How We Can Help You

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Quick note before we get started. If you're thinking about buying your first home and you want help figuring out your numbers, your options, or what the next step should be, my team and I would love to help. This podcast is completely free and the way you can support the show is simply by giving us the opportunity to help you when you're ready to buy. You can reach out to us anytime and we'll help you figure out what makes the most sense for your situation. Alright, let's get into the episode.

Why The Lowest Rate Can Lose

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Most first-time homebuyers think finding a lender is pretty simple. You ask a few places, ask them what their interest rate is, and whoever gives you the lowest number wins. But that is probably one of the worst ways to choose the person handling your mortgage, because a low rate quote means absolutely nothing. If it's the wrong loan, if the numbers aren't accurate, if nobody answers their phone when you finally find a house, or if you get three weeks into escrow and suddenly find out your loan doesn't work. So today I'm going to show you how I would actually choose a mortgage lender if I was buying my first house, where to find one, what you should be looking for, and most importantly, the questions you should ask before you trust somebody with one of the biggest purchases of your life. Hey, welcome back to the First Time Home Buyer Pros podcast. I'm Dat. And if you're buying your first home, my goal with this series is to help you understand the process before you're actually in the middle of it. Because once you find the right house, things can move really fast. So let's start with the first

Where To Find A Great Lender

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question. Where do you actually find a lender? There are a lot of places. Your real estate agent may recommend somebody, a friend or family member who recently bought a house may have somebody they liked. You can go to your bank, a credit union, a mortgage broker, a direct lender, or one of the big online mortgage companies. And here's what I want you to understand. There isn't automatically one type that's better than everybody else. You can find an amazing loan officer at a bank, you can find an amazing mortgage broker, you can also find terrible ones at both. What matters more is the actual person and team you're going to be working with and whether they understand your situation. So instead of asking, where should I get my mortgage? I would ask, how do I know if this is the right lender for me? And that's where these questions come

Loan Options And Real Affordability

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in. Question number one, what loan options should I be considering and why? Don't just ask, what loan do I qualify for? Ask, what options do I have? And then why would you recommend one over another? Because depending on your situation, you might qualify for conventional financing, FHA, VA if you're eligible, possibly down payment assistance program, grant programs, first-time homebuyer programs, or other loan options. But qualifying for something doesn't necessarily mean it's the best option. For example, one loan might have a smaller down payment, but higher mortgage insurance. Another might require more cash but give you a lower monthly payment. One program might make sense today, but another might give you more flexibility later. The lender's job shouldn't just be to tell you what you qualify for. They should be able to explain the trade-offs. And at the end of that conversation, you should understand why you're choosing that loan. The second question is how much house can I comfortably afford? Notice I didn't say how much can I get approved for? Those are two completely different questions. A lender might tell you you're approved for an $800,000 home. Great. But what does that payment actually feel like every month? Because just because underwriting allows you to spend a certain amount doesn't mean you should. I would much rather start with the monthly payment. What payment allows you to still save money, go out to dinner, travel, invest, handle an unexpected repair, live your normal life because your mortgage isn't the only expense you're going to have. You're going to have property taxes, homeowners insurance, maybe an HOA, utilities, maintenance, and at some point, something in the house is going to break. That's just homeownership. So don't ask your lender, what's the absolute maximum house I can buy? Ask, what price range keeps me financially comfortable? That's a much better conversation.

Cash To Close And Strong Pre-Approval

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The third question is, how much money will I actually need? This is one of the biggest surprises for first-time homebuyers. They'll hear 5% down and assume, okay, I just need 5%. Not necessarily. Your down payment is only one part of the money you may need. You could also have closing costs, prepaid property taxes, homeowners insurance, your appraisal, your inspection, earnest money, and depending on the transaction, possibly other expenses. Now, some of those costs can potentially be negotiated. Sometimes a seller can help with closing costs. There may be lender credits, there may be programs available to help you with closing costs as well. Every situation is a little bit different. But before you start looking at houses, you should have a very clear answer to this question. If I buy a house at this price, approximately how much cash do I need to close? And how much money will I have left afterward? Because I don't want you closing on a house and having $11 left in your bank account. Buying the house is not the finish line. You still have to live there. The fourth question is what does your pre-approval process actually include? This one is important because not every pre-approval is created equally. Some lenders may basically ask you a few questions, pull your credit, run something through an automated system, and send you a letter. Other lenders are going to actually review your pay stubs, W2s, bank statements, tax returns if necessary, your employment, your credit, your debts, and anything else that could potentially affect the loan. And I personally want problems discovered before you're in escrow, not after. So ask them, what actually are you reviewing before you give me this pre-approval? If you're self-employed, have variable income, commission income, bonus income, multiple jobs, gift funds, a recent job change, or anything else that's slightly outside the box, this becomes even more important because the worst time to discover an underwriting problem is after you've already fallen in love with the house.

Who You Call When Things Move Fast

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The fifth question to follow up with question number four is what could go wrong with my loan? This might actually be my favorite question on the entire list. Once the lender has reviewed everything, ask them directly, is there anything about my situation that concerns you? That could be your income, your employment history, your credit, where your down payment is coming from, large deposits in your bank account, student loans, a property you're keeping, a business you own, anything at all. What you're looking for here is somebody who's willing to identify potential problems early because experienced lenders aren't just looking at how to get you approved. They're trying to figure out what could potentially kill this loan later and then solve it before it becomes a problem. The sixth question is who am I actually going to be talking to? This one gets overlooked all the time. The person you're talking to right now might not be the person you talk to once you're under contract. So ask, if I find a house Saturday afternoon, who do I call? If my realtor needs an updated pre-approval letter Sunday morning, who handles that? Once my offer gets accepted, who's my main point of contact? Am I still working with you or am I being transferred to somebody else? There's nothing wrong with having a team. In fact, a great team can actually make the process much smoother. That's what we do over here. But you should understand who everybody is and who's responsible for what. You don't want to find out after you're in escrow that the person you trusted at the beginning has disappeared, and now you're emailing some random department trying to figure out what's happening with your loan. The seventh question is how do you help when I'm actually writing an offer? This is where the lender becomes part of your home buying team. Because once you find the house, your realtor may need things quickly: an updated pre-approval letter, different purchase price, different down payment, a new payment scenario. Maybe you're asking for seller concessions, maybe you're competing against another offer. Maybe the listing agent wants to speak with the lender. So ask your lender what happens when I find a house? Are you available to speak with my realtor? Will you speak with the listing agent if necessary? Ask how quickly can you update my approval? Can we run different scenarios before I write the offer? Because sometimes the difference between getting the house and losing the house is simply having a team that can move quickly. Question number eight is how fast can you actually close? Almost every lender is going to tell you, we can close quickly. So I would go one step further, ask them to walk you through the process. What happens after my offer gets accepted? When does the appraisal get ordered? When does underwriting happen? When should I expect loan approval? When do I sign my final documents? And realistically, how quickly can your team close? Because speed can matter, especially if you're competing against another buyer. But I also don't want speed just for the sake of speed. I want a lender who can close on time without creating chaos along the way. Question number nine: how should I compare your

Compare Rates And Fees Correctly

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rate and fees? So now let's talk about the question everybody wants to ask. What is your interest rate? You absolutely should compare rates and fees. I actually encourage it, but you need to compare them correctly because one lender can quote you 6.25%, another lender can quote you 6.5%, and immediately 6.25% sounds better. But what if the first lender is charging you $8,000 in points, which is an additional fee to get that rate, and the second lender isn't charging any points. Now that's a completely different conversation. So when comparing lenders, make sure you're comparing the same loan program, same down payment, the same time when you ask for the quote, same assumptions, and look at the points, lender fees, and lender credits. Ask, what does this rate actually cost me? That's much more useful than simply asking, what's your lowest rate? And once you're far enough into the process to receive a formal loan estimate, compare those as well. Shopping is smart. Just make sure you're actually comparing apples to apples.

Rate Lock Strategy That Makes Sense

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And the last question is what is your strategy for locking my interest rate? Mortgage rates move sometimes daily, sometimes even during the same day. So ask your lender, when do you normally recommend locking? How long is a rate lock? What happens if my closing gets delayed? Are there any costs to extend it? What happens if rates improve after our lock? Look, you don't need to become an expert in mortgage-backed securities here. I'm not saying that. That's your lender's job. But you should understand the strategy and you should understand what you're agreeing to before you lock anything.

Red Flags And The Four-Part Checklist

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Now let me give you a few warning signs. If you're interviewing a lender and they immediately start selling you on their interest rate, before they understand your situation, I would probably be careful. If all they tell you is your maximum approval, but they never ask what monthly payment you're comfortable with, I would say that's a red flag. If it takes them two days to answer you before you're under contract, imagine what happens when you're in escrow and there's an actual deadline, let alone during the process when you have questions about disclosures or documents. And here's another one which is like my favorite. If a lender gets upset because you tell them you're comparing them with another lender, I personally don't like that. You should compare because this is a huge financial decision. A good mortgage professional should be confident enough in the advice and service they're providing to let you make an educated decision. So how do you actually choose? At the end of the day, I would look at four things the strategy, the cost, the communication, and their ability to execute. Can they explain why they're recommending a certain loan? Do you understand the payment and cash needed? Are the rates and fees competitive? Can you reach somebody when you need help? And do you trust that this team can actually get you to the closing? Because your lender is going to know almost everything about your financial life: your income, assets, debts, credit, tax returns, and you're probably going to ask them a hundred questions before you get the keys. So choose somebody you're comfortable talking to. Choose somebody who's willing to educate you, and choose somebody who's looking for problems before they become problems. The goal isn't simply who can get me a mortgage. The goal is to find the right financing with the right strategy and a team you trust to actually get you through the transaction. And once you find

Subscribe And Share The Series

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that lender, you understand your numbers, and you're fully pre-approved, now you're ready for the fun part. Actually finding the house. And once you find that house, you've got to figure out how to write an offer that gives you the best chance of getting it accepted. And that's what we're going to talk about in later episodes. If you're buying your first home, subscribe to the First Time Home Buyer Pros podcast so you can follow the entire series. And if you know someone who's thinking about buying their first home, send them this episode. It might save them from choosing the wrong lender before they even start shopping. See you in the next episode.