First Time Home Buyers Part One

There are several essential elements that need to be brought together when making your first home purchase. The first place you should start is picking a Mortgage broker to work with. This is unquestionably the most important part of the puzzle when purchasing a home.

The person and company that you pick to help you get a loan on your home is more important than any other relationship that you will have. Most people think the Realtor or Real Estate Agent is more important. While they play an important role the Mortgage Broker or Loan Officer is more important.

First and foremost the Mortgage Broker (MB) or Loan Officer (LO) can make or break your purchase. The difference between an LO and a MB is that the Loan Officer generally can only get you loans through the bank that they work for. I.E. your local bank or national banker generally only uses a few sources or to get money whereas a MB can get the money from a number of different banks and companies. This doesn’t mean that MB’s are better than LO’s it just means that one might get you a certain type of loan or finance percentage rate that the other one can’t.

I work with a couple of MB’s that help people through bad credit issues, help them understand the whole process, and consistently close on the homes when they are supposed to.

Imagine this scenario: you are moving from your apartment the last Friday of the month. You have a moving truck packed up and you need to be out of the apartment by the end of the day, and you also need to return the moving truck by the end of the day. You’re excited to buy your first home and you’ve worked hard not only to get the house but to get ready for the move. Your closing is scheduled to take place at Noon and you are excited to move into the home. Then at 10 AM you get a call that the closing is not going to take place today! They don’t do closings on Weekends so you’ll have to wait until Monday to buy the home. You have a moving truck full of your possessions and nowhere to go. Worse yet you’ll be charged heavily to keep the moving truck all weekend.

Unfortunately, this is not an exception to what happens when people try to buy their first homes it is a reality. I just had a closing last week where the LO forgot to tell the buyer that his parents needed to be at the closing to co-sign for him. They lived six hours away, and needed to be there in two.

The week before I had a closing that finally happened after being scheduled to take place two weeks earlier! I had never met either of the Loan Officers before so I wasn’t responsible for either debacle, and the clients were another Realtor’s but it was still uncomfortable watching what these poor people went through. What made it worse for the people that had a moving truck full of stuff it was the second time in a month that the Loan Officer failed to close on a home for them! They had been stuck living with a friend for a month, and that relationship was deteriorating quickly. How do you avoid all of this?

First, no matter what anyone tells you, shop around for a good L O or MB. How can you tell their good? First, check and see how long they have been in the business. If it is only a few years they likely were among a massive influx of people that joined the business when people were refinancing their homes with the huge interest rate drop of the past few years. Unfortunately, a lot of these people don’t have much experience with home purchases they are used to doing refinancing. These are generally the type of Lo’s and MB’s that don’t consistently close on time.I would also check and see how many loans they are currently working on. Also ask them for references in who they have just closed in the past month. If they can’t get you at least three people from the previous month you are dealing with someone that doesn’t do a lot of business. This should be a red flag.

One other way to check what the LO or MB will be like is to call them a couple of times at various times and check to see what their response time is. If they don’t respond quickly from the onset things will only get worse when they are working on the loan.

Next, ask what programs they have available to first-time buyers. Like I mentioned earlier this can change with each LO & MB. I had one Broker swear that I couldn’t get a no-money down loan on a rental property when my other Broker laughed and got the deal done. Shop Around!!

Make sure that the information that they are giving you is in writing. They should be able to give you what is called a “Good Faith Estimate” on what the loan will cost to create and what the percentage of interest and term you will pay on it.

Refer to another article I have about the three ways Mortgage Broker make money on loans to have a better understanding about who is giving you the best deal. Unfortunately, the loan you will get may have hidden costs make sure you do your research on this matter.

For first time home buyers the person and company they use to get their mortgage should be interviewed like they are trying to get a job. Shop around and make sure to get the best price and best representative to help you.

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