Everyone's family looks a little different when it comes to buying a home. There are so many options to choose from
Casey: 0:01
welcome to our live better podcast. I'm Casey and I'm Kathy Harris and mortgage. And today we're
Kathy: 0:06
gonna be talking a little bit about mortgages and what that looks like. And really, how Thio had to apply for a mortgage how to accomplish that. Now, that's like a huge goal for a lot of people. That's one of the last goals that they may have is to be a homeowner. And so, I can tell you personally know, we just went through that, um, a couple of years ago, and we purchased our first home together. My husband and I, um, we are now a family of three. So we have a little one now, and, um, that's just something that we recently went through together. And it was it was a good experience for us. I will say, there's a lot of information. I remember that, you know, it had to be used up front, but, um, it was a cool thing for us. Kathy, talk to us a little bit about, like how long? Even in mortgage. And maybe a little bit of your story
Casey: 0:53
happened in mortgage actually doing loans for five years. In my story, I've actually personally bought a home, too, and and it is a process because they're getting your personal information and you got to trust these folks that are getting your personal information. So when they ask for your tax returns and your W two's and your pay stubs, it is for your loan approval.
Kathy: 1:16
Yeah, so it's important to me, you know, to know those people that you're talking with and to have that relationship, this one things we talk about with a credit union. You know, we're there for our members and we build that relationship. So going back to our process, that was one of the things that was a huge benefit to us. You know, we knew the people in that we had that relationship with, and it made things go so much smoother for the next home that we that we purchase. That will be one of the things that we look out. It's a huge, huge bonus for us.
Casey: 1:44
It is it's a part of something really personal to go through with any type of loan, but especially a mortgage, because it is a process of 50 15 to 30 days.
Kathy: 1:56
Any time you're working with someone that won't You want to make sure that there's a good relationship there. It's not just a transactional basis, you know, they're gonna get to know them and really understand what's going on. And sometimes it can get really personal, you know, Um ah, home is a big purchase and so it's a serious thing. And on the Winder sign and on the member side, they want, you know, make sure everything is a ah, good, good agreement, you know, good, good terms. Everything's on good terms. And so, yeah, that could just be a huge benefit to have that good relationship with your lender.
Casey: 2:28
Absolutely anything can come up during a mortgage. I mean, you may have, um, something on your credit that you didn't know that was out there or something that comes up on your court record that you don't know. It's out there like a judgment or a lean. And that's things that we can help you process dear. In the process of the loan. Yeah. So, Cathy, tell us about how
Kathy: 2:51
how that starts and how most conversations start whenever it comes to mortgage application.
Casey: 2:56
Well, typically, when someone calls in, they don't know where to start. So, um, I start with an application, and I pulled their credit, not ask a lot of questions. Uh, normally, I ask, how much do they have to put down? Um, what do they think? Their credit score ia's and where they stand. So that's kind of where we get started.
Kathy: 3:17
Yeah. So, um, it could get a 1,000,000 different ways, right? I know you were just talking about the different options that are out there. There's so many different options available just depending on if you're a first time home buyer or if you qualify with your with your income. So tell me a little bit about that, because I remember whenever, um, the first time that we went to get a mortgage, that was something that we have no idea. We didn't know what we qualified for and where to even start. We had heard a few things, but we didn't really understand, um, each option that was available to us,
Casey: 3:48
right? Most people don't. They usually want to do a first time Homebuyers program, so, typically with that, Intel's is a rule development program. It's 0% down, but you have to qualify with your income on that program. So non Tom's out of Dion, you may not qualify S so we have to put you in another program. So we do have ruled development, which is a 0% down program. Ah, we have f h A, which is a great program. It's three and 1/2 percent down, so it's less down. Um, and then we have conventional that could be a three or a 5% down payment via is great. If you're a veteran, that's 0% down payment. And it's actually to me better than rule development. Um, we do have some in house programs as well.
Kathy: 4:35
Okay, Well, um, there's also like, I know we talked about, like, minimum qualifiers. Like you said, What even qualifies you for a mortgage like backing it up just a little bit? Like, how do you even know if, like, this is even a conversation that you can have, like where to get started? What kind of history you need to have that sort of thing.
Casey: 4:52
Well, when we look credit, that's pretty much where a start. Start with application, then pull the credit. The application. You do have to have two years on the job or schooling, and a lot of people don't know that. Okay, talk to me about that. So the schooling part, they could be in school. Let's just say they graduate as a nurse on and they've never worked before. But we can use that schooling as their to your history, work, history. And they just have to have their first paycheck stub with their new job
Kathy: 5:24
who cool. And I know that. Say you learn So you know, like time on the job creditworthiness. Those are things that you know we want to bring to the table. There's, of course, like the income verification, that sort of thing. Everyone goes through that sort of the same. What about, like this forest down payments? I know you talked a little bit about that, so that could just that varies on the type of wound. Or there are other things that very are that have to do with the down payment option.
Casey: 5:53
The down payment light with F H A. For example, you have to have three and 1/2 percent down now that can be in a Gilf form from a relative or money that you have saved. It does have to be seasoned. Money cannot be money that you have, you know, taken out of your safe at home and put into your checking account because there cannot be any large deposits. But the one thing that they can get is a gift from a relative.
Kathy: 6:19
Cool. I do remember that. You know, from our first experience, I remember hearing that. And so that's something cool that I I really didn't understand until we got down into the weeds of that application. Okay, so whenever someone is interested in the mortgage and they're really just starting out in life, you know, we're looking at their credit. What? What does that need to look like? I mean, what are some things that you guys were looking for? Um, you know, what is some advice that you would give to someone who's not quite there yet, but maybe approaching that season in their life,
Casey: 6:49
I would definitely tell them they need at least two trade lines of credit, preferably to have 12 months on each trade line. And I would also suggest a credit card. Even if it's a prepaid credit card, it does go into the credit but keep it below 20 to 30% of the limit.
Kathy: 7:06
Okay, so we'll talk about trade lines. I know we're familiar with that term, but a trade line is just anything that's on the credit report. So anything that's reporting like an auto loan, we're a personal loan. Anything of that nature? Correct. That's correct. Yeah, so for sure that is there anything else like a CE for a score wise that you guys look at? Is there a minimum or just like an average that you would say to stay around?
Casey: 7:30
I would suggest anyone to be above the 6 40 range. Um, and that's just because there's so many stipulations with other programs. Ah, with F h A that can have a 6 20 credit score. But there's gonna be a lot of stipulations that they have to meet to get a loan with a 6 20 credit score with Roll Development 6 40 credit score. Um, and they will take a little bit lower score sometimes. Sometimes they will go to a 6 20 but with stipulations.
Kathy: 7:59
Yeah, so that's super important to have a good credit score to even start start the application process so we're
Casey: 8:07
gonna
Kathy: 8:07
talk about closing calls. So tell
Casey: 8:09
me a
Kathy: 8:10
little bit about the end game, you know, the end of the process, that closing. So what does that look like? I mean, what is included in that? How does that work?
Casey: 8:19
The closing calls will include origination, which the way we do our loans here, there's no origination fee. That does until a appraisal fee attorney fee. It's gonna have your escrow. Unless you waive escrow, your taxes and insurance or your escrow. We will collect a full 12 months of insurance up frying and usually a 2 to 3 month buffer for insurance and taxes. So at the end of the day, your typical closing costs are around 6500 ball part.
Kathy: 8:51
That could be a lot it iss. So how do you How would you suggest that someone prepare for something like that? You know, we talk about down payments and then close and closer big things. Some people don't even realize that that, you know, that is part of the process. You know, they think the whole thing is in alone. Um, and this is most of the time Cash. Correct. So how do you prepare for something like that.
Casey: 9:13
Save your live better savings. You need to be putting back some money foreclosing calls. Even if you're going roll development, there are still closing calls. Unless the house appraises for more to roll those clothes and calls me a and you're still gonna be out closing Cost?
Kathy: 9:30
Yeah, pretty much. Most of the options. A sw far as a mortgage. Guys, you're gonna have some closing calls. Absolutely. So even if you think you've maybe, um, like we said dodge the down payment, there's still some closing costs associated with the mortgage process. And so I think, Yeah, like he said, saving for that and preparing not only on the credit side, making sure that your credit is worthy and you're ready for him words. But also the savings is a part that I feel like maybe it's for gotten a little bit. How many times do you have people come to you and they're not ready for that?
Casey: 10:03
They're not. They're totally shot there. Like I thought I could put all of this in my loan. Well, it doesn't quite work that way in. Like I said, it has to be seasoned funds It can't be money that you've taken out of your safe at home. It does have to be in your account. They're gonna pull your last two months bank statements, and they're going to see all your deposits. So, um, and also overdrafts. Ah, lot of people don't think about having overdraft fees in their account and using their overdraft protection, But that can affect your mortgage.
Kathy: 10:35
Yeah, that's interesting, you know, And that all that has looked at for the benefit of the member, correct. You know, we don't want thio lonely out something that you're not gonna be able to afford or put you in any kind of situation where it's gonna come back and be a hardship on me and say, um, I know for myself, you know, hearing these things, I know that it's all for my protection and not to be a you know, so strict that, um, you know, to keep anyone from getting a mortgage, but it's it's for their benefit, you know. And so to keep that in mind too, I would say, probably, is the conversation that you have with members most often, you know, under explaining to them so that they understand while these things are put in place because there are a lot of rules with mortgages,
Casey: 11:17
they get overloaded with information when they come into my office, and and they're baffled about how much we actually look at their like, I didn't know you were gonna look at my tax returns and and if they owe any taxes, those have to be paid. And if they do of the RS, they have to have a payment plan. Now they're certain mortgages that we don't have to get tax returns. But there are mortgages that we do have to have the full tax returns, which is roll development in the A. So one of
Kathy: 11:48
the things that my husband I did whenever we started the process was getting prequalified. He knew we didn't even know where to store. And so coming in. And, you know, um, finding out what we were even qualified for was a huge thing for us. And how does that really work? Like, what does that look like whenever we get prequalified?
Casey: 12:05
Well, when someone calls me to get prequalified, I take their a full application. I run their credit, I get their income information and we look at everything and we see which program is best for them. Like how much money they have down. If they don't have a lot of money down, we could go roll development, that sort of thing. But then when you get prequalified than the realtors will actually show you, Holmes, Um, a lot of times they won't show you. Ah, home until you get a letter of prequalification.
Kathy: 12:35
Yeah. Say that's important, right? Absolutely. Just jump out there these days. You knew. And look at all these houses disunited qualified for and say that's important to know the pre qualification is definitely a must. You have to do that. And they won't still like a house and find out they can't afford it, right? He wants to fall in love, and then I can't even buy
Casey: 12:55
that exactly. I know. And you want to make sure you're gonna be debt to income wise, be able to, you know, get into that home. So you want to be looking at a $300,000 house and you qualify for a $200,000 house. That's no fun.
Kathy: 13:10
Yeah. Yeah. And you know, you always hear that like we'll make this purchase. But we just ate sandwiches for the rest of our life, right? And said, I know we've had plenty of conversations with people about even myself, my husband on a personal basis. You know, that's not the way we want to live. And so, you know, just having someone else there to look out for us is important. You know, I think Thio just say, Hey, this is what it's gonna look like, you know, with this mortgage with this payment and say that's really important to us And you've probably had several those conversations yourself?
Casey: 13:38
Absolutely. I asked them, Do they want to be married to their home? And then they say No. Then I'm like, You probably need to scale back or, you know, just a little bit so you can afford to still do the things that you love to do and gym memberships. I mean, there's a whole lot of things out there out to eat on the weekends.
Kathy: 13:58
Yeah, there's there's a ton of things that most would not want to cut out. Just just afford a nicer home. Exactly. When we talk about maybe some roadblocks that people have um What is one of the biggest things that that halts the mortgage process? I mean, what do you see? What are some things that kind of stop it?
Casey: 14:17
The credit? Yeah, number one credit they have to pay on time. Mortgage. The underwriter doesn't like to see, you know, delinquency on the credit bureau. That's my number one roadblock. The second is probably the debt to income ratio.
Kathy: 14:34
Okay, what about I know for us, we were told, you know, from the very beginning, you know, don't acquire new debt. What does that even mean? Like, Okay, we can't go out and shop
Casey: 14:44
for furniture, right? You can shop, but don't buy unless you're paying cash
Kathy: 14:49
eso in. You know, I know that affects your credit, but also like the debt, you know, kind of talking about what that means in Just know that everything that you do is being looked at. This is a huge part of CNN. So, again, everything is for your benefit and, you know, accumulate more. That is really not part of the process, not part of not good for the process. I should say, um, again, that's probably a huge roadblock that people face. Not really understand, then, that once the process starts, there's no new debt. There's no new credit cards, new financing of furniture. And I find anything of really anything during this process that can completely stop the process. Correct.
Casey: 15:29
It could make or break the whole long, um, if we let's just say we qualify you for 200,000 and deer in the process of the loan, you go buy a car, you may not. Debt to income wise qualify anymore for that $200,000 house. So that could mean a turn down instead of an approval.
Kathy: 15:49
Yeah, So I want to talk a little bit about, like, the home buying process as far as like, out shopping for homes and, um, really Wooderson things that you see, Um, as far as what people are looking for in the market and maybe some things that the conversations that we have, um, when they're out shopping for homes,
Casey: 16:09
it depends on the size of their family. Typically, Ah, if they have three Children, they may be looking for a four bedroom home. Um, and and we're seeing a lot more people looking for homes with land. I've been seeing. That's pretty common recently. Um, and there's not a whole lot to choose with a lot of land with it, So you may have to scale back on what your won't are.
Kathy: 16:33
Yeah, everyone, everyone's family looks a little bit different, and you may have this idea in your head as to what you want. But just know, and you know what's right for your family, what you can afford and what's going to write for your future. Um, you know, someone may want something specific, but really understanding what that looks like to comb is so important. You know, there's there's a starter home. Yes, but what's to come, you know, is this is a good investment for your family right now. And what does it look like down the road?
Casey: 17:02
Right. Um, I think the starter home is a great start for young families to work their way up later in life. You know, they're making more income 10 years from now than they can afford the bigger home, and they may have a larger family. At that time. They may start off with just a couple and then once they have two Children, five years down the road, They may be looking to expand.
Kathy: 17:25
Yeah, So just to kind of wrap up here, we talked about a lot of stuff. You know, mortgages are a deep in a thorough process. Even homebuying shopping for a home. You know, there's so many things that go into that. What do you want? A home? Like we said, What does that investment look like for your family? Your feature, You know. And really, um, you know what is your goal? You know, is it, you know, is it to be a homeowner, Is it, um, just to have a starter home. Now, you know what? What does that look like for you? But just knowing that there's something out there for everybody, there's an option available. And if you're not quite there yet, let someone help, You know, hear it centric. We have certified credit union financial counselor's own site. Um, and we also have, of course, are wonderful. Mortgage department on that will go through that process with e. And so really just leaning on someone else to help you with that. To know what's good for you. You know what? What is your affordable payment? Look like helping me find, like rates. Um, and of course, you know, just the different types of mortgages that are out there. Is there anything else that June and
Casey: 18:33
just call me? Let me take your application. Let me run your credit. Let's see what we can get done for you. Give me a call so we can get you prequalified. My number is 3183409656 I'm a 37 11 Cyprus street in West Monroe, Louisiana. And you can also just, um, assuming an email at mortgage at my centric dot or GE, I would love to talk to you today. Thank you,
Kathy: 18:58
Cathy. We really appreciate you being here with us today and talking with this injury. And there's a really, really important topics. And those chips for us going forward Say thank you and thank you guys for listening to our live better podcasts.