In the scheme of lifetime acquisitions few are filled with more angst and anxiety than the purchase of real estate! And, when it’s the first purchase, that anxiety level can increase by at least a factor of two!
In many ways anxiety comes from feeling out of control and unsure about what the future will bring.
For first time home buyers who are dealing with the unfamiliar process of negotiation with a seller and getting pre-approved and finally approved for a mortgage this stress and anxiety can be at unimaginable levels!
A few months ago we had provided some tips on negotiating with the seller for a first home purchase and now we want to provide tips from 32 mortgage experts on handling the process of financing that home in the best and most efficient way possible that will achieve the ultimate goal of a mortgage.
We offer numbers 1-15 here with a link to the original article for anyone who wants to continue on with numbers 16-32.
Some suggestions you may agree with and others you may not but having input from some of those who are in the trenches everyday can never be a bad thing!
So the question that was asked and answered by these masters of the mortgage was:
‘What is one uncommon mortgage tip for a first-time home buyer?’
1. Engage a Lender Early On
Do not try to impress your lender by showing how financially sophisticated you (think you) are. I have seen first time mortgage customers close out credit card accounts (this hurts your credit), move money around from various accounts and/or deposit a big stack of cash they have been saving (if you do not have a paper trail of all funds you plan on using for the transaction, you will have a hard time getting a loan approved). Instead, the first thing you should do even before contacting a Realtor or visiting an open house, is to contact a seasoned mortgage professional and get pre-approved for a home loan and inquire on the do’s and don’ts from that time through the closing. A competent lending officer will be able to provide you with information to insure a smooth and stress free financing transaction if they are contacted early enough in the process.
John Shaw – NMLS# 72524 – Guaranteed Rate
2. Always Bring a Gun to a Knife Fight
Think of Indiana Jones in Raiders of the Lost Ark. First time home buyers need to show sellers they are serious and differentiate themselves from the other competing buyers to gain leverage in the negotiating process. Most buyers are making offers using prequalification or pre-approval letters, which aren’t worth the paper they are written on. Don’t be like everyone else…be better. FTHB’s should be coming to the negotiation table with a fully underwritten conditional approval or a PreferredBuyer™ Advantage type approval that I arm my buyers with.
Brad Yzermans – NMLS# 315238 – Caliber Home Loans
3. Don’t Hide Any Information
While you may feel you are helping the process by not telling us about that other home you own/bankruptcy you filed/lack of down payment, etc it will eventually come out. Help your lender by providing them with as much information as possible upfront, even if you think it may hurt you. We must verify significantly more information than in the past and everything is discovered. We’re here to help you obtain that loan and it’s much easier to find a solution upfront rather than during the final approval when the clock is ticking!
Patrick Ruffner – NMLS# 364050 – Guaranteed Rate
4. Use an Experienced Loan Officer
The best loan officers are known in their markets for providing an exceptional experience for both the borrower and realtor alike and just like Starbucks their clients are fiercely loyal because they’ve earned the trust of their community. Because there is no internship for mortgage loan officers, experience is gained on the job. Now more than ever, a first time home buyer can’t risk ‘on the job training’ with a newly licensed mortgage loan officer because experience may be the difference between buying their first home or renewing the lease on their college apartment.
Ricardo Cobos – NMLS# 120651 – AES Lending
5. Meet Your Loan Officer Face to Face
Many of the new lending disclosures can be confusing if you are seeing them for the first time. By sitting down with your lender it allows you the opportunity to fully understand the financing charges and the details of the transaction you are entering into.
Patrick Haywood – NMLS# 217727 – PERL Mortgage
6. Respond Quickly to Your Lender
Time kills transactions! Instead of bellyaching about the documentation requested – focus on the big picture – you are going to own a new home!
Phil Caulfield – NMLS# 386911 – WJ Bradley Mortgage Capital
7. Consider Seller Credits
Always consider a seller credit when making an offer. This can alleviate some of the out of pocket costs on closing day. Often 1st time home buyers are working on a tight budget. They have a lot of expenses including down payment, homeowner’s insurance, various inspections, and moving expenses. A seller credit will allow for some of the acquisition costs to be financed into the loan. Your Realtor will be able to help guide you through structuring an offer with a seller credit. You will also find it helpful to speak with your lender so you know how much credit will be allowed with your type of financing and how much of it to utilize.
Cory Kessenich – NMLS# 248368 – Inlanta Mortgage
8. Verify Your Loan Officer
Check the NMLS website for background on who you are dealing with (lender). Is this person on his first month on the job or on his 20th year?
Jeff Tarbell – NMLS# 249176 – Comstock Mortgage
9. Use Your Own Realtor
One thing I see first time buyers doing is contacting the listing agent on a home for sale and then letting that Realtor represent them as well as the sellers in the offer. How can an agent get the highest price for the seller at the same time the lowest price for the buyer? I tell them to get another agent to represent them, for it does not cost them a penny and are only working for you.
Ray Silvestri – M08002781 – Mortgage Architects
10. Request a GFE Before You Apply
You owe it to yourself to get a GFE (Good Faith Estimate) from a local Mortgage Broker before you formally apply for a loan. The mortgage broker is required by regulations issued by the Federal Reserve to disclose all their fees upfront to the consumer. Mortgage Brokers have a pre-determined amount of compensation they can receive before the application can be initiated. Therefore Brokers can NOT choose to “pocket” more money on a specific transaction, if a consumer chooses a rate that has a premium, the extra money must be credited back to the consumer.
Kirk Chivas – NMLS# 160828 – First Commerce Financial
11. Guidelines Vary from Lender to Lender
There are guidelines that all lenders must follow; however there are also requirements that can vary. Borrowers are often led to believe that they will not qualify for certain programs when in-fact they will, just not under those particular lenders guidelines. I recommend a second opinion if you have been told “no”. For example, many clients I speak with say they will not qualify for a conventional loan because their credit score is only 620. Lenders offer different programs, credit restrictions, etc.
Paula Bonnafant – NMLS# 858645 – American Eagle Mortgage
12. Keep Your Bank Statements
One of the biggest problems with first time buyers is their bank statements. Underwriters look those documents the hardest. They are looking for large deposits and other income sources not listed on the application.
Craig Ballhagen – NMLS# 93005 – Guild Mortgage
13. Pay a Higher Rate
And save on your monthly payment. Always look at Single Premium Mortgage Insurance options.
Kelly Whytock – NMLS# 286369 – RidgeView Mortgage
14. Shop Your Insurance Policy
First time buyers should shop for homeowners insurance, the same way they shopped for a lender. Their current insurance carrier may not be their best option. Make sure you have proper coverage, make sure you have enough funds set aside to meet your deductible in case of catastrophe and take advantage of multi-policy discounts.
Tamara McNeil – NMLS# 289680 – Comstock Mortgage
15. Don’t Spend Your Reserves
One uncommon mortgage tip is to do your best NOT to spend your reserves during the loan approval process. First time homebuyers tend to get very excited during escrow, and there is a tendency to want to shop for new furniture, appliances, etc. However, most banks will want current asset statements right before we sign your loan. So if the amount of reserves you now have is less than what we started with, you may have to prequalify again. This can cause loan approval delays, and frustrate the seller since we may have to extend the contract date.
Pete Castillejos – NMLS# 331643 – 808 Home Mortgage
Read the rest of the tips here.
Follow @Hallmark Abstract Service