are always, so those form numbers are always so to change whenever they come out with a new version of that form. But right now we're going to look at the third party financing in a dendom. And so, post a link to this in the notes. And so you check off the box. The buyer shall apply promptly for all financing, describe below and make every reasonable effort to obtain approval for the financing, including but not limited to furnishing all information and documents required by buyer's lender. And then the buyer checks off one of a number of boxes. It's box A is conventional financing, box B is Texas Veterans loan, box C is FHA, an FHA loan, box D is a VA loan, box E is a USDA loan, and then box F is a reverse mortgage. And that's not going to apply to our transaction here. And then paragraph two, so then you look at that. Let's go with the conventional financing. So a first mortgage loan in the principal amount of blank, excluding any PMI premium, doing full within blank years, usually that's going to be 15 or 30 years, with interest not to exceed blank. So let's say the interest rate right now is around 4%. I'm going to look that up. So 30 year interest rates. But now, and you know, a good place just to go look is well here's Wells Fargo. So 40 or 30 year fixed. Yeah, that's a jumbo. That's not what I 30 year fixed jumbo can form me. It's 4.125. Let me see if I've got. Not sure nerd wall that says 30 year fixed is 4.58 with a 15 year 4.06. Let's go to bank rate here. Bank rate. We're looking at 4.62 on a 30 year fixed with through bank rate. That's, I think that's going to be an average of the industry. So we've got above 4%. So let's say, let's say we go with that 4.62 number. So from, if we go from just looking at February 2019 numbers, we had 4.57, 4.54, 4.52, 4.54, 4.62. These are on a weekly basis. So that brings us into March. And you go, well, maybe interest rates are going to go up. And if we go above 4.75, I won't be able to afford that loan. And so in that, in that blank, we may put with an interest not to exceed 4.75 or interest not to exceed 5%. I can't afford anything over 5%. For the first 30 years of the loan, with origination charges is shown on buyers. Loan estimate for the loan not to exceed 1% of the loan. Your origination fee is usually 1% of the loan. But then if we go over to that loan estimate agreement, on there, it outlines what those origination fees are going to be. And that is in on the second page, loan cost origination charges. You've got the origination fee. You may have points, application fee and then an underwriting fee. So all of those can end up impacting the loan because the bar doesn't have the money for the closing costs. So generally, what you'll see in there is 1% of the loan as the origination fee. And so then each of the others has their own criteria, but they're very similar. So then once we fill that out, we send over the contract. Contract, let's just assume now it's been approved. So we had offer, we have acceptance, now we've got an agreement, so we've got a valid contract. And then I'm going to talk about the earnest money process. I've got the license holder disclosure in the next episode and then I've got earnest money in the episode after that. So we'll talk about the earnest money, but earnest money goes to the title company. And then the lender is going to order the appraisal. Well, as part of that process, the client of the appraisal is the lender. And the buyer is going to end up paying for that appraisal. And the general cost of that appraisal, as of right now, is usually between $400 and $450, maybe $400 and $500. So the borrower is going to pay for that, but the appraisal is for the benefit of the lender. And so if I can get in a appraisal and talk about the process, then that's a whole process in and of itself in terms of how that works. When the lender puts the order in and then the appraisers are going through their role of the transaction. So I was going to cover the appraisal at this point. And I think what I'm going to do is come back to that. Either in an episode right after this or in a subsequent episode. See if I can get in a appraiser in and then we'll talk about the outline that I have for the appraisal process. So what we've covered is the financing. We've covered the forms. We've covered pre-qualify versus pre-approval. We've covered which lender to use. We covered the loan application process. Watch Josh's video, Josh sequence video on financing 101 great information. We came back to the contract and then we looked at the contract and then the third party found into the dendom and then we will cover a pre-sale in a subsequent episode.