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Buying Your First Home: 5 Steps to Success

If you’re considering buying a home but you aren’t quite sure where to start, you’re not alone. Our step-by-step guide can walk you through the process with ease.

 

For those who are getting tired of renting and have decided it might very well be time to buy, it’s important to understand the buying process, what type of property is best for you and the type of financing you’ll need. Here is a step-by-step program for those who see a first home purchase in their future.

Step 1: Think it through

It’s important, early on, to understand the pros and cons of buying versus renting. It’s not always in one’s best interest to buy a home instead of renting. While there is certainly time to change one’s mind during the home buying process, it helps to understand the benefits and downfalls of owning a home before applying for a mortgage.

Pros of home ownership

  • Each month, as you make a mortgage payment, you’re contributing to your own financial stability in the form of increased equity in the property. Over time, your equity grows and it belongs to you, not to your landlord.
  • Mortgage interest is tax deductible, whereas rent payments are not. Property taxes may also be tax deductible for those who itemize.
  • The property belongs to you and you can have pets, paint the walls whatever color you like, and create your own kitchen.
  • When financing with a fixed-rate loan, your monthly payment will never change.
  • You won’t have a landlord who can increase your rent each year.

Cons of home ownership

  • You’re not as mobile as you once were. As a renter, you had the option to change your scenery and move across town, or to another city each time your lease was up for renewal.
  • When the heater broke down in your apartment, you called your landlord. When the heater breaks down in your own home, you’re the landlord.
  • You no longer have the free access to a fitness center, pool or other amenities offered by your apartment building.
  • If you make a poor decision when selecting an apartment, you can always move when your lease expires. If you make a poor decision when buying a home, the consequences will be much more severe – negatively impacting your finances significantly.

Step 2: Credit and lifestyle check

At the very beginning of this process, it’s important to check your credit report. When consumers pull their own credit report, they should be looking for errors or mistakes that might be incorrectly lowering credit scores.

Fortunately, it’s no secret that credit files can be rife with errors. Similar names can pop up on one another’s reports, and old accounts can show as open and in collection when they’ve actually been paid in full.

Consumers should regularly check their credit regardless of whether or not they’re looking to purchase a home, and free credit reports can be obtained annually at a website supported by the three main credit repositories: Experian, Equifax and TransUnion. The site is www.annualcreditreport.com.

Consider your lifestyle to help focus in on a neighborhood and property type that will best suit your needs. Do you want to live the high-rise condo life downtown, or does a neighborhood and your own lawn sound better? Are school districts a priority for you? What about your commute to work?

These and other questions should be settled before you seriously begin your home search.

Step 3: Understand your finances

How much are you comfortable paying each month? Remember that when you begin the mortgage process, how much you qualify for and what you’re comfortable paying can be two very different amounts. It pays to get prequalified early on, but stay in your comfort zone and don’t get carried away taking on a payment that is too high for your own good.

Use MortgageCS to get a feel for current mortgage rates and for the program that best matches your available down payment amount. By the time you close on a home, rates will more than likely be different than they are now, but you need to familiarize yourself with credit markets and monthly payments.

As always, keep your personal information safe during this early stage. Uninvited pressure from a loan officer or multiple credit pulls over time can create unnecessary issues and stress. Using MortgageCS to ensure your personal information remains protected is a great way to understand your options and find a trusted source for your financing without the hassle.

Don’t forget about homeowners insurance. Contact your insurance agent and get a quote on coverage for your new home. Your lender will require a minimum amount of coverage required, but speak with your agent about any additional coverage options you might want to add to your policy.

Step 4: Get organized

Begin gathering your financial documents. Once you’ve selected the loan officer you’re going to work with, they will provide a list of required items. This list will include bank and investment account statements, and income tax returns might be required along with W2 forms and paycheck stubs. You’ll need to update these items once you get closer to a loan approval, but gathering them early lets you know if there is anything missing that you’ll need to track down.

Step 5: Find the property!

Looking at many different properties can be exciting and frustrating at the same time. Once you have an accepted sales contract on a property, follow the requests of your real estate agent, loan officer and loan processor when additional information or action is required. Most sales contracts conclude in 45 days or less. Don’t assume anything during this critical time and be sure to keep the communications line up and working!

How fast?

You can follow these 5 steps in 5 months, or in almost any time frame, but giving yourself enough time to complete each step will help create a stress-free experience.

Ask anyone who has been through the home buying process before and they’ll tell you that spending more time shopping for homes with a preapproval letter is far better than chasing down loan documentation at the last minute. So plan ahead and make the process as easy as it can be!

Company News, Learning, Purchase Mortgage, Refinance Mortgage, Reverse Mortgage, Second Mortgage / HELOC, Uncategorized, Videos

A Day in the Life of a Loan Officer (Video)

Video Transcript: Have you ever wondered what your loan officer does all day?

In a nutshell he or she is working hard on your behalf to close your loan while also managing many other tasks. At times it may feel like they’re doing everything but working on your loan, so keep in mind that loan officers typically only make money when they actually close loans. They want your deal to close.

Your loan officer will change hats constantly throughout their day. They’re a consultant in the morning, a documents processor in the afternoon, a marketer in the evening and a problem solver just about all of the time. One of their toughest jobs is overcoming obstacles associated with documentation requirements and other questions brought up by underwriters. They’re running interference for you all day long, and making a complex process feel a lot more simple than it actually is.

A typical path of working with a loan originator looks like this: You’ll be introduced through MortgageCS or some other way, where you have an opportunity to interact and then exchange information when the time is right. Keep in mind that a good loan officer listens carefully, takes time to understand your complete situation and then develops a proposal that meets your short-term and long-term needs.

A good proposal is much more than the lowest rate being offered. It considers interest rate as well as the length of time you plan to stay in the home, the best strategy for the down payment, the amount of the mortgage, and the estimated closing costs.

Loan Originators stay up to date on program guidelines, complete numerous licensing classes and work hard to set proper expectations that result in delighting their clients. At MortgageCS, loan originators know that a happy customer will leave positive feedback and this will help them build their reputation in the platform – which is about the best marketing a loan officer can get.

Announcements, Articles, Company News, Down Payments, Home Buying, Learning, Loan Programs, Purchase Mortgage, Refinance Mortgage, Shopping Mortgages Now

Streamlined quote requests at MortgageCS

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Mortgage shopping can be challenging for many reasons. Questions regarding rate competitiveness, determining the integrity of the lender and simply trying to keep it all organized can be enough to drive someone crazy.

Fortunately, MortgageCS resolves these issues. Here is how it all goes down.

Step 1: You create a quote request

Creating a new quote request is quick and informative. Short help videos are available at each step – providing answers to the most common questions and delivering insights to make the entire mortgage process go smoothly. At the end of your quote, you choose if you would like to share your name, phone number and email address.

Step 2: Loan officers respond

When loan officers receive your quote request, they get to work building custom responses.  You’ll gain a full picture of the available loan options, the personality of each loan originator and what you could expect during the loan process.  Here is what each loan originator can include in their reply:

  • Loan offers: The loan programs you requested – assuming you qualify – are provided. Amongst other terms, you’ll see the interest rate, bank fees, loan amounts and monthly payments for each program. Loan originators can also include proprietary programs that may better accomplish your goals. This gives you a full understanding of the loan options available without the hassle of putting pen to paper or being a mortgage expert.
  • A written message: Important details, some of which may be vital for your particular loan program, can be added in a written message. Helpful tips and additional points can also be included, ensuring you are set up for success early on.
  • Attachments: Documents, such as loan disclosures, product highlight sheets or checklists, can be included for your review. This can facilitate learning and expedite the decision making process.
  • An audio message: Gaining insights into a loan officer’s personality is easy when they provide a helpful and informative audio message. This message is available alongside any written message or offers provided by a loan originator.

Step 3: You evaluate and decide

As each offer is received, it is added to your quote dashboard for easy evaluation. Questions and further communication is possible by using a sleek messaging system included right on the site. If a few days go by and you need rate updates, that is easy too.  You can request a Rate Refresh, which allows loan officers to send new offers – ensuring you stay up to date on your options.

The process of requesting a new quote at MortgageCS was intentionally designed to deliver efficiency and value – so don’t miss an opportunity to take advantage of this great service.  Contact your financial advisor today for access!

Announcements, Articles, Company News, Learning

Financial Advisors: Finding value in MortgageCS

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The past few months at MortgageCS have been an incredible blur. In addition to wrapping up the initial product development cycle for launch, we spent a great deal of time on the road, presenting MortgageCS to financial advising organizations. Presentations were given to large mutual insurance companies as well as smaller, more independent, advising teams.

Over the course of these meetings, financial advisors shared how the various components of the platform support their business better than the status quo. Here are two of the more common responses we have heard:

Streamlined mortgage shopping saves time and eliminates the hassle

Creating and sending a mortgage quote request to 5 validated loan officers takes less time than a single phone call. MortgageCS allows users to protect their personal contact information, refresh a quote request with a single click (for those that need a pre-qual prior to buying a home), and provides ratings and performance metrics for loan officer selection. Also, comparing offers is faster and easier because all offers are collected in one spot. Financial advisors with a strategic relationship can include their known originators too – allowing all involved to benefit from a more efficient process.

Monitoring rates across an entire platform exposes money saving opportunities that were previously hidden

Creating a rate monitor at MortgageCS is more dependable than any manual process of checking interest rates. Rate monitors at MortgageCS work around the clock by comparing the target criteria to each new offer provided to any quote request across the entire platform. Rather than a single bank or lender offering a rate watch service, MortgageCS provides real-time monitoring of offers from an entire market for comparison. Superior data and an efficient process provides for superior results at MortgageCS!

Articles, Company News, Home Buying, Learning, Loan Programs, Mortgage Topic, Shopping Mortgages Now

Increasing confidence when mortgage shopping

Since the early stages of building MortgageCS, we have been interacting with financial advisors to validate the platform features. Throughout this process, the platform’s ability to harness real-time mortgage data has earned and maintained a top value position. In fact, this component addresses one of the “aha” moments we learned of back in early 2015. Here is how we learned of the mortgage confidence problem – and what we did to solve it.

Uncovering the Confidence Problem

In early 2015, we conducted an anonymous survey focused on understanding buying behaviors surrounding mortgages.  We asked respondents to rank the factors they consider important in a mortgage offer.  Perhaps not surprisingly, interest rate took the top spot, followed by bank or lender fees in the second position. The next three positions were inconsistent but included proximity to institution, reputation of institution and personal relationships.

We then asked respondents to rate their level of confidence in obtaining the best loan terms for their given situation. The scale included a 5-point range from Very Confident to Not Confident At All.  Shockingly, only 9% of respondents revealed they were Very Confident. When combined with Confident, the number grew to just 21%.

According to this data, only 1 in 5 recent mortgage shoppers were Confident they obtained the best loan terms – despite it being the top priority when ranked against other factors.

How could this be?  One possible explanation can be found by looking at the existing mortgage landscape.  A fragmented market, with lots of advertising dollars and a perception of a complicated transaction could take some blame. Perhaps consumers are settling early and avoiding “pain” (a human tendency) – rather than continuing on what can be perceived as a long and complicated journey. Or, perhaps there is just no way for consumers to know, given the current tools available to the market.

Solving the Confidence Problem

We looked at what makes people feel confident when shopping. When it comes to many large buying decisions, using prices that other people paid can be a good judge of deal quality.  Anyone that has purchased a car recently, likely reviewed what others have been paying. Based on that, they either approach the car buying process with confidence or, if after the fact, may realize they overpaid. Regardless, the fact remains that access to information can create confidence in approaching a buying situation.

So, we applied this to mortgage shopping when building the MortgageCS platform.  Market Insights will collect proprietary data, harnessed within the platform, to inform consumers of “what others paid” for a mortgage that matches the key terms of their loan. This is part of our magic sauce and routinely generates a “Whoa!” reaction from financial advisors during a demo presentation.

So, will the Market Insights component solve the problem of “lack of confidence in mortgage offers”?  Based on initial reactions from professionals who have witnessed Market Insights in action, it certainly will.

Articles, Company News, Home Buying, Learning, Purchase Mortgage, Refinance Mortgage

Common reasons you aren’t shopping for a mortgage – and how to fix it

“I can’t wait to shop for my mortgage!”

(Said no one, ever.)

When it comes to the tasks associated with buying a home, shopping for a mortgage may win the award for least desirable action. Let’s look at the reasons why some people don’t shop for a mortgage loan and provide simple solutions to improve outcomes all around.

After all, the financial impact of a mortgage loan will last years, perhaps decades, beyond the few days required to identify the best mortgage lender.

You didn’t realize you could shop

If you fall into this category – we’ll save you the embarrassment and get it over with quickly.  You can always shop for a mortgage – even if your Realtor or Financial Advisor has an “in-house” lender or mortgage broker. Generally speaking, any “in-house” lender or mortgage broker is paying (one way or another) for this privilege. This can, and likely does, have an impact on the loan terms offered – ultimately delivering a less than desirable result for you in the form of inflated fees or interest rates.

How to fix it: Great news!  You just did. You now know you can shop – so do it!  You are in charge of your own financial well being and any “pain,” perceived or otherwise, that may come with shopping for a mortgage will be short-lived compared to the consequences of overpaying on a mortgage for 30 years.

MortgageCS is an unbiased mortgage resource, so we can’t help but suggest you use MortgageCS.com to ensure that shopping is efficient and hassle free.  There is no other place where you can easily company mortgage options without a bombardment of phone calls and undesirable credit report inquiries.

You believe all mortgage companies offer the same rates 

This one is just about “as a matter as fact” as it gets. When it comes to the rates offered by mortgage brokers and lenders, their operational structure does a good deal of the talking.  A few differences to look out for include:

  • Layers of management: Just about all mortgage companies earn revenue when they originate new loans.  Accordingly, a company with multiple layers of management will have more “mouths to feed” from each loan compared to a mortgage company with less management. More mouths to feed means they need to charge more on each loan.
  • Office location(s): When it comes to overhead expenses for a mortgage lender, just about nothing exceeds the combined expense of banking licenses and equipment for a physical location.  Not only does each physical location need to spend several thousand dollars each year to maintain their banking licenses in each state, but they also need to pay for the office equipment, fancy desks and signs, and all other expenses.

There are several other reasons why rates can vary between lenders, but rather than describe the depths and complexities of the secondary market, we hope you may take our word for it!

How to fix it: Again…you just did. You now know that different mortgage companies offer different rates and fees in order to support their operational structures and overhead expenses.  Accordingly, a rate that may seem “impossible” for one lender, may actually be provided by another lender on an everyday basis. 

You are afraid to mortgage shop

Shopping for a mortgage involves all types of new terms, a market that changes at least once a day and pressure from all directions to meet your purchase agreement deadlines.  Factor in the pressure from a real estate agent telling you that the “only one” that can close on time is their mortgage professional and the fact that we, as humans, don’t like to tell people “no”, and you have an environment which can quickly become overwhelming and scary.

How to fix it: Remember that you are in charge of your own financial future.  Real estate agents work hard to ensure the property sale transaction goes smoothly- but they are not compensated one way or another based on the terms on your new mortgage loan (and they don’t need to make the payment either).

While many mortgage originators stationed inside a Realtor’s office may offer ultra-competitive rates and may have a great reputation for getting to the closing table on time, don’t forget Reason 1 or 2 from above. 

About Mortgage Prequalifications

Also know that a pre-qualification doesn’t require that you continue with a particular mortgage lender. Up until the time when you are required to obtain a loan commitment, you have the option of shopping and searching for the loan terms which best suit your financial goals going forward.

 

Announcements, Articles, Articles / Videos, Company News, Learning, Mortgage Process, Shopping Mortgages Now

The Journey to Solve the Mortgage Shopping Problem

Our story began nearly two years ago when we wrote a business plan to improve the mortgage shopping process for consumers. The journey to create an unbiased mortgage-shopping platform that protects privacy and generates amazing results for families allowed us to confirm numerous hypotheses and learn some rather surprising facts along the way.  In addition to sharing these insights and other findings here in our blog, we’ll be posting stories from our various business interactions with Realtors and Financial Advisors as well as mortgage-related content.

Until now, there have been no easy options to shop, evaluate and select a lender, loan officer or loan program. If you recently obtained a mortgage for a home purchase or for a home refinance, chances are you used at least one online loan search engine, a spreadsheet, several emails chains, many phone calls, a few text messages and lots of time…LOTS of time. If you made the mistake of giving up your phone number and email address during your online mortgage shopping, you may still be getting calls from mortgage lenders – months after you closed your loan!

It is also likely that you felt a bit unsettled during the process of shopping and comparing mortgage loans. Who could blame you? A mortgage is a big deal and with the confusing terms, jargon filled disclosures and range of products and options, it can be nearly impossible to ever feel confident in a decision.  There seems to always be a “but what if I were to…” scenario, and let’s face it: you don’t know what you don’t know.

This experience and these feelings are not unique to your last mortgage transaction.

This pain is felt by thousands of people on a daily basis – and it is what we solved for when we designed and built MortgageCS, the Mortgage Concierge Service.

We have lots more to share, so be sure to stay in touch with us right here on MortgageCS and through Twitter, LinkedIn or Facebook. Our founding team has been in the mortgage business since early 2002, and involved with consumer focused technology platforms since 2000. This expertise, when combined with our recent findings and listening to our users, will be leveraged to continually improve the MortgageCS platform.  We are glad you are here – reach out at anytime, we’d love to hear from you.