Welcome to Mountain Real Estate. Today we have the pleasure of Aimee Airey with BOK to talk about some lending. So welcome Amy. 

Thank you. Thank you for having me, Candice. 

So we’ll just jump right in. Aimee, why don’t you tell us about yourself and how long you’ve been doing lending and what brought you to the mountains, those types of things. 

Sure, sure. Well, I’m originally from Washington State. I moved up here to Summit County in 1989, like a lot of other people thinking I’ll spend a season or two up in Summit County and. You know. 30 some-odd years later, I’m still here, raised my family, and been here ever since. So yeah, I have two daughters who graduated from Summit High. One went to CU, graduated from CU last year and now she’s starting to apply for some law school. My second daughter went back to our roots, back up to Washington State. She’s going to college at Western Washington, up in Bellingham, very similar to here. If you’ve ever been there, it’s really nice. But yeah, she’s really into her rugby. Her club team just won at nationals last week, so she’s doing great. Yeah, go Vikings. You know, I like to do all the typical things in Summit County. Hiking, some of my favorite things are all the great festivals that you know, Summit County offers in this summer. And then Red Rocks is so close. I really like to go see live music, so I like to go to Red Rocks whenever I can. I came to be OK in 1989, did a few positions here with them over a couple of years and then just really. You know, like the lending part of it.  I really liked the challenge of it and, the feeling of helping people, second homeowners or locals get their homes. So I was really able to focus in on that. I was lucky enough to have a great mentor. My partner Darlena Mormons is just great. She’s been in the business a little longer than I have and was really great in teaching me all the ins and outs of lending in general and especially resort lending, which is something we’ll be talking about today. 

So yeah, that’s great. Sounds like there’s a wealth of experience in both the lending world and just the locality being here. I love seeing what you’ve instilled that in your kids and they’re staying with the mountain lifestyle even when they move on and do their own thing. 

Yeah, they’ve really realized how nice the mountains are as they’ve gone away and experienced a couple other places and come back home and say, “Oh my gosh.” And I’m like, I know. 

That’s what we tell our kids. We’re like, “You don’t realize how lucky you have it,” but they don’t. 

They don’t, but they will. Yeah, they will. 

Awesome. Well, let’s jump into some lending. So let’s start with the mountains. So how would you say lending in our kind of mountain resort area is different compared to some of the other more urban areas? 

Well, I do think lending in our area is, is significantly different. You know, it’s the mountains and specifically, because it’s a resort community. So there are a number of differences regarding purchasing real estate in resort communities, one of the most obvious ones being condominiums. A lot of people who purchase homes up here are often second homeowners, not always, but have purchased their primary home wherever that might be, typically a single-family residence. And so the nuances of condos are they’re unaware of those types of things. That’s one of the major things about lending up here in Summit County is being familiar with condos, which are truly different. One way to think of it is that a condo has to be underwritten almost just like a borrower does. So there’s a whole other level to lending on condominiums that sometimes we need to educate our real estate clients on. The lending requirements for second homeowners can be a little bit different than for primary homeowners. You know, they’re mostly the same, but there are a few nuances that people need to know about. I believe too, that one of the big things about lending up here in Summit County is the real estate market has a little bit different feel. It’s very fast-paced. Because there’s a lot of second home owners, I think their mindsets are just a little bit different than they are when they’re purchasing their primary home and often they’re selling one home to buy another. So the, the market moves very quickly up here, it’s a very desirable area. There are great properties come on the market, and boom, they’re here and gone before you know it. So. I think it’s very important to already have your ducks in a row and a local lender I think can be a big asset to a buyer because our Realtors up here are very experienced, very smart know our area and they’re aware that condos can trip up some other lenders so. They definitely want to make sure that their clients are aligned with people who can close that loan. You know that that’s, that’s the name of the game, right? In the end, nothing else matters if the loan doesn’t close, right? So I have definitely seen Realtors advocating and wanting local lenders and accepting offers a little bit more readily if they see a local lender is on that side. They know that person. They know they have experience, they know the loan’s going to close. So I think those are some of the things that make us different than the typical urban market or primary home ownership market. 

Yeah, that’s great. And we, we definitely see that on the brokerage side. We like when we see lenders that we know and trust, and we know they can get to closing. Aimee, you mentioned a little bit about condos and how they can be different, and how they have to be underwritten separately. Can you dive a little bit deeper into that? 

Yeah, absolutely. So it’s a really good question and it’s kind of the heart of the matter. Like you said, you see that a lot with these, with buyers who are very smart, very savvy people, however, just may not have had the experience of buying a condo. So I think it’s really important to help them realize how different that is and act accordingly. It’s important to pick the right lender that’s going to help with that property. Some of the things that are different about condos are like I mentioned earlier, the HOA does have to be underwritten in itself, which is a whole other level. We look at everything just like we do for a borrower, from budgets to assets to how they run their daily maintenance operations. All of those things are equally important. And you know the good news I think for Summit County particularly is, all HOAs are run differently all over the country. In Summit County, I feel like the management companies and the HOA, they’ve been doing it long enough where they are very good at managing their HOAs. They know what is required for lending reserves and budgets and these types of things. And they’re really good at managing those things. So I think that’s great for Summit County that we have such good HOAs. Up here it’s so important, though, to find a lender who is familiar with condominiums. Who knows what the processes are that we go on the back end, do on the back end and which properties fit those. Luckily for us in Summit County, most of them do fit all the requirements. There are very few properties that we at least be okay cannot lend on. I think that the biggest challenge for us as Realtors and in the community is helping the borrowers understand how different condos are. And although they might not have to do anything, there’s a lot going on the back end that your lender is responsible for and it’s crucial that you pick a lender based on that criteria as well.  So many people get hung up on interest rates and interest rates, don’t get me wrong, are very important and competitive, but not always the most important factor. 

Yeah, you want to be able to get the loan. That’s the number one. 

Absolutely, yeah, I mean what good is 1/4 less than the interest rate if you don’t close the loan? And we do have very competitive rates, you know so not as if we’re really fighting against that, but it does often pop up. And then we end up hearing from those clients again sometimes when they have a lender who didn’t quite understand what they were getting into. 

I know enough to be dangerous in this area. This is why I rely on people like you. But some of the property types aren’t eligible for federal loans is my understanding, like condotels. Can you just describe a little bit about what qualifies as a condotel that would make it more challenging for lending?

Well that’s a good question as well because you know there are some very obvious situations where a place is certainly it operates like a hotel just like it sounds right. They have made service, they have room service, they have all that kind of stuff, bellhops and concierge desks and all that stuff. Those can present some challenges and I think the important thing to know is that lenders can (I don’t want to say) make up their own rules, but if they have a bank loan as opposed to a government loan like you were saying, they can kind of make up their own rules. So for government loans, lenders also have the ability to kind of interpret those rules as they will. Some lenders I believe because they are not as interested in lending on those types of properties, they see them as a bigger risk and just don’t quite want to get into it. Their interpretation of those rules is very stringent not out-of-the-box thinking at all. Therefore, those lenders don’t do those loans. They pass on them at the end. Unfortunately, sometimes there are loan officers up front who are doing those loans and don’t realize it. And that’s when you kind of get in some trouble. But yeah, BOK, we’ve been lending up here for years. We are very interested in doing these loans. There are very few properties that I would say fall into that category of condotel or anything that a buyer would want to be concerned about when they’re looking at properties. You go to work with the local lenders because there’s a huge benefit to it. Once in a while, there’s something going on with this specific property, say they have some lawsuit or some structural issue or something. We know about that we know about that up front and we say this is going to be a little bit of a challenge so. We have that real intense local knowledge that you can only get by being part of the community. It’s super helpful. Yeah. Because of that we’re seeing it happen right now. There are some places where you can’t get loans. That is true. During my time with BOK, they’ve come on and off might be some issue with the HOA, some small lawsuit that’s wrapped up in a few months and you’re back on track after that. So we keep a really close eye on that and we’re very familiar with all the properties and, and can lend virtually anywhere and more importantly choose to lend there.  BOK is very interested in doing these loans. I think a couple of the local lenders here, the banks and stuff, we are familiar with the area. We trust it, we know it. We know these are great loans. So we work to make them happen instead of picking out the details of maybe why they might not work for some lenders. 

Yeah, that’s great. That’s why our clients love working with you. So let’s switch gears a little bit and talk about rentals. Do short-term rentals or long-term rentals impact your lending process? 

The short answer is no. Definitely long-term rentals do not affect our process at all.  Short-term rentals can be a problem for some lenders. But as I was kind of just describing, you can make a little bit different rules when you’re using your portfolio or bank loans, and certainly, there are many lenders out there who will use the short-term rental situation as a reason not to lend on the loan when in fact having short term rentals in a project are not against the rules or a reason why somebody wouldn’t be able to do a loan. Those particular lenders might not love them, so they pass on those and yeah, there’s no driving force that short term rentals could impact a loan at least with BOK. So yeah, I think the short answer is no, yes with some lenders. Typically not short term. Long term people can do what they like. 

Awesome. OK. Yeah, I guess it’s a good clarification that BOK as I understand does some portfolio lending, so you do your own kind of lending as well as some government lending. So you guys do both and there are other lenders that just do one or the other, is that right? 

Absolutely. So the difference between a broker, a mortgage broker and a mortgage banker is a broker will go out to many different companies and may be limited to the loans based on the companies that they work with, whereas a banker works specifically for their bank. We offer all the same loans a broker would as in all the government loans: USDA, VA, First time home buyer, all of those. And then in addition to that we also have our bank products, our portfolio products that are created by our bank for specific purposes, so we have some jumbo loans that fall into that category. Two or three years ago, Fannie Mae and Freddie Mac, the government agencies really cracked down on interest rates and some other rules for second home purchases. I’m sure you remember, and it was a little bit of a challenge. To get those loans done that way and so BOK, knowing how important these loans are to Summit County and to their portfolios, created a specific product. So they did create a specific second home product for condominium, second homes investments that follow our rules. They’re loosely based on some of the government rules, but yes, it’s absolutely a thing where a bank can create a product that they want to use to make it a little bit easier, and that’s really been a huge popular product for us up here. You know in the last few years the interest rate is significantly higher.  We kind of make the rules of what we’ll accept or how broadly we want to interpret some of the government loan rules for condos in second homes and those types of things. 

Yeah, that’s great to have that flexibility in-house. I have another follow-up question to that we didn’t discuss, but I’ve always been wondering, can you describe what the difference is between taking a loan as an investment property versus a second home property? 

Yes, I mean of course the rule is really what you intend the property to be. The only time that a property really has to be an investment property is if you’re long-term leasing it, if you’re signing a long-term lease on it. But you can absolutely buy a property that fits all the IRS guidelines and rules as a second home, as long as you intend to occupy it at least some portion of the year, even a few days a week, you do use it as a second home. Then you can purchase it as a second home. You can still short-term rent it when you’re not using it as long as you maintain that access to be able to do that when you want. So it starts there with the intention of the borrower. And then the lending rules are not too much different with our portfolio product. We only require 20% down for a second home and investment requires 25% and the interest rate is a little bit higher. So those are the big rules when it comes to approving the loan, you know there’s nothing different or more stringent than there is with the second home. 

OK. And you said the investment properties are slightly higher than higher interest rates than the second. Yeah, as you can imagine lenders are very secure with primary homes. They know if any bills going to get paid, it’s going to be that one. Yeah, they’re fairly secure with second homes because I know people love their second homes. They start wanting people have a little bit more skin in the game when it comes to an investment property, thinking if anything goes wrong, this is going to be the first one to go. So with an investment property, they do require a little bit more, more skin in the game from a borrower, but the rules themselves on getting qualified are about the same. OK, you have seen some people utilize an investment property to help them qualify. If they have the 25% down and they’re fine with that, then you can use the potential rental income from an investment property to help you qualify. So let’s say it’s a really big benefit to a lot of people who might be using the property technically in a second home sense, but you know, to be able to get their hands on it and secure the property they do purchase as an investment property to use that income. 

That’s a great point for qualification. I have kicked that around a lot with clients and so wanted to hear it direct from source. 

Yeah, yeah. 

All right. So kind of switching gears now to focusing back on Summit County, what programs do you have that are unique in our market? 

Speaking for Summit County as a whole, I’m sure you’re well aware of the Summit Combined Housing Authority. So now this isn’t a BOK loan, but I want definitely want to mention it as an asset to Summit County. It’s Summit Combined Housing Authority. They help first-time home buyers, they help with down payments. They have loan programs to help keep housing affordable here involved in all the low-income housing projects and all kinds of that. So Summit County itself does have some really great down payment assistance programs through the Housing Authority which are super beneficial to our locals and first-time home buyers.  Not every county or city or place in the nation has that. So I think Summit County is very lucky to have that. And then I touched on this a little bit earlier, really the keystone of our products which are great products for second home, investor condo purchases has been this program that we specifically created and tailored around them. As you mentioned and said we have all sorts of other loan products you know for primary homes first time home buyers we do VA, all the government loans, USDA loans, but for you know our predominant customer up here has been second home owners purchasing condos. Since we have that specific product that we’ve tailored to them, that’s really been a huge asset to all of us to allow people to continue to buy these great second homes in Summit County, keep the interest rates a little more reasonable than they are. They’re significantly better interest rates than they are with the government, say Freddie or Fannie loans. So I think specific to Summit County those would be the two products that I think impact buyers the most. 

OK. Yeah. And I was just actually I came across like USDA loans on something else where somebody said, hey, you can get a 0% down loan pretty much anywhere outside of big city. And I was looking and technically we qualify. How many USDA loans do you see or are they more kind of geared towards the Summit County housing programs when they need like that low down payment?

Yeah, you hit it right on the head. Is that because USDA is a great program that offers 0% down, there are a few nuances to that program that make it sometimes a little bit more difficult to qualify for. And because we have this Summit Housing Authority who essentially is doing the same thing by allowing you 100% financing because they’re giving you that 3%. I often find when I have clients coming to me and asking me about USDA loans, when I educate them about what we have available and what Summit County has available. It’s very clear and obvious once you see the bullet points that a USDA loan isn’t always the best way to go. It certainly can be a great loan for certain areas, but typically up here in Summit County, we have better options.  And USDA loans you may know may or may not know are only for primary homes. So second homeowners can’t utilize those programs. VA loans are only for primary homes. So again for our predominant borrowers that we have up here, second homeowners, we have much better options.  

I think there’s income limitations as well, that gear more towards you if you’re in that lower income, maybe first-time home buyers, are local programs. 

Yeah. And there’s certainly, it’s not the only loan program out there that has income limits, some of some of these other loans that we’ve talked about today have some income limits as well, but the USDA loan does have income limits and there’s, like I said, there are a couple quirky little things about those loans that when I lay out all the options for clients, I usually show them a better way. I’ve done quite a few USDA loans too that work for specific properties. 

Perfect. As we close it out, what advice do you have for buyers getting ready to purchase? And maybe we talk to like that as a first-time home buyer that’s looking at Summit County, they’ve been saving up, and then that second homeowner that’s looking for a condo type of property.

Well, and the advice is really the same for either of them. I believe you should talk to a lender first. I mean, it’s just, it’s just crucial that you talk to a lender first for so many reasons for your own Peace of Mind. You just don’t want to be out there looking at properties that you can’t afford. You fall in love. First thing off the bat, you get disappointed. I’ve also certainly been in a situation where I have borrowers who underestimate themselves and say and they might want something a little bit nicer, a little bit different, and they don’t even realize they can get there because they haven’t spoken to a lender. So it goes on both sides of it. I just think it’s, it’s crucial to talk to a lender first and decide what you can afford according to them, what you can afford according to yourself. Because of course, you want to keep your own needs and wants at the forefront of everything. So I think that’s step #1 understand your loan options. As we just discussed many people coming to me saying, hey, what about this loan? And I lay out all the options. These are just things that make you feel so much more comfortable as you progress through actually purchasing a home. You’ve got your lender, you know your loan options, you know what you feel is going to work for you. Those two are super important. Don’t do anything with your credit. This is a really basic one, but I just can’t leave it out of this list. Please don’t get prequalified then go buy a car, open a bunch of new credit cards or furnish your home. Maintain some steady credit through the whole thing. We also mentioned and which kind of this whole podcast is about is local lending is very important. It’s very important for a lender or for a buyer to be comfortable with their lender and to know them and to not make a decision solely based on interest rate or what fees you might see in an estimate. That is an estimate. You know, it’s just very important that you’re comfortable and that you’re certain that you’re making the right decision with your lender that will ensure you close on the property that you want work with the realtor. I think it’s absolutely a crucial step. You know, the Realtors up here have their fingers and thumbs right on these properties.  They know when they come on, they know what you’re looking for, they know what you need and they’ll reach out to you right away and you know, hopefully help ensure you’re one of those first offers that gets in.  I have a lot of clients who I asked, “are you working with the realtor?” They’re poking around on Zillow and here and there, which is great when you’re starting out, but when you get serious, get a realtor. They’re absolutely invaluable. You need one.

I didn’t pay her to say that! 

And then one of the last things they say is, and I’ve heard this just over and over and over in my time in lending is, “Well, we’re going to wait until…. we’re going to wait until we have more down payment. We’re gonna wait until rates go down. We’re gonna wait until…” Don’t wait. I may not say that if I were a lender in other parts of the nation, but in Summit County, your appreciation is going to outweigh all of those things.  If you’re your appreciation will make up for some down payment down the road you know if you went to refinance your appreciation will make up for the high a little bit higher interest rate down the road and as soon as the waters are perfect for everyone, now you’re up against 20 offers on every single property that goes in. So yeah, my advice is don’t wait. When you’re ready to go, you get pre-qualified, you find the property, and if you follow all of this other all this other advice, when the right one comes on, you go for it. You just really go for it. You’re comfortable with your lender, the loan, what you’re going to be spending, and you got your realtor to find you the right property. There’s no hesitation. You just go for it. That’s my other piece of advice. I feel like there’s a lot of hesitation, but if you follow these steps and you know what you’re doing, you’re good. Just go for it. 

Yeah, that’s great advice, Aimee. I love it. It is a big decision. But like you said, if you do your homework up front, it makes like all of that downstream stuff a little bit easier. 

And yeah, and absolutely I am not suggesting that every client comes and I give them all the information and they still say OK, I’m ready to go for it. Certainly some say “Gosh, well I’m really not in that position. I need to either make a little more money or look for a property that is a little less.” But yeah, typically once everything falls in line then you’re good to go. 

Awesome. Well, thanks so much Aimee for joining today. We really appreciate your insight on lending and the mountain market and Summit County and just lending in general. So thank you for being here. 

Well, thanks for having me, Candice. I really appreciate it. And yeah, hopefully we can do it again sometime. 

Sounds good.