When it comes to buying a home, a.k.a. the biggest financial decision most people will make, mortgage originators are typically the gatekeepers – and consumers have a myriad of options when it comes to choosing a lender.
Since all mortgage loans are originated, processed, approved and closed by people who work with the tools and programs offered by the institutions they represent, it’s important to choose wisely. For starters, be wary of institutions advertising significant interest rate discounts. If it sounds to good to be true, it probably is. Carefully compare the fees, lock-in periods, points and qualification requirements of any advertised program, especially those you find online.
To do that, you’ll probably have to speak with a loan officer who is going to try and convince you to apply for a mortgage. Before agreeing to anything, ask about this person’s credentials and experience. Remember, you are looking for a skilled financial mortgage expert to guide you through the home buying process.
“Everyone is pretty much playing by the same rules today,” Jeremy Gorelick, Vice President, Mortgage Loan Officer for Peoples Bank, said. “Buying a home can be a scary and intimidating process. My goal is to make sure that every one of my clients feels comfortable with the home buying process. For first-time home buyers the whole process can be especially overwhelming. Whether it’s your first home or your fifth, we’re here for you every step of the way, from start to finish.”
The first step in the home buying process is a pre-approval.
“Some institutions – especially non-local lenders who are online – offer pre-qualification letters, and unfortunately that letter doesn’t hold a lot of weight in today’s real estate market,” Gorelick explained. “Local lenders are more likely to do a full pre-approval, which is very similar to a loan application. For us, that means the bank will be reviewing credit reports and the whole application will be sent for full underwriting. We want to be sure the I’s are dotted and the T’s are crossed so we’re not giving anyone false hope. It can be a tedious process, but it’s well worth it in the long run. With a pre-qualification all you really have is a letter that states maybe you can do this. Pre-approval letters are good for 120 days, and barring any unforeseen circumstances, streamline the closing process for our clients.”
Once a pre-approval is in place, you can begin shopping for a home within your price range.
“Most of the real estate agents we work with hesitate to even show homes without a pre-approval letter anymore. It makes the whole process less stressful for all parties involved,” Gorelick added. “It’s my job to educate my clients and answer any questions they might have so they can make wise and educated decisions that are best for their financial future.
“For first-time buyers, after the initial meeting I do one-on-one home buyer training with them. It’s important for them to understand that there’s a lot more to it than making payments. They don’t always see all the bills and maintenance costs when they are living in an apartment or under mom and dad’s roof. They also need to be prepared if and when their circumstances change over time. Families grow and jobs change. Everything costs money, and as a homeowner you’re always investing in your property. There’s so much more to it than just rates and payments.
“The average person in this country touches their mortgage every 5-7 years, so it’s important to get off to a great start. In credit preservation, the almighty sin is missing a mortgage payment. It’s a very detrimental hit on your credit report so you need to be able to pay your mortgage every month, first and foremost. There’s a big difference between taking people to that breaking point versus protecting them from biting off more than they can chew. It’s very scary when you see a first-time home buyer taking it to the limit.”
When you find a home and come to terms with the seller, your lender will begin the process of finalizing your loan for closing.
“Right now we’re offering 30-day turnaround time to closing with a pre-approval,” Gorelick said. “It’s crazy how fast people are finding properties right now. I would say we are averaging about 2-3 weeks between the time people are getting pre-approved and calling us to say they are ready to move forward after finding the right property. I’ve been doing this for more than 10 years, and I honestly don’t recall another time when this was happening so consistently.”
Ultimately, it’s your home, your loan, and you have to make the payments. You have to feel comfortable with the loan you are getting.
“My goal is that by the time we get to closing and sign on the dotted line, my clients will know as much as I do about the home buying process,” Gorelick said. “We try to cover everything from A to Z, making sure they are as knowledgeable as possible and understand every document they sign. The most important thing is ensuring clients are comfortable with the decisions they are making, and that they are well-prepared.”