Episode Transcript
[00:00:10] Speaker A: You're listening to Beauty and the Boss where each episode mortgage experts Brett Shapiro and Nikki Dolan break down mortgage myths and answer your questions about what it really takes to land your dream home.
Welcome, welcome, welcome to Beauty and the Boss.
I am Brett Shapiro and this is my partner in crime in the mortgage industry, Nikki Dolan, who together we have 35 years of mortgage experience and represent Team Shapiro of Princeton Mortgage Corporation. Today's podcast is our first of many in a series we are creating to both educate and have fun.
Long term, we'd like to be able to do them live with a live Q and A.
Today's topic is first time home buyers. And Nikki will be playing the part of the first time homebuyer and I will be playing the part of the mortgage loan originator.
We have compiled the top 10 questions we get daily and we're going to share them with you.
But first, Nikki, why don't you take a minute or two and introduce yourself.
[00:01:12] Speaker B: Thanks, Brett.
So I'm a people person, a mother of three, a grandmother of two adorable girls that I live for and I believe I have a good understanding of life after raising a family, educating children, watching them buy homes, watching myself right size.
And I've done it with you for a lot of years and you are my fearless leader, the person who loves to read guidelines in the background, the person I can hand deliver our clients to and really sit down, make everyone feel at home and go over the loan process the first time buying process together. So I thank you for the opportunity to share what we do behind the scenes with everyone.
[00:02:00] Speaker A: Awesome.
It's been an absolute pleasure over the last five years working with you and having you on my team and I'm super excited for what we're going to step into with this podcast series because I really do believe that we talk to a ton of new first time home buyers, but there's a ton that we haven't been able to talk to and or just love the answers to some of these questions.
So I'm really excited to be doing this with you.
Let's jump right into it. What would be your first question if you were a first time homebuyer?
[00:02:34] Speaker B: Well, I think the first thing I'd say is I'm really nervous because that's what the first time home buyers come to me with. They're really nervous. They want someone who will talk to them.
Although they're really great at being online, they want to ask questions and their first question is that someone has told them to be pre approved and they want to understand about a pre approval or a pre qualification process, they have to give this to their Realtor so they can make an offer or even understand what's the difference between the two?
[00:03:11] Speaker A: That's a great question, and we get that one often.
A pre qualification is nothing more than you applying on a lender's site or in person and a lender giving you a pre qualification letter just based on what you're stating on the actual application.
What most Realtors and sellers are looking for is something a little bit more than that. They want a pre approval, which is a step up from your application and stating your income and your assets. And they want you to be able to actually send to the lender, here's my pay stubs, here's my tax returns, here's my bank statements, here's everything that you need to take a really deep dive in to make sure that I am actually pre approved.
All parties in the transaction are counting on the lender to make sure that they've not only given good service to you as the buyer, but that they're giving proper information to the community. All the real estate agents involved, all the attorneys involved, the sellers involved, all of that.
What I would close that question with is that a good lender is also going to run you through what we call an automated underwriting system, which is going to give you a further stamp of approval. It basically has Fannie Mae or Freddie Mac or FHA guidelines written in it if you, it analyzes you as a person from a credit, income equity and asset standpoint and says, am I approvable for this loan? And when we run you through the underwriting system, it tells us yes or no. And when we have that yes, we know that there's a 99% chance that that loan is going to go through, assuming that nothing changes between the start and the finish of the process.
So you want to make sure that you have a pre approved approval letter and you want to make sure that you're going with a good lender that is putting you through an actual underwriting system.
[00:05:06] Speaker B: Thank you. I love it. Because my personal goal is to make sure no one cries.
So you do a really thorough job going through all those documents and our borrowers appreciate it.
[00:05:20] Speaker A: Well, one of the things that you've always said and I think is important is that you sell a good night's sleep.
And I think that most first time home buyers and probably anybody going through the mortgage process right now doesn't sleep at night entirely because they're worried about, well, what if this doesn't go through. What if I screw up? So you want to make sure that you're following the rules and that you're with a lender that's going to set you up perfect.
[00:05:44] Speaker B: Thank you.
So now that you tell me that I'm qualified, let's assume that you've told me I'm qualified. If you say I'm not qualified, I'm assuming you're going to give me a homework list. You're going to tell me to do something so I can get qualified.
[00:05:58] Speaker A: Absolutely.
[00:05:59] Speaker B: But if I am qualified, what type of loan are you going to give me? What are the different types of loans that you might use? I've heard a lot of different words. I've heard government, fha, conventional. What's the story here?
[00:06:14] Speaker A: Sure.
So any good lender is going to give you a real consultation. And what we mean by that is somewhere in the realm of 15 to 20 minutes talking to you about what we consider the four keys of lending.
We want to look at your credit, we want to look at your income, we want to look at your down payment, and we want to look at your assets and your reserves.
And once we establish the answers to that, we can then thoroughly review with you the pros and cons of going with conventional or fha. But the key to the answer to that question is, is that there could be many answers and that you want to go with a quality lender that is going to take the time to listen to you and understand where you stand on all four of those different aspects of lending to make sure that they're giving you the proper guidance.
[00:07:06] Speaker B: So if I hear you properly, different lenders might tell me that there's a different type of loan that would best fit me.
[00:07:16] Speaker A: That is true.
You know, there are different lenders that have different ideas on the right way to guide people.
And it is important that you understand, well, if I'm, do I qualify for both the conventional and government?
And if I do, you know, what are the rates that are going to be associated with that? What are the costs that are going to be associated with that? What are the down payments that are going to be associated with that? And any good lender would take the time to sit with you and made sure that you were comfortable in understanding what your options are.
[00:07:48] Speaker B: Doesn't sound like the type of thing to do with an online lender. Sounds like you really need a good consultation.
So you spoke about credit. And this is another thing that really makes me crazy. I go to the car dealership and they think I'm a superhero and I look on credit karma and every place I look, I get a different score.
How does this work for mortgage and what type of credit do I need?
[00:08:13] Speaker A: Free sites are often misleading and the reason why is they include a lot of what you would consider public data.
When a lender pulls your credit on the mortgage side, it's going to be directly from the repositories and it's only going to include your private financial data and the associated score that goes with it. At that time.
A good lender would share with you that you need a minimum score of 500 to get an FHA loan and you need a minimum score of 620 to be able to get a conventional loan.
Hopefully your score is over or significantly over both of those thresholds. However, if it's not, a good lender is going to have the tools where they can run simulators to show you how easily it may be to get an extra 10 points here, 20 points there, maybe even as much as 80 points.
So you want to be with a good lender that understands that. Part of the consultation is also educating people where their credit stands on a fair to good to excellent level, and then how to get to the next level to be able to get better pricing.
[00:09:26] Speaker B: Can you break that up just a little bit for me and tell me, like, what a poor number is, what an average number is and what a good number is?
[00:09:35] Speaker A: It's funny because if you were to Google it, you would get like 20 different scales. But the reality of it is is that if you want to go conventional and have what I would call reasonable pricing, and when I say pricing, I mean your combination of your rate and costs. And we'll get into that a little bit later. But a lot of people are misled by really low rate, really low cost, and there's actually a great blend of the two and I call that the sweet spot.
However, on a conventional side, if you don't have at least a 680 score, you're going to wind up paying a lot for that loan. Where on the FHA side, you could go down to as low as 580 and still get extremely good pricing.
So generally, if you have great credit, we're going to steer you towards conventional.
If you have fair, average credit, we're going to steer you towards fha. Now, how does that break down? You asked. I would say to you that based on the way Fannie Mae, Freddie Mac and FHA are pricing loans and the way they're offering their pricing, I should say you need to be over 740 to have excellent credit. If you are between 70, 680 and 739, you have good credit, fair credit, and then anything under 680 is on the poorer side.
And you know, we have outlets here, but we're not going to get into any specific programming today, but we actually have outlets to be able down to 550 and we've helped out a lot of people that have poor credit, obtain refinances and new home purchases.
So it's important that you take that consultation seriously as the home buyer and seriously as the lender because you never know how you might be able to help somebody out. Just because someone says they have fair or poor credit doesn't mean they can't be helped out immediately or that they can't be helped out in the next 30 to 90 days. It's important to have that consultation and it is extremely important to look at all your options.
[00:11:44] Speaker B: So what I'm hearing you say is that there's a lot of scores that can achieve different loans, but you really need the help of a good lender to tell you where you best fit.
[00:11:58] Speaker A: Absolutely, absolutely.
[00:12:01] Speaker B: It's a trust relationship.
[00:12:03] Speaker A: It is, it is. And you. And you know, one of the other things that I would add into this is that beyond trust is you want to be truthful and accurate. When you're the first time home buyer, it is extremely important that you are just truthful and accurate with your situation.
If you are, that lender is going to be able to properly advise you.
We're rooting for you, but we're also, you know, we want to help you with your exact situation. So be as honest as possible and you will find that if you find a good lender and you're honest with them, that miracles do happen.
[00:12:43] Speaker B: Now you're going to mention something called a rate to me, something I'm really scared about because everyone around me bought a house when rates were 3% and now that doesn't exist anymore. I got tired of waiting for it to come around again.
So I'm going to buy a house, what's my rate going to be? And what's this crazy thing called APR that no one seems to understand?
[00:13:06] Speaker A: So the interest rate versus APR question is one that's been around forever.
When you get down to locking in your loan, it's probably the most important question because your interest rate is what your monthly payment is going to be derived on.
So if I'm getting a 6% rate, my monthly payment will be based on a 6% rate.
However, the APR is a formula that takes your rate and adds in your closing costs and then expresses that as a percentage. So, for example, I have a 6% rate. Maybe I have a 6 1/4% APR.
Now, what's extremely important when you're comparing offers between hopefully good lenders is that if my rate lower than the other lender, my APR better also be lower than the other lenders. Because if it's not, then it means that that loan is loaded with extra fees.
So all good lenders should provide the potential buyers with an actual draft loan estimate so that they can review all of the terms of the loan.
These created spreadsheets that we see floating around all the time oftentimes leave out important data.
So it's extremely important that you make sure that your rate and your APR are both lower than your competitors so that you can assure that you're getting the best deal on both the combination of rates and cost.
[00:14:46] Speaker B: So when everybody gives me this estimate, it seems like a lot of people use a lot of different papers when they give it to me. Like, is there a document that's supposed to be used by everyone or can anyone just make up something?
[00:15:01] Speaker A: Well, that's an interesting question. That's a lethal one.
The mortgage industry provides a document. It's a standardized form. It used to be called a gfe, which was a good faith estimate, and then it changed to a loan estimate.
And it's the form that we use.
And anybody that has any kind of any responsible software to put out estimates would give someone a loan estimate.
We see different fee sheets, we see different Excel sheets, word sheets, even crazy things. And the problem is that it's not standardized. So the customers can't ever truly compare apples to apples. If you are shopping for the best rate and the best cost, you want to tell your lender, I'd like a draft loan estimate, please. Oh, well, we have this spreadsheet over here. No, no, you want a draft loan estimate because it's the only standardized mortgage form where you could actually compare apples to apples.
So Nikki, as you know, all the consultations we've done for our borrowers, we always send the pre approval letter and a draft loan estimate together. That way our customers know and our agents know you're pre approved. And here are the terms of the loan.
And could someone come in and snake us and give a little bit better rate and cost? Sure, anybody can do that. But most customers that we work with realize we give out fair offers. We're very quick with the process and they're happy that they know that they don't have to come back to us three times to get the offer in writing. We give the offer in writing right away. Here it is. Here's your loan estimate. Here's your rate, here's your costs. We have nothing to hide. We are a very open and transparent lender. Please go ahead and shop. And of course, if someone is being more competitive than us, please bring it back to us and let us evaluate it again.
[00:17:06] Speaker B: But yeah, I mean, I love that about you, Brett. I love that. I think that you're very brave. That's the best word I can use because it's very brave and transparent to show our borrowers all of the costs up front and say to them, we stand behind this. You want to ask us questions about it, we'll answer it for you.
And now our first time homebuyers are not afraid and hopefully they're getting to know us a little on this podcast. One of our goals that they understand. Work with someone you're not afraid to talk to.
[00:17:44] Speaker A: You want to have a relationship where your customer feels confident calling you Saturday afternoon at 3 o' clock on your cell phone.
But yes, I think, I think that we do not fear being the first person to quote a borrower a rate and cost and we do not fear putting it on proper mortgage documentation so that it can be upheld because there's no one running around with some half cocked spreadsheet that someone put together actually upholding some of these offers. So my best advice is that any good lender will give you a draft loan estimate is someone's giving you a handmade spreadsheet. I would proceed with caution.
[00:18:28] Speaker B: So now you give me this sheet and it says that I am going to get a six and a half percent rate.
And I get off the phone with you and now I get a house and you now say, okay, now the rate is, you know, it's taken you a month to get the house. The rate is now six and a quarter.
And are you going to lock my rate? I give you a contract, I'm all excited. Are you going to lock the rate? How long is it going to take me to close this loan? And what if rates go down?
[00:19:04] Speaker A: Sure, there's a lot to unpack in that question, but the answer is that it all comes down to your appetite for risk.
Most people are consumed with the home buying process, the needing to relocate their life to a different home. Whether you're, you're upgrading or downgrading, you got a Lot of family involved, you got a lot of movers involved. Pieces to the puzzle.
Do you also want to worry about if your rate is going up or down every day?
90% of people don't. They would love to be locked in and not have to worry about it. There are 10% of people that absolutely want to ride the market and try to lock in on a specific day that might be more advantageous and absolutely more power and kudos to them. My advice to a first time home buyer, since that's what we're covering today, is that we want to give you the best rate and the best cost up front.
And I believe that any good lender would lock their buyer in when they go under contract.
And you're going to want to have a lock period that covers at least that contract.
It'd be nice to throw in a few extra days, but you want to obviously have a rate lock that covers your full contract.
Any good lender would also let the borrower know that they have the ability to one time negotiate their rate for a better rate if there is a significant market improvement. Generally that has to be at least 100 basis points or more.
But any good lender would have a renegotiation policy that says, hey listen, if my borrower is in process for 30 to 60 days and the market improves greatly, do they have the ability to take advantage of that? And of course the answer is yes. We don't want you then going apply to another mortgage company to get a better rate and move your loan somewhere because you're already locked in.
However, we can't keep relocking your loan every day. So we give you one time to renegotiate your loan if the market has improved.
And that's what any good lender would do.
[00:21:15] Speaker B: Right? It sounds great that you're going to do this for me, but I don't really understand what 100 basis points means. You're speaking jargon, what does that mean?
[00:21:24] Speaker A: 100 basis points would be the amount of market improvement that we would see on mortgage backed securities and how the 10 year flows through the market.
And the best thing that we can do is, you know, chart it out for you and show you is as we watch, we watch.
[00:21:47] Speaker B: Will you call me? Will you call me if that happens? Because I don't know that I'll be aware that that's going on.
[00:21:54] Speaker A: We absolutely would.
We look at our customers, our customers rates every single day and make sure they're getting the best possible rate that they can, the lowest possible cost that they can Like I said to you before, the easy move would be for somebody to talk to you while you're in process with us and say, hey, my rate went down.
And, you know, did your lender give you the benefit of it? And if you didn't get that from us, that you might be interested in talking to the competition and seeing if they'll give you a better rate.
So we take on the burden of looking at that, and if there's any major market improvements, then we proactively reach out to our customers and let them know.
[00:22:36] Speaker B: Thank you. And I guess that will be working with me and having communication with me will help resolve that.
So the next thing I'm afraid of is closing costs.
And I've heard a lot of different numbers. How much are they? What should I expect?
Do I pay them? Who pays them? How do I not have to pay them?
[00:22:57] Speaker A: So depending upon the state you're in and depending upon the size of the loan that you're taking out, to answer the question generically, you could expect to pay anywhere from 2 to 5% in closing costs. Now, a good lender is going to have the software to be able to get you your cost accurately up front for you within a deviation of about 10%.
So on that loan estimate we talked about a little earlier, you're going to be able to see your closing costs as accurate as possible. We'll get a slight deviation of about 10%.
Now, as for who pays for them, it's your responsibility to pay your closing costs. However, we are able to structure with the help of your real estate agent and offer to the seller where they can help cover some or all of the cost costs. So it's extremely important that when that offer goes in that we know what is your appetite and ability to pay for closing costs. And if you need the assistance, they will structure your offer so that the seller can help pay for your closing costs.
[00:24:04] Speaker B: That gets me into something that I'm really curious about. Do you have any of that grant money?
Because I heard there's some money out there that I might be able to get because maybe I didn't save as well as I should have for this house.
[00:24:19] Speaker A: Sure.
Every state has their own bond or grant loan. Every state.
They also come with a down payment assistance option. And there are also several national ones as well.
So for as you know, we offer both the state local grant options and we also offer the national ones.
[00:24:39] Speaker B: So should I take it? Should I take it? Like, why do I use them or why don't I take them?
[00:24:46] Speaker A: I would Say a good lender would make you aware of them and then give you the pros and the cons.
Some of them seem helpful when purchasing a home, but they can also become an albatross in the near future. If you ever want to refinance or sell your house.
Yes, it might seem great to take a 10 or $15,000 assistance up front. And by the way, if you need it, you should take it.
However, if you, if you aren't planning on staying in that house long term, there could be penalties for not, not usually there's three years or five years or 10 years that you have to stay in the home, but you know before that's forgiven.
So you want to make sure before you sign on the dotted line that you're taking grant money.
Do I understand that this is going to potentially prevent me from, from refinancing in the future and it also may prevent me from selling in the future?
So those are, that's a great question. And it's important that you have a good lender that understands what the options are so you can be properly educated.
[00:25:53] Speaker B: So I don't know if this is something everyone does or if it's reasonable to ask, but what happens if I have a family member or somebody that will potentially give me some money towards this person purchase? Do you get involved in talking to that person? Can you help me out?
[00:26:10] Speaker A: Sure.
I would say that, you know, more loans than not on primary residences have gifts and almost all of them on first time home buyers have gifts from family.
So I think that's a great option.
And when we do our consultations, we welcome in any family members that want to listen in or are part of the transaction.
It's important that they understand any tax implications.
So you know, if someone's giving a $5,000 gift, there's no real tax implication for that. But if they're giving a $50,000 gift, there absolutely can be tax implications for that. So it's extremely important that everyone understands, you know, their role in the process.
[00:26:55] Speaker B: Okay. And I can have beyond myself on this loan. I can have a co borrower with me if I want.
[00:27:03] Speaker A: You can, you can have a co borrower that is going to live with you in the property or you can actually have a co borrower that they consider non occupying that does not live in the property with you. Maybe you're moving in with someone that you're dating or a new spouse, or perhaps your parents who have their own life and own home need to co sign with you. We can do it where they're either living in the house with you or they don't live in the house with you.
[00:27:31] Speaker B: Perfect. Okay.
So I guess you're going to want to some documents from me, right? How do I know what documents I need?
How do I know if I have them? What if I can't find them? Do you help me with all of this?
[00:27:48] Speaker A: Sure.
The short answer is you need to. You're going to need to provide an identification document, income and assets. That's ultimately what we're going to need. Now, depending upon whether you're employed, self employed or retired, those documents are going to vary.
So any kind of good lender out there is going to have some very easy technology for you to use when you're applying that is going to tell you, based on how you've applied, what documents you need with. We use Maxwell here at Princeton Mortgage. It's a fantastic piece of software. And then we also follow that up with an email to the buyer. Hey, just as a reminder, here are the minimum documents that we need to get your loan into underwriting.
[00:28:33] Speaker B: So you're going to email me what I need to put into the system where I apply. And if I don't understand something, is there going to be someone that I can speak to that's going to help me with this?
[00:28:47] Speaker A: Absolutely. The, any, any good lender is going to have, you know, a loan officer assistant or some other kind of assistant that can get on the telephone with you, video chat, cell phone chat, and kind of walk you through how to, how to fill out the application if you need help or you need help with, with certain questions. Absolutely.
[00:29:08] Speaker B: So I'm not going to be alone at Princeton Mortgage. You are going to handhold me and make sure that I am successful at this. So if I manage to do it all, how long is this going to.
[00:29:19] Speaker A: Take in the application process? Assuming that you are, you know, one person applying, should take you about 10 minutes and it should probably take you another 10 minutes to upload your documents, assuming that you can find them all.
But you know, any good lender is going to have some system out there that is going to be very easy to use and today's world to be able to just fill out your application and then submit it securely and then more important, be able to upload your documents securely as well. That's the big scare right now is identity theft and documentation theft. And you want to make sure that this lender has the proper security protocols as well. You know, you don't want any credit card information or Social Security information stolen.
[00:30:05] Speaker B: You Know, do I have to pay for anything up front while I do this? Do I need money to apply for the loan?
[00:30:13] Speaker A: You. You're going the only.
Well, that's a. That's a good question. You're probably going to have to put down a deposit.
Generally that's 1% of the home or thereabouts, which it's a good theory. If I'm buying a $500,000 home, I'm going to put a deposit of five grand down.
And the only other out of pocket expenses until you get to closing, where you bring the rest of the down payment, are generally an appraisal and an inspection.
They're both in the neighborhood of 5 to 600 bucks.
And your inspection is more.
Is.
Let's start with the appraisal. The appraisal is more for the lender.
And what the appraisal is doing is confirming the value of the home and it is also confirming the general broad condition of the home is acceptable to lend.
The inspection is more for you. It's more of a thorough look at every aspect of the home. Electricity, plumbing, etc. Etc.
And we recommend that everyone does that. Now, the inspectors tend to sometimes be dramatic and make you think that the whole house is falling apart when they come back with 30 items that they looked at that need to be fixed. But they're also doing a good due diligence job in pointing out anything major.
And as Nikki, as you know, we've had many consultations with people that we want to make sure that there's no issue with electricity, there's no issue with plumbing in the house, there's no issues with the roof, making sure that the major things are taken care of on that inspection report. That is something that you and your agent or you and your attorney will look over in detail.
And then you have the opportunity to go back to the seller and say, hey, listen, you know, we're comfortable with these 25 items being what they are, but we want these five things fixed before we move into the home. So that is something that we'll also help you out with. If you want us to do a cursory look on the inspection as well.
[00:32:25] Speaker B: We will, but the only thing I pay the lender for is the appraisal. And when do you order the appraisal? Because I hear stories about people not getting their appraisals and things being held up, etc.
[00:32:40] Speaker A: So great question.
We order it right away.
As soon as that customer signs their initial paperwork, we're ordering the appraisal, we're ordering Title, we're putting everyone into motion assuming that that loan is going to close.
If it doesn't, it's disappointing. But we would rather get everybody in motion so that we are meeting the closing dates and not missing the closing dates because we didn't order title or appraisal until two weeks after we should have. So we're going to be erroring on the side of caution and making sure that everything is done on time.
[00:33:14] Speaker B: So I live in an area where it's very, very competitive.
Is it reasonable for me to ask you, the lender, to call the realtor from the other side who's listing the house and tell them that I'm a good borrower? I mean, do you do more than give me a letter?
[00:33:33] Speaker A: We would gladly do that as long as your real estate agent, our real estate agent on our team is comfortable with that. We do that all the time. We would love nothing more than to communicate with all parties, including the seller side, on how great of a customer you are, how well qualified you are, how excited you are, and let them know all the reasons why you should be the owner of the house. This is your house. This is your dream house. You know we're in it with you. You know it's a pass fail thing. Either. Either we win the house or we don't win the house and then you're back to the drawing board. So we are going to try to help you pass and win as best as we can.
[00:34:16] Speaker B: That all sounds great, but I hear that sometimes these loans fall through. How often does that really happen and why does it happen and what can I do to make sure it doesn't happen to me? I'm a crier.
[00:34:30] Speaker A: So a good lender will give you the riot act, the absolute riot act on what not to do when buying a home.
And then it's your choice if you want to follow the rules or not. To be honest with you, I would say that 90% of the time, none of this stuff comes into play because people do follow the rules. But as the lender, we send out, we verbally and in writing send out what not to do when buying a home. So let's talk about the major things.
No major purchases. Can't go out and buy a boat. Can't go out and buy a new car.
Why? Because that could affect your debt ratio. We've qualified you based on a certain debt ratio and if those percentage points move up and up and up, you may not qualify for the same loan or a loan at all.
No large deposits. You can't verify and source. So anything that's larger than you know what your paycheck is, we don't want to see flying around. So if you're making $5,000 a month, we don't, we want to see, you know, we don't want to see $30,000 deposits flying around that can't be explained very simply. We're just protecting the fact that, you know, there's no money laundering.
You can't introduce money that isn't gotten in a legal manner into a real estate transaction.
Not to scare anybody, but to be blunt about it, we're simply going to ask you where did this money come from? And we need to be able to show that you know where you got it from or if it was a gift, however you got it, we're going to need to be able to show significant drop in credit score.
Look, if you're, if you're seen it, if your credit drops a ton, you're going to qualify for a worse loan or maybe no loan at all. And you're going to want to make sure you're making the minimum payments on your liabilities. You're going to want to make sure that everything that's on your credit report, you're making at least the minimum payment until we close.
And last but not least, no job changes, no job losses. God forbid you get laid off. We have nothing but sympathy for you.
However, proactively changing your job while buying a home is only going to cause delay and you don't want to do that. We may be in a situation where we can use an offer letter from a new job or we may be in a situation where we are going to need you to have 30 days of pay stubs to close. So you don't want to change your job. Obviously you don't want to lose your job.
No major purchases, no deposits that you can't verify and source, keep your credit score the same or higher, make sure you're making all the minimum payments. But those are the things that we're going to be looking for first time home buyers to do and we're going to tell them and we also provide via email, you know, a pros and cons list with that as well.
[00:37:26] Speaker B: What you've basically explained to me is even though you've done my credit when you qualified me for this mortgage and you are somehow going to be taking another look later in the process.
[00:37:40] Speaker A: So we have, we have, you know, there are several loan quality initiatives that are, that are part of making sure we do the loan correctly on Our side and we have debt monitoring. So we are going to monitor you up until the day you close that you don't take out any new debt.
And if you do, we are going to potentially need a new credit report and we are potentially going to need to add that into your debt ratio depending upon what it is you bought.
So it's really important that for the three weeks to 45 days that you are buying this home, just don't buy any, don't make any major purchases, don't open up any new credit avenues and keep yourself clean.
[00:38:30] Speaker B: So I know that everyone gets really nervous. It's like the third most nerve wracking thing you can do in life is to buy a home.
And it sounds like there is going to be a lot of communication, a lot of open conversation.
You're really going to want to be very, very comfortable with who you use because you're going to be talking to them regularly. And I want you to know we'll leave it up to our audience. Which one of us is beauty and which one of us is the beast?
[00:39:06] Speaker A: But it's boss.
[00:39:08] Speaker B: Oh, the boss. Which one of us is the boss? You are correct. But you are a beast when it comes to lending. You know everything about it. You know guidelines better than any person I have ever met in my life.
You are so smart and so capable and I'd like to think that I am so compassionate that I'm able to handhold our borrowers, deliver them to you and we are able to inform them and make sure that they're comfortable with what they're doing.
And we can have a good relationship with the realtors at the same time because they seem to be the other partner in these relationships. How much do you tell the realtor? Do you tell them my credit score? Do you tell them how much money I have?
[00:39:58] Speaker A: No.
First of all, thank you for those kind words. I definitely appreciate that.
I love this industry and I love this business and it is a feel good thing when we're able to take somebody that maybe couldn't get a loan somewhere else and get them done here because we have the products or the understanding of how to fit round pegs into square holes.
And we enjoy seeing families happy. It is a real joy to see somebody buy a home for the first time or buy a home for the third time, upgrade their family.
The first time we saw somebody they didn't have kids now, now they have kids and it's just great to see that refiing to help people pay off debt and improve the quality of life.
It's all fun, but we don't share information with anybody we are not supposed to. And a good lender is not going to open up specific things about, hey, my client's credit score is 602 or my client makes $62,000 or, or they only have $10,000 in the bank or anything like that.
We are going to be very respectful to you and your financial needs and transaction.
We do have to give updates to the real estate agents. So we do have to let people know if we're generically waiting for an updated pay stub or an updated bank statement or verification of employment. So we have to tell people what we're waiting on. But we do not, we do not read, you know, the same way you have HIPAA laws for medical data. We're not reading your medical records to anybody.
We're the same way here. We're not reading your financial records to anybody.
[00:41:53] Speaker B: And Brett, what happens if really I'm buying a house for five or six hundred thousand dollars, but in reality, you know, I can afford a house for more money?
Are you telling anybody that I actually have more money? Like I keep myself on a budget, so maybe I qualify for more, but I want to spend less? Do you tell anyone that?
[00:42:16] Speaker A: No, we don't. We talk about what you're comfortable in terms of spending and that's what we put on the pre approval letter.
Now with that said, we want to have a conversation of, hey, listen, 500,000 is my max, but the house I want, you're going to go for 525.
So we might have conversations of, hey, do you want to open up a little bit more to make sure you get the house of your dreams?
But no, if you're qualified for 800,000 and you want to be around 500, we're not telling anybody that you're, you're going to go, you're going to qualify for 800,000 or that you even want 800,000. But if you're, we've seen a lot recently in the last few years where houses are going for more than asking price, price. So we don't want a house that's asked for 500 you to lose because other people are bidding 510, 520, 530.
We're going to be the responsible lender, have those kind of conversations with you and make sure that you understand, you know, hey, I'm approved for this, but you know, where am I comfortable bidding up to? So there is some nuance and a process with it. And generally, together with the real estate agents understanding of the market and their strategy, you know, you're able to get together as a group and figure out what you want to offer to get the house. Remember what I said before, this is pass or fail.
You either win the house or you don't. And if it's your dream house or a house in a neighborhood you really like, or school system you like, you know, you have family there, you have friends there, you may be willing to pay a little bit more for that without the thought process of someone's trying to jack me up.
You know, we're just trying to educate people on how to win the house.
[00:43:56] Speaker B: So are you going to treat me differently if I can't afford a $500,000 house? What if I can only afford 350?
[00:44:04] Speaker A: We treat everybody the same. Our goal is to give everybody what we could consider an effortless experience for them and also a referable experience.
Anybody that is in this business or any other commission business understands that it's never about the transaction in front of you. It's about the transaction that's next.
And if I treat you with respect, even if you're not putting a whole lot of money in our pocket, you're going to appreciate that and you're going to tell your family and friends, I got to go see Nikki. Nikki treated me with respect. I only bought $120,000 condo. She treated me like I was buying a million dollar, million dollar mansion. And that's the level of effortless experience we're trying to give everybody here and that any responsible lender would give to anyone else.
[00:44:51] Speaker B: And is it true that when rates go down, you are going to consider yourself my lender and you're going to contact me and maybe help me lower my rate? I mean, everyone says next year, it's happening next year.
[00:45:06] Speaker A: Yep, we are, definitely are. We have a, we have a database that is already letting us know when your rate is going to be, when we can lower your rate at least 1% or more. You're already in the database. The day you close, you're entering into our database and we're monitoring that. I wish we could have reached out to more people. Over the last three years, the rates have been significantly higher than when they were during the pandemic. But as soon as the rates come down, which is another topic of content conversation, but hopefully will be within the next six to 12 months, we're going to have a lot of people to call, including those future customers.
[00:45:44] Speaker B: All right, well, I work with you, so I know how great it is to work with you and I hope that this helps a lot of our first time home buyers feel more comfortable with the process and hope we hear from them.
[00:45:59] Speaker A: Absolutely. Nikki, thank you for joining me on this podcast. This being our first, it is absolutely been a joy and a blast.
I hope, my hope is that we can get feedback from real estate agents and that we were able to get feedback from first time home buyers, multiple time home buyers so that we are able to get better at it, provide content that people need and bring some real, real value out there.
We want to do a few podcasts but we also would like to do some live stuff where we're able to have people join and then do some live Q and A to go along with it. This stuff is a lot of fun and we're just grateful for the opportunity to reach out to everybody and share what we hear on a daily basis from first time homebuyers.
You did a great job with the questions Nikki and hope we've provided answers to people that will benefit them greatly and if people have more questions on it, hope they reach out.
[00:47:02] Speaker B: Thank you so much.
[00:47:04] Speaker A: Absolutely.
[00:47:05] Speaker B: Bye bye.
[00:47:05] Speaker A: You've been listening to Beauty and the Boss, hosted by Brett Shapiro, NMLS number 23470 and Nicola Dolan, NMLS number 38774. If you enjoyed today's podcast, please like subscribe and tell your friends. For more information go to princeton mortgage.com.
