First Time Homebuyer Tips : Understanding the total mortgage process -- Part 3 of 5

By
Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

FYI - (these tips in this first time homebuyers series are not just for newbies/first time homebuyers)

 

Shopping for a mortgage can be such a confusing process, even for those that have bought a home or refinanced previously. And in this first time homebuyers series, the biggest thing that I can't stress is the ability to pick that loan officer who will have your best interest at stake.  I don't want this to be a debatable subject. There can be arguments based on :

  • Make sure you get the loan officer through a referral  (you can find people on the internet, such as myself - just be careful of such services that promise companies that will fight for you to give you the best rate)
  • Make sure that the loan officer is local  (this gets debated often - in regards to myself, about 80% of my business is out of state - 10 loans that I closed this year were out of state and denied by local lenders)

Hence why I am not looking for debates based on the information above.  I wanted this to be an informational piece, just keeping you informed.

 

 

 

Here is the basic process when shopping for a mortgage : 

  1. Shop for a mortgage - The loan officer should have an interview process, asking you questions.
  2. Get pre-qualified or pre-qualified - Make sure that they went over your credit in detail
  3. Once you choose that lender, apply for a mortgage
  4. Get all documents to your lender, ie. pay stubs, W-2's, bank statements, credit explanation letters
  5. Make sure you talk about locking in your rate or floating - understand the difference
  6. Wait for the lender to process your mortgage loan and underwrite it to approve it
  7. Once approved, help getting the conditions in and have your homeowners insurance ready
  8. Get ready to close on your mortgage and celebrate

 

 

Here are some of the basics that you should be aware of......

 

mortgage calculators

Beware of those online mortgage calculators. You need to focus on :

  • Property taxes - even in the same location or on the same purchase price, taxes can vary, so get an average.
  • homeowners insurance - start early in the process of getting homeowners insurance quotes. Even if you haven't found a home. And don't wait until 5 days before settlement, because each dollar could make a difference, and could possibly affect your mortgage approval.
  • mortgage insurance - each program is different if you don't put 20% or more as a down payment.

Overall, these calculators don't give you the real payment.

 

 

mortgage interest rates

Mortgage Interest Rates - One of my biggest pet peeves. Too many people focus on interest rates and allow themselves to get sucked up into the hype. Your loan officer's focus should be on what kind of mortgage payment that you are comfortable with and not selling you rate right from the get go. yes, many of us have different ways of selling. But you can't get the lower rate unless you have more money to buy it down. Something a true mortgage professional will share with you and not ignore.  Please read : Payment vs Rate   And when shopping for a mortgage, don't just shop APR (Annual Percentage Rate). Please read : APR vs Interest Rate

 

 

 

balancing interest rates

Locking into an interest rate -  Another pet peeve of mine. When you actually shop for an interest rate, many loan officers will just give you a rate, but not explain to you that it's probably based on a 30 day lock. It's doesn't matter if you are shopping for a mortgage or decided to go with that loan officer.

You see loan officers that give a low rate without asking you important questions. They just want to be the lowest so you choose them. And the best rate won't always equate to a smooth or ethical loan closing. And once you do apply with them, some won't explain in detail about the importance of locking or floating your rate. You just assume and they wait until it comes up in conversation.

 

 

value of money

 

The Value of Money

This will be talked about more in Part 4 of this series. But your loan officer should be asking you about your goals. There are many different ways to save money both in the mortgage payment or in closing costs. There are also ways to take that savings and invest it also.

This post is just a quick example of how you can lower your payment :

The Myths behind ZERO point mortgages instead of paying points upfront

 

 

 

 

My biggest Pet Peeve!!!  -   Good Faith Estimates

When you are shopping for a mortgage and that loan officer actually qualifies you?? Let's define qualifying you first....  someone that asks some important questions and someone that has actually pulled your credit report or has viewed a copy of your credit report. Well, after being qualified, that loan officer should offer you a Good Faith Estimate in the next 24 hours. And to be honest, if they truly qualified you, they should be sending it to you in the next 15 minutes. With today's technology, there is no excuse, unless their building just blew up. And a hint :  even if they didn't qualify you and they gave you a rate over the phone, they should be sending you a Good Faith Estimate. And if you have to ask for it severak times and it takes days?... Red Flag  Please read : Consumers need to be aware of these Red Flags

 

And in regards to Good Faith Estimates, please read :  Good Faith Estimates  and  Good Faith Estimates.

 

 

Summary : Everything that I mentioned is to give you a better education of the process and what things that you should be most concerned about. Make sure that your loan officer brings each of these issues up and that they educate you on them.

 

 

All images from : istockphoto

Good Luck

 

 

 

The First Time Homebuyer Series :

 

Understanding if you should rent or buy :



  • First Time Homebuyer Tips : Summary - Red Flags to be aware of -- Part 5 of 5

 

 

 Buying Tips :

 

 

 

- FHA Loans - USDA Loans - Conventional Loans - VA Loans -

Experience & Knowledge at its BEST !!!

 

________________________________________________________________________________________

For more information on FHA loans, please go to this link. : The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags

 

Copyright © 2008 by Jeff Belonger

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______________________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Edward Wadsworth 12/14/2008 12:58 PM
  2. Mike Hughes 12/15/2008 08:57 PM
  3. S&B Real Estate Team 01/20/2009 06:34 AM
Topic:
Lending / Financial
Location:
Virginia Fairfax County Fairfax
Groups:
Realtors®
Mortgages
All About Mortgages/Mortgage Networking
1st Time Buyers
The FHA Mortgage Group
Tags:
home buying
first time home buyers
pre approved
fha loans
1st time home buyers
first time homebuyers
mortgage interest rates

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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

Keeping in mind that this is my opinion, but also my expertise of over 16 years in the mortgage industry.

 

Dec 14, 2008 10:51 AM #1
Rainmaker
111,108
Steven Wright
Home Real Estate - Aurora, CO
CRS - Home Real Estate - 720-989-5283

Thank you for the tips regarding mortgages for 1st time home buyers. I appreciate it.

Dec 14, 2008 11:36 AM #2
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Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Good stuff dude...you are the master of the GFE or Good Faith Estimate.  I just had someone quote 4.875 with no points, but when the GFE came out....wa----laaaa.  1 percent origination, plus fees, but yes.....no points.  GFEs are critical!

 

Dec 14, 2008 12:08 PM #3
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Jeff - great information for first time buyers. I have found so many who really don't have a good idea of how to proceed, what to look for and ask about, and so on. I am stll amazed at how many buyers do not receive a GFE and don't even know what it is.

Jeff

Dec 14, 2008 12:10 PM #4
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Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

If it's one thing I take stock in...is a mortgage broker/LO that gives good information. With that in mind I say this. The first thing I tell my clients (when referring them to a couple of loan officers) is to tell them what kind of monthly payment they are comfortable with (it IS important they stay within their budget). Interest rates are important if they are shopping around and getting a better deal than the next guy so I tell them to ask. (and you also said that to mention the loan lock....good one!) You brought up some on target points for the first time homebuyer Jeff and I always come here knowing you have sound advice. Thanks!

Dec 14, 2008 12:22 PM #5
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

STEVEN..... .  my pleasure... I hope these tips help many. I can't tell you how many times that I ask a potential client that was never told a payment, but just rate.  thanks for stopping by....

LARRY.... .  I truly think the Good Faith Estimate should be the consumers biggest issue... especially when given or quoted a rate and or fees... that doesn't mean crap until they see it in writing. And what's sad, even when they see it in writing, it could still only be worth the paper that it is written on.  Sad, but so true.  But getting back to what you said... it comes back to what the consumer wants to hear and as you stated, wa laaa... now you see it. Sorry that it changed on you... lol

JEFF.... . many don't..... again, I am not god nor am I perfect... but the basics of getting a mortgage?  Very dad that so many are lied to or mislead... and those borrowers still trust that loan officer at times.... it's almost like, 3 strikes and then you are out. What?  Why are they waiting so long...???  thanks for the compliment...

SALLY.... . I think many of us take the payment thing seriously. I love when a loan officer fights me on this issue and tells me that it doesn't matter when you bring this topic up, as long as you do. me personally and professionally?? I think it does matter... if not talked about in the first 5 minutes, that borrower will be misinformed and mislead... just my opinion. And yes, rate locks are just as important.  Thanks for understanding this whole process and for your feedback. .. PS.. and for the polite compliments...

 

Dec 14, 2008 03:18 PM #6
Rainmaker
400,678
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Holy moly, thats a lot of links.  :-)

Jeff - My biggest pet peeve is similar to yours with some slight adjustments... You mention Good Faith Estimates.  I think you are right that it should be turned around rather quickly, unless the person is really really new to the business and is waiting for their 'trainer' or 'broker' to put it together for them.  I've experienced that in the past.  It was actually the processor providing the quote and not the actual LO working the file.  Anyway, what really bothers me is that the customers will compare the bottom line.  Unfortunately, many LOs know this so they will purposely leave off the title and/or insurance / taxes so that the bottom line is lower.  There are other things that are missing, left off... which now I think I'll write a post about. Thanks for the brain food.

oh yeah.. great post by the way.  Very informative and I actually liked the links, even though I commented that there are a lot of them.  All examples of how you share your knowledge with everyone and are trying to get the word out on 'what to look for and avoid'.

Dec 15, 2008 02:17 AM #7
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

JOHN......  lol... just laughing at your holy moly comment.  You hit a nerve that I agree with 110%, and that is the bottom line. But one thing to think about, my blogs are generally too long, 750 to 900 words... and I couldn't put all of that in there, hence why I put those links in there. Please read both links to my Good Faith blogs and I think you will see that I mention bottom line. Hence why I address the lenders fees and highlighted the section from 801 to 820.  So I agree with you, just the fact that I mention this in another post.

Overall, thank you very much for the kind compliments...

 

Dec 15, 2008 02:34 AM #8
Rainmaker
519,175
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

Jeff ... good blog article about your part 3 of Understanding the Mortgage Process. That's a lot of information.  Keep up the good work and breaking down the myths about mortgage.  Harrison

Dec 15, 2008 03:58 AM #9
Rainmaker
172,062
Vicki Pedersen
Pedersen Real Estate - Riverside, CA
Providing Exceptional Real Estate Service

Jeff,  What a great post!  You provide a wealth of very important information for first time buyers.  I wouldn't hesitate to give a link to your post to a first time buyer client.

Dec 15, 2008 08:31 AM #10
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

HARRISON..... . thanks, I truly appreciate that. I hope more consumers read stuff like this, just informing them of what is out there and not just about rate.  thanks

VICKI..... . I appreciate those kind words and compliments. I do hope more people see posts like this, breaking it down in easy to understand processes... thanks

 

Dec 15, 2008 10:39 AM #11
Rainmaker
337,585
Thesa Chambers
Fred Real Estate Group - Bend, OR
Principal Broker - Licensed in Oregon

Jeff - I hope you know how much I appreciate your posts - I just wish you were licensed in Oregon so I could repay the favor of the FHA education you have provided.

Dec 15, 2008 01:12 PM #12
Rainmaker
99,185
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Really good series Jeff, and focusing on the right topics. So rarely are we as lenders remembered for giving somebody a cheap deal. We are remembered for taking their hands and walking through what is usually the most complex financial transaction of their lives, and making them feel comfortable.

So when are you going to compile all those links into a book?:-)

Gerry Suarez, Jr.

Your FHA Loan Pro!

Dec 16, 2008 12:29 AM #14
Ambassador
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

THESA.... .  I do and I truly appreciate your support and for the polite comments... As mentioned, I am working on Oregon... it just can be costly, from state to state.  thanks

GERRY..... . thanks, I am actually glad that this is turning out to be a good series also... Part 3 turned out better than I expected, just because of the last 3 blogs that I wrote prior to this and how a specific loan officer semi attacked my methods. Because of that, I thank her, because it made me think deeper and harder on what the consumer needs to know and what to understand. 

In regards to the book?  People have mentioned this.... I just don't see myself writing a book... but maybe... but I need to work on an e-book of just these basic topics...  thanks

 

Dec 16, 2008 03:13 AM #15
Rainer
24,603
Keith Pound
EXIT REALTY CRUTCHER - Louisville, KY
Realtor, Auctioneer - Louisville, KY - 502-645-5950

Good post Jeff, I will read more to better understand the whole process

Dec 30, 2008 12:55 PM #18
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