For most, purchasing a home is the largest financial transaction of their lifetime. And it comes with lots of questions! We sat down with Senior Mortgage Loan Officer Ian Bennett to get the inside scoop on the most common questions first-time homebuyers ask the Mortgage Team at Elevations Credit Union.
Common homebuyer questions cover topics ranging from how to find a lender and what mortgage insurance is, to how to stand out to sellers when it’s time to make an offer. The overall takeaway is: Each buyer and transaction is unique, so it’s best to have an open, honest chat with your lender before attending open houses.
Here, Ian helps answer some of your homebuying questions on finding a mortgage lender.
What are some tips for a first-time homebuyer who is shopping for a mortgage lender?
As you embark on the homebuying journey, you’ll quickly learn that trusting your real estate agent, lender, home inspector and seller is the key to making things flow smoothly. Ian explains that when it comes to finding the perfect home loan provider, you must absolutely choose a lender who you trust to educate you on the process ahead.
So, who would that be? “I personally think homebuyers should look for a local expert who they could either meet in person or who has a reputation in the community,” Ian suggests. “Look for someone who’s going to be able to support you with coaching and mentorship — someone who can provide education around how to qualify for a mortgage.”
What should first-time homebuyers know about finding a mortgage provider online?
‘Easy online mortgage’ ads are abundant. So, are they a good option? Ian weighs in with his personal experience: “I find that online lenders tend to turn and burn through things. If they don’t want to talk to you, they just don’t answer the phone,” he comments.
Ian warns that their estimations may be a little less certain, and they often flaunt attractive interest rates and low fees to lure first-time homebuyers in who don’t know that loan rates are a commoditized service — which means they are roughly the same behind the scenes no matter which lender you choose. Ian says that fees across lenders will all be typically within a couple hundred dollars, so don’t get stuck on those numbers.
“The question is — when you’re making this large financial decision — is this something you want to do faster and cheaper? Or, do you want to actually understand what you’re doing? Do you want to understand the ins and outs of how this could affect your short-term life, long-term life and financial planning?” Ian explains.
When picking a lender, look beyond numbers. Pick someone you can connect with and who has a solid reputation for their service, ability to educate and follow through.
Download our free Elevations Home Buyer’s Guide:
How can a first-time homebuyer understand how much house they can actually afford?
After selecting a lender, the education begins! Ian explains that early on in the relationship, he personally performs an analysis of the member’s income, assets and credit history to determine their financial fitness.
From there, he’ll ask questions about their lifestyle and plans for the home (is it a forever residence, starter home, investment property, etc.?), and then together, they work to create a loan estimate and worksheet to determine what amount of monthly mortgage payment the homebuyer could handle in relation to other financial goals they have in their life, such as paying down college loan debt or planning for an upcoming auto loan payment.
“What a member can afford from a qualification standpoint, and what they think they can pay from a monthly budget standpoint, are typically two very different things,” he adds. A mortgage payment should be both comfortable and practical.
After crunching the numbers, and taking life plans into consideration, the member has an understanding of how much home they can afford while managing other obligations and taking steps toward their goals beyond homeownership.
How can a first-time homebuyer stand out to a seller who is reviewing offers?
Sellers will often put a potential buyer who works with a respected local lender in the community above other options. Also, buyers who already have a preapproval letter in hand from their lender are a step ahead of those who haven’t done the financial homework to ensure they can indeed manage a mortgage.
“It’s very centric on local,” Ian explains. “We work to have the education upfront so that when we go under contract and we put in an offer, the financial component isn’t stopping us from getting to where we want to go, because we’ve already done all that work upfront.”
Do you have questions about buying your first home or investment property? You can contact Ian or any of our other Mortgage Loan Officers here. Find answers to more first-time homebuyer questions in our second part of Answer to Your First-Time Homebuyer Questions. Also, browse the Elevations Credit Union upcoming free online webinars and in-person seminars related to homebuying.