A Q&A Revealing What You Wish You Knew about Getting a Loan
Interview with Maggie Richter
Senior Loan Advisor at RPM Mortgage
Q: What do you find are some common misconceptions regarding purchasing a home?
MR: For first time home buyers, many people think private mortgage insurance (PMI) is cost prohibitive and that without 20% saved for a down payment they can’t purchase a home yet. The key is consulting a professional such as myself and finding out the truth, which could be as low as $100.00 per month for the PMI. Education is the key to understanding what your situation is, not assuming or believing stories you’ve heard.
For people wanting to sell their current home and make a new purchase, there is a lot of fear surrounding the process. People can assume that they must first sell their home before they make a purchase, leaving them vulnerable to the market and to finding what they are looking for in their price range. This isn’t always the case as there are options available, giving a current homeowner more options to buy their next home.
Q: What are some common reasons people don’t pursue home ownership?
MR: Fear and misinformation that having an expert in lending to consult with can alleviate.
Some people have fear regarding their credit score, when often they don’t even know what their credit score is or how it might impact the loan and interest rate.
Also, people with student loans incorrectly assume they can’t qualify for a loan because they have a large amount of school loan debt. The fact is lenders do not care how much school loan debt you have, it’s the monthly payment that matters. So even if your student loans are $200,000 or $20,000, if the payment is $500/month, that is all we will consider for qualifying.
Q: If you could tell people one thing that would help them purchase a home, what would it be?
MR: Talk to an expert in lending and get real information, even if you’re years away from buying. Planning early is very empowering and alleviates the fear surrounding a home purchase that leaves many people stuck in the renting cycle. I will do a pseudo pre-approval for you, which does not require pulling your credit to give clients a clearer picture of how attainable their goals are.
Q: Describe an aspect of your role as a lender that sets you apart.
MR: I have conversations upfront, asking and finding out what client’s goals and dreams are. I get my clients focused on those goals and help them get there. I am most passionate about educating people. Often fear is a narrative people bring and by identifying the goal, I outline a track for success.
Q: As our market in Seattle adjusts to a more balanced market, how are you seeing loans change?
MR: I’m seeing more loans contingent on the sale of a home, which a year ago was unheard of. Also, more buyers are having the luxury of time to write an offer subject to inspection. There are more seller concessions after the inspection coming up as well, meaning sellers are either fixing things, offering compensation, or re-negotiating the price. There has also been an increase in buyers finding that dream home, but it needs some updating before they move in, so they are structuring their loan to allow for those renovations, resulting in the home of their dreams they thought was unattainable. In general, less competition surrounding the sale and getting into contract.
There are still pockets of neighborhoods that are very competitive though, where the multiple offers are the standard.
Q: How do you think the new up zoning laws will affect getting a loan.
MR: Underwriting does not follow the rules of local up zoning, meaning even if you are able to build three dwellings on your lot, that additional income will not qualify you for a loan. You must qualify on your own without counting that additional potential income to qualify. Overall, buyers are getting excited about expanding their real estate portfolio with the new up zoning laws.
Q: Are properties appraising at value in the current market?
MR: Yes, I am not seeing low appraisals, except in the event of escalating purchase price where buyers agree to pay the difference in the event the property doesn’t appraise for the escalated contract price.
Q: What’s the biggest mistake you see people make that increases the difficulty in making a home purchase?
MR: Not paying their bills on time, my best advice? Use auto-pay.
Also, and this is important to note, when you see ads for interest rate offerings online, they often assume you will pay one point in fee, though many clients don’t choose to pay points on top of the other costs and the down payment they are putting. The cheapest deal isn’t always the best deal, a smooth on-time closing is worth a lot.