June 18, 2025 • 55 mins
Our mortgage experts and real estate professional break down what financial readiness truly means for first-time homebuyers and why qualifying for a mortgage doesn't always mean you can afford homeownership.
• Understanding the difference between what you can qualify for versus what you can truly afford
• Warning signs that indicate you may not be ready to buy a home yet
• The importance of budgeting for more than just your mortgage payment
• How credit scores, income stability, and available assets impact your mortgage eligibility
• Common mistakes people make during the pre-approval and mortgage application process
• Different down payment options from 3% to 20%, and when "no money down" loans might be appropriate
• Why you still need cash reserves even with 100% financing options
• The reality of closing costs and what expenses to expect beyond just the down payment
• How to create a sustainable path to homeownership when you have good income but poor credit (or vice versa)
• Why being informed is the best way to avoid expensive mistakes in the homebuying journey
Check your credit score early, get pre-approved before shopping, save for more than just the down payment, and know your real budget by factoring in taxes, insurance and maintenance to avoid becoming house poor.
Visit our guests:
Denetria Burris, Realtor ® Notary Public
Licensed in Louisiana & Mississippi| LPT Realty LLC
Cell: 225-223-0499 | Office: 877-366-2213
Email: denetria@dbclosers.com
Matthew Cloy
Mortgage Loan Originator @ Neighbors FCU
Cell: 225-953-5076
Email: mcloy@neighborsfcu.org
Bridgette White
Vice President of Mortgage @ Neighbors FCU
Email: bwhite@neighborsfcu.org
Have an idea for a show or a question for Kim? Send us a text message
Welcome to Money Matters, the podcast that focuses on how to use the money you have, make the money you need and save the money you want – brought to you by Neighbors Federal Credit Union.
The information, opinions, and recommendations presented in this Podcast are for general information only and any reliance on the information provided in this Podcast is done at your own risk. This Podcast should not be considered professional advice.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Welcome to Money Matters, the podcast that
focuses on how to use the moneyyou have, make the money you
need and save the money you want.
Now here is your host, ms Kim.
Speaker 2 (00:12):
Chapman.
Well, welcome to anotheredition of Money Matters.
I'm your host, kim Chapman, andwe're going to be talking about
home buying because, of course,june is National Home Buying
Month, and so I have somereturning guests with me.
Of course, our National HomeBuying Month, and so I have some
returning guests with me.
Of course, our VP of Mortgage,ms Bridget White, and, of course
, matthew Coy Relax, matthew, Ineed you to take that deep
(00:33):
breath, matthew our loanoriginator.
And then, of course, we have aguest with us today, ms Denetria
Burris, a realtor, and so we'regoing to talk about all the ins
and outs of what you need toknow if you're ready to make
that first time purchase or ifyou just want to get some
information so you can figureout what are those next steps.
So welcome everybody.
(00:53):
Thank you for having us sobefore we get started, just for
any guests that may not befamiliar with Bridget and
Matthew, I'll let you tell alittle bit about what each of
you do, and then, of course,we'll definitely have Ms
Denetria talk a little bit abouther background.
Speaker 4 (01:06):
Okay, I'm the VP of Mortgage Lending.
I've been with neighbors forabout 23 years now and I oversee
our mortgage department.
Speaker 3 (01:15):
I'm our mortgage loan originator.
I've been here for six yearsand I'm basically the
front-facing person thatborrowers deal with when looking
to get a mortgage.
Speaker 5 (01:32):
And I am Denetria.
I'm a Louisiana, mississippi,licensed realtor.
I'm also a Louisiana licensedreal estate title agent.
I co-own a local title companyand have been around the real
estate industry most of my life.
Speaker 2 (01:42):
All right, so we're ready to dive in, yes, and so of
course you know some of thesequestions I might direct to a
person, but anybody can reallychime in, because I know you
have a lot of experience andsome of the different answers
may really help reach somebodyand give them the exact
information they need.
So when someone says I thinkI'm ready to buy a house and we
hear that a lot what's the veryfirst thing they should do
(02:04):
financially house and we hearthat a lot.
Speaker 5 (02:06):
What's the very first thing they should do
financially?
So I'll be glad to take thatone.
So I think that the first thingis a financial check and I
think that most people's firstcall is to a realtor, and that's
a great thing, but I think thatmost realtors or at least
everyone on my team and who Iwork with our very next phone
(02:26):
call is to a lender to get thempre-qualified so we know that
they're buying power.
Okay, Richard or Matt, you wantto?
Speaker 2 (02:34):
chime in.
Speaker 3 (02:36):
Yeah, a lot of people are kind of clueless if they've
never done that before as tothe steps that need to be taken.
But if you reach out to a loanoriginator they can run an
application on you.
And you know, some people cometo me and they just say, oh, I
really just put a number here,but I'm looking to see what the
max I could qualify for would be.
And you know, we can kind ofwork backwards and see what we
(02:58):
can get them pre qualified for.
Speaker 5 (03:00):
And I think that a lot of people do start there.
What's the mix that I canqualify for?
I think a better question thatI don't see people reverse into
is what is the amount that I canactually afford to?
pay there you go and I thinkthat that's that's a real big, a
(03:21):
bigger, more important numberthan just what you qualify for.
Because you may qualify for amillion dollar house
hypothetically speaking, butwhen you factor in the lifestyle
and all of your other expenses,can you afford the mortgage
continuously on that particularhouse if something unexpected
happened?
Yeah, because just because youcan does not mean you should on
(03:42):
that particular house ifsomething unexpected happened.
Speaker 4 (03:44):
Yeah, because just because you can does not mean
you should, that's right, yeah.
Speaker 2 (03:49):
And so of course I'm sure we all pick up the phone at
some point in time and somebodysays, hey, I'm ready to make
that purchase, I want to be afirst-time homebuyer.
But what are some red flagsthat each of you initially see?
Maybe right off the bat thatsays that this individual or
this couple is not quite readyto make that leap yet.
Speaker 4 (04:10):
Poor credit, like if they call in and they're getting
pre-qualified and we see thecredit and it's poor.
Then we have to coach them onwhat they need to do to get
their credit up.
But other than that, one of thefirst questions is okay, well,
you pay rent.
Do you pay rent right now andare you comfortable with the
rent that you're paying?
Do you struggle to feed yourfamily each month or to buy your
(04:33):
groceries?
Do you struggle to pay yourbills?
If something were to happen andone of you lost a job, would
y'all go under?
Do you have any savings to backyou up?
Because if you're havingproblems paying your monthly
rent, you're going to haveproblems paying your monthly
mortgage and you're not readyyet.
You haven't set yourself up tobe prepared, or you may just be
paying too high of a rent andyou need to look for a home that
(04:55):
has a lesser payment than that,because Denetra made a very
good point.
You need to be able to affordit, not technically.
Find out what you can qualifyfor.
Find out what you can afford.
Speaker 2 (05:08):
And I think that's the key point, because sometimes
, like you mentioned, they'restruggling to pay rent and they
have to realize that itshouldn't be a struggle and that
you know it's not something.
Oh, if I'm struggling payingrent, I'll be fine struggling to
pay in a mortgage.
You don't want that particularscenario.
But let me allow Matt andDenetra to chime in.
Speaker 3 (05:26):
Yeah, I mean when I said the max, I just get people
that call me that say that.
But I always get nervousqualifying people at the line
because especially things likeinsurance now in Louisiana can
be all over the place.
So I estimate what I thinkthose costs will be up front.
(05:47):
But if we qualify someone rightat the max and there's some
variations there it can throw awrench in things, especially
when we have things liketerrorists always flying around
in the news.
Speaker 5 (05:57):
Yes, and it's not we.
I think that in life there'sonly so much you can plan for.
You know what I mean.
It's not the things that we'veplanned for.
That normally comes back tohaunt us.
It's the things that we haven'tconsidered.
So I think that oftentimes whenyou say, like what are the
things that kind of can say aperson is not quite ready,
(06:19):
someone that just is not, Iwould say, just, you haven't
even taken the time to reallylook at or putting a budget
together.
And even though you may not,there are some type A people
that have a budget that theyknow every dollar that they
spend.
We're not necessarily sayingthat you have to be that
(06:40):
detailed per se.
It really is at least having abaseline understanding, like
where you can just bucket inyour head like, okay, I know, I
have a car note, I have carinsurance, I have like
considering those other inputs.
Do I have daycare?
Do I have a summer school iscoming, or summer is coming,
will my kid have to go to summerschool?
(07:02):
Um, or will I need to put themin a camp?
And things that we may notthink about, that come down
later on, that are not here,especially if I'm buying per se,
like in the fall or what haveyou, when those dates are kind
of further down, further awayfrom from being top of mind.
I think that just having thosekind of conversations and some
people are like, well, I don'twant to do that, and that's a
(07:22):
red flag to me that I'm like Idon't think that just having
those kind of conversations andsome people are like, well, I
don't want to do that, andthat's a red flag to me.
They're like I don't think thatyou, you may not be quite ready
if you're still wanting to justspend in that way, because this
is a big commitment, it's thebiggest investment for most
people that they are, ever, thatthey will ever make.
And we do see.
I mean, y'all can probablyspeak to the numbers of
(07:44):
foreclosures, right?
I don't consider that a success.
I think that most times, from areal estate standpoint, we look
at just the number of peoplethat we close.
But I'm like let's go back andlook at those numbers and see
how many of them are stillhoused.
And I think that that's abetter reflection of how good of
a job we're doing in terms ofhelping the clients navigate
(08:08):
that purchase process to keepthe total peace in mind and not
just can I sign on these linesat this particular point point,
because on a loan applicationwe're not going to be
considering those types ofexpenses.
Speaker 3 (08:27):
So that's something you sort of need to think about
on your own, because I'm onlygoing to see things that report
on credit, child support, thingslike that.
But you know, life's expensesget in the way as well.
Speaker 2 (08:37):
Yeah, I agree with Denetra.
I think often, far too often,they look at how can I get to
that finish line, how can I getthe house?
But they don't think beyondthat.
What does it take to actuallysustain being in a house?
And like you said, and sothere's a difference between
being able to qualify and signon a dotted line no-transcript a
(09:31):
house.
Speaker 4 (09:32):
That's not how you do it.
Speaker 2 (09:33):
And I'll use myself as the poster child in terms of
being flexible, because I know,when my husband and I built our
house, we had our fiveyear planand two weeks before we signed
on the dotted line to close well, I found out I was expecting my
first child.
That wasn't in the plan.
The day after we closed on thehouse, I totaled my car.
So that wasn't in the plan and Iknow from the outside, looking
(09:56):
in, it's like, oh, they got anew house, they got a new baby,
got a new car, but we got awhole lot of whole new debt that
was thrown at us all at once.
And so, while, yes, you know,we had a five year plan, but it
didn't include that new car, itdidn't include that new baby at
that particular time.
So, definitely having thatflexibility and, like Matt said,
not necessarily getting rightto your maximum amount, because
(10:18):
you don't know what tomorrowwill bring yeah, and that's kind
of like one of the tags that Iuse.
Speaker 5 (10:27):
My saying is I want to help you close confidently,
right.
And so I think that that pieceis having the confidence and
knowing that the way that youget to that is through your
numbers.
You know, finding a particularproperty, most any realtor,
that's.
That's our number one job to dothose things, but to understand
(10:49):
those numbers and to pull outthe right questions.
It's not our job to tell youwhat to do, but it is my job to
help ask the right questions, tohelp you come to those
conclusions and guide yourselfin a way that makes sense for
your family.
And that's really my always myresponse when people say what's
a good house?
(11:09):
Is it a good thing to like?
Is it a good time to get into amarket?
The good time is when you'reready.
We can always take liabilitiesand turn those things into
leverage if we understand ourfinancial position of where we
are and where we're trying to go.
Speaker 2 (11:26):
So when you talk about when you're ready, I guess
the million dollar question ishow far in advance should
someone or a couple plan forhomeownership?
Because far too often I'll getthat call where somebody wants
to come in and sit down and dosome housing consultation, and
so I ask them what their timeframe is.
And it's always by the end ofthe year consultation and so I
ask them what their time frameis, and it's always by the end
(11:46):
of the year, whether that'sJanuary or whether that's
December, it's always by the endof the year.
And so what's a good time frame?
How far in advance shouldsomeone start planning if
they're ready to buy their firsthome or even their next home?
Speaker 3 (11:59):
I think it depends on the individual what your
savings look like, what yourcredit looks like, what what
your credit looks like, whatyour employment history looks
like.
We want to see stability andthat's generally a good sign
that this is going to work out.
But you know, sometimes peoplecome to me and they're not ready
and I will coach them, and I'vehad people that I've worked
(12:19):
with for over a year that youknow take my advice A lot of
times.
You help out with that as well.
For over a year that you knowtake my advice A lot of times.
You help out with that as well.
If they're willing to listenand take the advice.
Speaker 4 (12:34):
sometimes it takes a little longer.
Some people are ready the daythey walk in.
It's different for everyone.
Yeah, it's all dependent onwhere they're at at this point
in time in their life and as towhat Denetra said, and if
they're willing to understandwhat a budget is and work with
that.
Speaker 2 (12:46):
So definitely not a situation where you want instant
gratification.
You definitely need to walkinto that process with some
patience, and so we've talked alittle bit about individuals not
being really financiallyprepared, not seeing the whole
scope of it.
So can you talk to us about thedifference between what it
really means being house poorversus being ready for home
(13:08):
ownership?
Speaker 4 (13:09):
Yeah, house poor is where you or paying way more
than what you should of yourincome towards your home.
Technically, I wouldn't suggestthat anyone have more than 25%
of their net income going towardtheir house payment, because
you have to have a budget forother things.
You're going to have to havemaintenance on the house.
(13:30):
You may have HOA dues on thehouse.
If you're in a condo, you'llhave a larger HOA due.
You're going to have to feedyour household.
You're going to have to clotheyour household.
There's just many things in lifethat you're going to have to
deal with and, depending on yourlifestyle, if you want to
continue that same lifestyle,you'll need to make sure that
you have a budget that says,okay, this 25%, that's it.
(13:53):
That's all I'm putting on thethe house.
If you go above that a littlebit, not so bad.
It's really dependent on youroverall income, your stability,
your assets that you have savedup.
Do you have three months savedup in case something were to
happen and you get laid off andyou have to get another job?
Are you ready there?
Or are you 50 of your incomegoing to 40% of I shouldn't say
(14:16):
50 because I don't think you canget qualified for that, but 40%
of your income going completelyto your house, that's way too
much, because you have thevariables in life that you're
not prepared for, and if youdon't have a savings, then
you're going to go behind onyour house note and you're going
to go into foreclosure andyou're going to lose your house,
and then you're going to havebad credit and you're going to
(14:41):
be trying to get into aapartment and you can't get in
there.
So let's not go trying to keepup with the Joneses.
You get what is good for you.
Don't get what you want toportray as your life.
Speaker 5 (14:50):
So if I could just add in into that I think that
that's a big thing to considerlifestyle right Someone who
doesn't have responsibilities.
You don't have kids now, butI've always wanted them and I
(15:22):
want five children.
I only have one, or maybe twonow, but I know that that is the
lifestyle that I am curatingfor myself.
Those kind of inputs are thingsthat I think should be play or
way, a bigger have, a biggerweighty, I guess, component to
(15:43):
the decision of how or whenyou're going to buy.
But also timing Right.
This doesn't have to be yourforever home, so can we leverage
the liability here to turn itinto an asset by saying I'm
going to start off smaller untilI grow, so maybe I'll get a
smaller house as a start, a homethat could then be turned into
(16:06):
an investment for me later.
That's important to kind of keepthose things in mind, because
the price at which we buy thathouse you don't make money when
you sell property.
You make money when you buy theproperty, and that's so
important buying at the rightprice.
And so if we have those thingsin mind, then you kind of can
(16:27):
take those into consideration.
What is the school district?
Where am I doing this?
What is the rental income inthis particular area?
That's not something that y'allmay particularly look at, but
that is something that is goingto be factored into your
appraisal process, and so, oncewe're looking at those things,
can I then use this as a start ahome, put a couple of updates
(16:48):
into it that really balloons theequity that I have here, so
that, as I'm putting that five,10 year plan together, that I
can grow into my forever homeand I've gotten a good head
start.
Speaker 2 (17:02):
Yeah, I think a very, very valid point.
Sometimes people go into themindset that this is it, that
one and done purchase, and soI've got to get the mansion,
I've got to get it right thefirst time.
So how often would you eventhink that when you meet clients
, that you do have to kind ofhave that reality check and that
that Megan Dollar home may haveto wait just a little bit
longer?
Speaker 5 (17:22):
I think that that's part of the consultation process
for us.
We kind of start doing a reallydeep dive in the beginning to
understand clients.
It's more than just a sale,right?
I think that, as far as myself,I'm not very active on social
media, I'm not really big onadvertising, because when you do
(17:43):
good work, people will refer toyou.
I think word of mouth is betterthan any other in terms of
conversion, right, it's not thatyou don't people don don't get
are able to convert frommarketing.
I just think that most, if youlook at even your own numbers,
that the most of your, theirrepeats and or referrals from
(18:04):
people that you've closedsuccessfully, I think that that
that's a big piece of slowingdown in order to speed up, right
.
And so I think that taking thattime to again ask the right
questions because a person itjust may be that they that was
never presented to them as anopportunity or an idea, so it
(18:24):
wasn't top of mind but askingthose questions and saying, okay
, let's see where you want to beversus where do we qualify for.
That's why, on my side, it'simportant to partner with people
like Matt Matt is my buddyBecause we want to know that
before we start showingproperties.
(18:46):
If you go see a $500,000 houseor a million dollar house,
there's very few 150, 180,$200,000 houses that are going
to give you that same wow factor.
But it's not that you can't finda 2,000 or 2,500 square foot
house.
That doesn't give or have that.
(19:06):
It's just it's a harder thingto build up to because you're
looking at fixtures, notnecessarily that the house is
really worth that.
Much more than those things isreally probably location and the
finishings and fixtures thatare here, the types of floors,
the marble do you really needthat?
Yeah, right, it looks pretty,but if I have kids three, I'm
(19:29):
like I do not want white marblefloors and furniture because I
think I'd be having anxietyattacks pretty often just from
again it being destroyed.
And so again pointing thosethings out, because I think that
social media life I think youmentioned Bridget keeping up
(19:50):
with the Joneses I think that welive in a society now that is
very, very in your face aboutwhat everyone else is doing and
that making you feel a piece ofguilt for not necessarily being
where someone else is, and Ithink that that makes us run
other people's races and notours, right.
(20:12):
I was a sprinter but I am not along, um a long, uh.
Okay, I can't do a longdistance, not a mile, uh-uh not,
not even now, not even walking.
It's not my thing, um, but Ithink that just knowing that
that's just not your race andthat's not a bad thing, it
doesn't make you a loser either.
It just says it's just not foryou it's just different,
(20:34):
different, and that's okay Allright.
Speaker 2 (20:36):
So, bridget and Matt, I want to talk a little bit
about the nuts and bolts.
What would you consider, likethe top three or four things
that lenders are looking for interms of that pre-approval for
somebody to be ready for a home?
Speaker 4 (20:46):
You're looking at credit, income slash, employment
history and your assets,because that's your top three
factors there.
We've got to know that you havestable employment.
We're looking typically for atwo-year history or you know,
even so, someone coming out ofcollege or a technical school or
any type of school going intotheir field.
(21:07):
So we consider the time thatthey put into their schooling as
part of their overall jobhistory, because they're going
into their actual field.
So you know, we want to seethat there's some stability
there.
We want to look at credit.
Make sure everything is goodthere.
You have established credit andthat is at the score that you
need it to be.
(21:27):
You don't necessarily have tohave the best score to get into
a home, but you want your scoreto be as high as it can be to
get the better rate, and so youmaybe can afford more, because
then your payment would be alittle less.
Then you're looking at theassets.
You need to understand thatyou're going to have closing
costs and your sellers.
(21:48):
On a typical conventional loan,if you're only putting 5% down,
your sellers are allowed to pay3% of the purchase price toward
your closing costs.
So some people will come in andthey'll say, oh, I'll just get
the seller to pay everything.
Well, no, that's not the case.
It depends on what's allowedfor the seller to place into the
transaction.
So you're going to have somemoney that you have to come out
of pocket.
(22:08):
You need to anticipate this andhave your down payment saved up
, your closing costs saved upand, yes, there are other
products that you can get intothat you do not require a down
payment.
But overall, you do have tohave some funds saved up.
Speaker 2 (22:23):
So, credit wise, what are the biggest, I guess,
roadblock or barriers that youfind on credit reports that
really get in the way ofsomebody becoming a homeowner?
Speaker 3 (22:33):
Bankruptcy.
For sure, there's timeframesfrom completion of bankruptcy to
being able to qualify for aloan.
Definitely don't want to seerecent delinquent payments which
is considered anything over 30days late.
Those things ding your scorewhich, like Bridget said, will
affect your rate.
We want to see an established,varied credit history.
(22:56):
You know, have you paid off acouple of car loans?
Or you know, sometimes ifsomeone's just starting out,
maybe they only have like asecured credit card with a small
limit.
So we want to see a varied,established credit history.
Speaker 2 (23:10):
So and I know, besides credit, there's so many
different things that you'relooking at Can either of you
talk a little bit about debt toincome ratio?
Speaker 3 (23:17):
Yep.
So debt to income ratio is apercentage that shows your gross
monthly income versus yourtotal monthly obligations, which
would, in the case of a homepurchase, include the proposed
payment for what you're tryingto do On a conventional loan.
That needs to be below 43%.
We have an in-house productthat's 100% financing purchase
(23:40):
power, with no PMI.
That one is 40.
We also do a lot of land loans.
It's 38 on that.
So some people can do that workon their own without putting in
an application.
Just take what you're expectingyour new mortgage payment to be
.
Add in all your existingliabilities, which means items
(24:00):
that would appear on your creditreport, the minimum payment,
and then things like alimony andchild support we would consider
as well.
Speaker 5 (24:08):
And Kim, can I chime in Because I'm like I know this
is probably going to make youguys laugh when you're
mentioning that.
Probably going to make you guyslaugh when you're mentioning
that another big piece for us isdon't go get new credit.
Speaker 4 (24:23):
Wow, yes, you're in this process.
Oh yeah, a deal can fall apartat the last minute and we do
have a form and we tell themplease don't change anything on
your credit, don't charge up.
Don't go buy that house full offurniture that you want before
you close.
Charge up, don't go buy thathouse full of furniture that you
want before you close.
And you know you should bebudgeted for that already anyway
(24:44):
.
But we've had somebody go andpurchase a brand new car, like
they had no car, and then theycan't close because now their
DTI is out of whack.
You just put yourself out ofyour house to go buy a Mercedes.
Was it worth it?
Speaker 2 (24:58):
So let's talk a little bit about a pre-approval.
So what does the process looklike after someone submitted an
application and, assuming theychecked some boxes, what does a
pre-approval look like?
Speaker 3 (25:08):
So, we do a pre-qualification versus a
pre-approval, meaning we don'treview your income documents up
front.
We would do that once yousubmitted a purchase agreement.
So we do a pre-qualificationbased on the income that you
state that you make in theapplication, combined with a
credit poll, and then you know,give you a pre-qualification
letter if you want to make anoffer on a house.
(25:29):
Once we receive an acceptedcontract, then we go about
verifying all of that.
So I would also caution peopleto take care of the accuracy of
those numbers, because we alsoget deals where wait, you make
half of what you said you did.
You didn't think we'd look intothis, so accuracy is key.
(25:50):
On the application.
Speaker 2 (25:50):
You mean, we have to prove what we say.
Speaker 3 (25:55):
Right, and some people will upload their docs up
front.
I'll take a look at them to seeif you know anything looks
wildly off.
But then sometimes some folkshave side businesses which can
affect an income calculation.
If you have a Schedule Cbusiness under taxes showing a
loss, that will be negativeincome on a mortgage application
(26:16):
.
So that's another thing toconsider because some people do
that for tax benefits but thenit can cause a problem in this
process.
Speaker 2 (26:24):
Are there other common mistakes that people make
just during the applicationprocess that can, you know,
maybe warrant a denial?
That could just be a mistakethat they've made.
Speaker 3 (26:35):
Well, generally, that's why you have a loan
officer that will review theapplication and even denials.
I go over and verify everythingwith them just to make sure we
have it input correctly.
A lot of people get nervousthat they're going to put
something wrong on theapplication.
Can always be corrected once itcomes over to my side and you
know I will go over everythingwith them.
Speaker 4 (26:56):
So yeah, and to piggyback on that, I feel like a
lot of people leave out.
There's a section on there forreal estate owned.
A lot of people will leave out.
Oh, I didn't even think aboutthat.
Yeah, I have some land.
Well, you have to pay taxeseach year on that land, so we
need that for your, your debtsand things like that.
They'll leave that off, andsometimes people leave it off on
(27:21):
purpose, but we will find it.
Speaker 3 (27:22):
We don't like surprises.
Speaker 5 (27:24):
And Bridget.
I will mention this becausethis happened with my husband.
His parents put him on propertythat he did not like.
He's not paying the taxes, he'snot generating any of the
income, but he's on title, butthat still factors into the debt
(27:49):
numbers that you're calculating.
So I think that that was a goodpoint to bring out, because
it's those small things that youdon't consider, but that's also
shrinking your buying power toa degree.
Speaker 3 (27:59):
Yeah.
Speaker 2 (28:01):
So, denetra, of course you're often that first
point of contact for somebody.
What do you wish?
Homebuyers or prospectivehomebuyers knew you know before
they began the process.
Speaker 5 (28:12):
That it is.
I like to replace the wordprocess with journey.
Okay, right, that it is ajourney and it can be daunting
or overwhelming, but it doesn'thave to be when you have the
right mindset, the rightmotivations and we get your
money together.
So those are my three ends thatI'm like, if you say that this
(28:35):
is hard and that's where you are, it's going to be hard.
But if you say, like you know,it could be challenging, that's
where we have like an elitegroup of people that we work
with, right, putting you withthe right lender, the right loan
officer, you can have the rightproduct.
But at the same time, do thosetwo people jail?
(28:57):
And I've seen that happen whereit just the deal and everything
just had a lot of frictionbecause of who is involved, not
necessarily that a person didn'tqualify right.
So, understanding that thosethings all do play factors, but
that really is up to you how bigof a factor it plays.
(29:19):
Law officers are your friend.
They're not your enemy here,and so when they're telling you
you can't do something, it's notbecause they're targeting you
as an individual, it's listen,most of these things that I've
been putting to place are foryour benefit.
It's because you haven'tconsidered the cost.
So I'm a Bible person, I'm aspiritual person, and the Bible
(29:42):
does tell us that like who wouldfirst be without counting the
cost, and so I just hope thatpeople would kind of start them,
start at that place withgetting to the numbers and
understanding your money andwhat that means for you, and
that is not something that isgoing to be the going to be the
same.
So you and I are now friends.
(30:04):
If we're talking, our buyingjourneys are going to look
different because we havedifferent incomes, we have
different lifestyles.
And you have a husband, I have ahusband, but we don't know what
contributing factors ourhusbands may play in that role
too, right, and so you may be abreadwinner and your husband
(30:25):
still has an income, but thehousehold income is mostly on
your part, or vice versa yourincome may be a smaller
component, but it's heavy onyour husband's side, and being
able to understand those piecesthat says again, that's not
anything bad, it's just thatthat's not your race, it's a
(30:47):
different one.
And if we go into it with thosethings, then we can overcome it
and instead of having themindset that I'm going to be
denied, I don't really I thinkthat some people stay in rental
positions where I'm just renting, I'm just renting, they don't
buy because they are afraid ofbeing denied, like I'm not ready
(31:07):
.
Well, you don't, sometimes youactually may be ready and you
don't even realize that part,and so I would just also kind of
put that piece out there, thatwe don't focus on the denial,
that it may just be delayed,like I'm not going to tell you
never, right, we're going togive you a plan to put in place
to kind of get you to that point.
Speaker 3 (31:26):
I hear that so frequently and it's always
surprising to me.
I'm scared I'm going to bedenied Once we've pulled your
credit.
It really doesn't matter.
Denials don't get recordedanywhere.
We're just, you know, legallyrequired to inform you of the
decision, but you can try again.
There's no time frame.
You know, if you're denied,I'll tell you why and say here's
(31:50):
how we can get you out of this.
You know, or at least a goodloan officer will.
Speaker 2 (31:57):
All right.
So, speaking of getting out ofthis, you know I want to give
you two different scenarios andany of you can kind of chime in
in terms of what advice youwould give, because often we'll
get that person that has reallygood income really good, you
know, in terms of debt to income, but very poor or limited
credit, and then, on the otherextreme, we may have that person
(32:17):
that has really great credit,but then they have very limited
income.
So what recommendations, whatadvice, or is there hope for
individuals that sit in thatposition?
Speaker 3 (32:28):
So income, you know, may change over time, but
generally that's what you'reworking with.
So you're going to have to workon either the credit or your
current expenses.
A lot of times, if someone's ona fixed income you know social
security or a pension unlessthey're to go out and get a job,
(32:48):
that's what we have to workwith.
So you know we have to look atthat.
With credit, you know, havingobligations that are currently
passed to is a sign that you'realready living beyond your means
or at least you're not managingyour money properly.
Speaker 5 (33:13):
And that's not what we want to see.
When you know, entering a 30year commitment with you, and I
think that, if I'm just chimingin on the same thing that you're
alluding to here, is, if you'rein these positions working with
someone, there's other creativefinancing kind of deals that we
can structure right, and somaybe there is an opportunity to
do some owner financing in themeantime while we correct those
(33:37):
things, while we improve thecredit, and then can refinance
into a permanent financingvehicle through again coming
back to the bank.
That's where, again, startingwith the right people and having
the right team in place to helpkind of put together that plan
of where you are versus whereyou want to be, just again
(33:59):
getting in the door to get anevaluation of where you're at
helps that piece.
I think that banks do put a lotof emphasis on credit, and I
just personally, I don't thinkthat it's a very good indicator
of people's buying power,because I'm like, when we look
(34:19):
at the numbers of foreclosures,banks lend based off of credit,
right, and so we see that that'snot really the best, or always
the best, indicator.
The thing is, though, is so wecan't allow that.
I think people will holdthemselves back from getting
into this when it'sunderstanding why is your credit
bad.
Some people just don't paybills on time, so let's just get
(34:41):
that part together.
Like that, we put your stuff onauto pay Right, like you don't
have to go to a credit repairspecialist, and I think, miss
Kim, that's something that youhelp them with with in terms of
giving them steps that they cando to improve credit.
So getting some financialliteracy or education around
(35:02):
credit repair and not just goingto the credit repair gurus
online that's just doing a lotof deletions or charging you a
dispute in ways that, again, Ithink that those secondary
reports and things that you said, like if you have real estate,
the bank will still find it.
(35:23):
That means that there's otherreports and research and things
that they're doing on your side.
That's a part of this theirfiduciary responsibility to look
these things up.
I think that the more that wecan just come to terms with that
and say, look, I had a problemat this time, but we can put an
explanation to explain whathappened then allows you guys to
(35:45):
then make deviations or othersuggestions that maybe this one
was tight, but because we knowthis, you've had several
overdrafts.
Okay, can we put in a savingsaccount that gives you some
overdraft protection, Things tohelp you guys get to a place of
being comfortable with a personthat may have had bad credit
(36:07):
habits but are now just in aplace where, look, I've
recognized this, but here's thesteps or the plans I've put in
place to remediate that nowgoing forward, yeah, and to
speak on that like utilizationof credit cards, you want to
stay at 30 percent or lesscredit of your limit on your
(36:28):
balances and that'll help yourscore stay up.
Speaker 4 (36:31):
A score can go down really quickly.
When you get over that it canstart going down.
You could have had a 700 andliterally go down into lower
sixes in a matter of a month ofoverspending.
So don't get in the habit ofputting everything on a credit
card.
A credit card used properly isa good thing to build your
credit for you and get you agood score, but if you can't pay
(36:54):
it off monthly or keep it belowthe 30% of the limit, then you
probably shouldn't have one.
Speaker 2 (37:02):
And I think that you know it would be you know well
of us to talk a little bit aboutsome of those common mistakes,
because we use Google all thetime and so you'll get somebody
that gets information andthey'll say, oh, I don't have
any credit, so they'll go andopen five credit cards.
And then they'll come and say,hey, you know, I went online and
I didn't have any credit, andso I opened five credit cards
and then, to speak to whatBridget said, they didn't have
(37:23):
the education about utilizationand so they ran those credit
cards up.
What are some other commonmistakes you think individuals
make in the in the guise of oh,I'm trying to get myself ready
to buy a home, I'm trying to fixmy credit, I'm trying to build
credit.
What are some common mistakesthat people make up front?
Speaker 3 (37:42):
Well, danita mentioned credit repair earlier
and you know there's plenty ofpeople out there that are
legitimate that can help withthat stuff.
And you know there's plenty ofpeople out there that are
legitimate that can help withthat stuff.
But a lot of those people, fromwhat I've heard, they just
dispute accounts and you may seea temporary bump from that.
But if it's not resolved inyour favor, then a month later
you're back where you're at, andI think some of those
(38:05):
businesses operate by justcontinuously doing disputes, so
the problem never actually getsresolved.
You get a temporary bump, butthen you're back to where you
started.
So you know, I refer a ton ofpeople to you if they need more
detailed credit counseling thanwhat I can offer, but I would
recommend reaching out to afinancial institution for those
(38:28):
sorts of issues.
Speaker 5 (38:30):
And that's free right institution for those sorts of
issues.
And that's free, right,absolutely, that's free with you
guys.
I think that that part isimportant.
It costs a lot of money to beill-informed, right, and so
going to a person who says thefact that they have people that
specialize in credit repairtells you that it is a necessary
(38:51):
and needed thing.
But, again, being with an eliteservice provider is more
important than just the serviceitself, right?
Someone that actually knowswhat they're doing and can give
you those steps to take or pointyou into the right direction.
And, again, just counting thecost of those things, right, and
(39:11):
so deleting too much stuff.
So if you delete everything offof here, you don't have a
history.
And then Bridget mentioned or Ithink both of y'all kind of
spoke to, as I was justlistening some of having the
proper mix of credit is what youguys mentioned, and so those
are the kind of things that Ithink make a big difference too.
(39:33):
So you've had a car, you've hada student loan, you've had a
credit card, you've had theseother types of credit, and I
think that understanding that abank can also offer those things
.
So again, depending on thejourney that we're on, so again
depending on the journey thatwe're on, maybe you might need
(39:54):
to refinance your car as atemporary thing to give you the
ability, on something smaller,to again build credit.
That's something that y'allwould tell them yes, let's do
this, but you don't need torefinance a full amount, let's
just do a small amount orsecured type loan or whatever
the case may be, to again startto establish that credit history
and doing that early on.
(40:16):
I think that I wish someone hadtold me those things coming out
of college or while I was incollege no, I didn't need a
house at that point but ifsomeone were giving me steps
that I could do to preparemyself to purchase a house when
I was ready and knowing theimportance of how heavy I think
(40:36):
that, at least for me, my familyhas always been.
I think with Black families inparticular, credit is not a big
thing.
It's cash, cash, cash cash.
Like you know, especially olderones, like they buy everything
cash.
Their houses were bought cash,their cars were bought cash, and
so I just remember when mygrandfather had we pulled his
(41:00):
credit and he had a 500 creditscore and I was like no way with
all of the real estate and allthe things that he had wasn't
because his credit was bad, hejust didn't have one, he didn't
have any credit history, sothere was just nothing there for
it to calculate off of.
I think that that's a big piecethat I think is just always,
(41:21):
always missed, especially now,in this particular day and age.
Cash is not king, credit is,and you just have to have it.
In the scenario that youbrought up, the person that is
strapped for cash but hasexcellent credit, versus a
person that has a lot of cashbut bad credit, which one do you
have?
Which one would y'all say has ahigher likelihood of being
(41:42):
approved in a shorter amount oftime?
Probably the person with theyes, with a better credit with a
better credit over the personthat has the money and I.
I think that is such a conundrumin in my own mind, but at the
same time I'm like it doesn'tmatter what I feel about it
personally.
This is, this is what these arethe regulations, and whether
(42:03):
you don't like neighbors becausethey told you, when you go to
the next bank, the numbers maychange a little bit, whether or
not it's 600, 630, or whatever,but the thresholds of whatever
that minimum floor is, that'sregulated right.
Pretty much, yeah.
Speaker 2 (42:22):
So, since we're talking about cash, I think we
really want to kind of pause andtalk, dive a little bit into
the fact that, while, yes,credit is definitely going to be
important, let's talk aboutwhat does it mean?
Or why do you need 20%?
And then, for those mortgagesthat say no money down, why do
you still need cash?
What are some of those thingsthat people or individuals are
going to still need money in thebank for?
Speaker 4 (42:44):
Yeah Well, with the 20% down, that's like an optimal
goal for homeowners to avoidthe private mortgage insurance
payment, which is a defaultinsurance which is only
benefiting your lender, has nobenefit to you.
You must pay it.
It'll legally fall off at 78%of the value of the home
(43:05):
compared to where your balanceis, and that's based off of
where you start.
You can always request to haveit sooner removed, but then
you'll have to pay for anappraisal.
With FHA loans, though, yourPMI is on there for life, no
matter how much you put down.
But that's a good goal to beable to get you into the house
(43:26):
that you particularly want.
If you're wanting a much higherdollar amount house, it'd
probably behoove you to savesome more money down.
Depending on where you are atin life, you may make enough
money that it doesn't matter ifyou put 2% down or 20% down.
You're still going to be ableto get a house.
So it's not so much that youhave to have the 20% down, it's
(43:47):
just people prefer to have thatto avoid the PMI.
There's plenty of options for athree and a half percent down
on an FHA loan.
You can put 5% down on aconventional as little as that
and actually as little as 3% ona conventional the 100% products
out there.
We have a personal in-houseproduct that we created.
(44:08):
It's called Purchase Power andit allows you to get into the
house at technically withnothing down, because we allow
for 6% seller concession on that.
So that means typically all ofyour closing costs can be
covered if your seller's willingto do that for you.
And then you are putting nodown payment.
It's 100% financing.
(44:28):
So we have a little bitstricter guidelines on that.
And then we don't requireprivate mortgage insurance on
that either.
So you could possibly get into abetter house or a higher dollar
amount house with that, whereasyou couldn't if you had to put
a down payment.
Now the rate is a little bithigher on it because it's a, you
(44:48):
know, a bigger commitment forus on our side not to have our
default insurance on it.
Then you have VA, which is 100%financing, and then you also
have rural development, which is100% financing.
So it's all dependent on whereyou are in life.
As Denetra's kept, you know,alluding to that, you have to
have an overall good picture ofwhat can you afford.
(45:09):
So, but there's plenty ofproducts to get you into the
home that you can afford.
Speaker 2 (45:17):
All right, anybody else want to piggyback?
Speaker 5 (45:19):
on that, closing costs, right I think you said
the 6% but there are some thingsthat you have to pay outside of
closing before we get to thatpoint, right.
And so, having that in mind,your appraisal is going to be
something you're going tousually pay outside of closing
An inspection.
While you could waive it, Idon't think anyone should do
(45:41):
that, even on a new construction, absolutely, and probably even
more importantly, on a newconstruction.
(46:02):
So, again, having those things,but now from the I know
yourself to pay that agent, acommission, and what happens
there is again depending on theagent for which you're working
with and their ability tonegotiate on your behalf.
That's why, again, working withsomeone who is what I would
(46:23):
call of elite status helps youto understand all the numbers
that are potentially there.
Because if the agent doesn'thave you sign it legally, the it
that I'm referring to is abuyer's broker agreement.
That's another cost that,technically, is your cost and
(46:44):
agents, we're going to try toget that covered by the seller.
There's no guarantee to that.
There's nothing guaranteed.
You're not guaranteed, even inthis loan, that even as we sign
those things, that you're goingto 100% get approved.
That's why it's called apre-approval.
But you have to go throughthese steps right, and so
(47:04):
understanding that part is very,very important.
But again, reading is important.
What are you signing off onwith the buyer broker agreement?
What are you signing off onwith your application?
As you sign those things?
They're all saying that you'reswearing that this information
is true, right, the same thingthere.
(47:26):
You may work with or start withan agent You've signed a buyer
broker agreement.
You're not liking the way thosethings work out, and then you
say I want to come work with youor you want to come work with
me, or whomever.
The problem becomes is, ifyou've signed that and you've
not read it, I can't representyou if you're already working
(47:46):
with an agent that you've signedthat for.
So what's the length of timethat you signed?
Most people may want you tosign for a year, maybe six
months, maybe three months, andso those are a lot of things
that I think like factor intoyour home ownership journey that
you don't really realize.
(48:06):
But there's no.
You said 6% can be covered inyour sellers On that particular
product, on that particularproduct.
Does that include realtorcommissions or it depends, it
depends, it depends.
So that part right.
And so if you had to, if theseller wasn't willing to do both
, pay the real estate commissionand said I'm only doing 6%.
(48:28):
Well, that concession at thatpoint now is not going to alter
your total closing costs becauseyou are obligated if you signed
a three, four, five whateverthat percentage was with your
agent, you're obligated to paythat.
So it's gonna come out of thatseller's credit, if there is one
.
And so, again, being informedand partnering with the right
(48:50):
people is so, so importantduring this process Because, if
not, as I've said previously,being ill-informed is the most
expensive mistake that you canmake.
Speaker 2 (49:04):
And I definitely think that's some very good
information and almost to thepoint that, Denetra, I hope we
can get you to come back just sowe can have that conversation
in terms of why it's soimportant to have a realtor,
what role they play and how doyou even choose a good one and,
like I said, we definitelywouldn't even have time to touch
the surface of that, but Ithink the realtor part is so
important.
So, as we close out, you knowthinking about each of your
(49:27):
individual roles, what is that?
One piece of information youwant a listener to know, A
would-be homebuyer.
What should they be considering?
What's that one thing that youwant them to take away and focus
on?
Bridget, we'll let you go first.
Speaker 4 (49:39):
I would have them focus on the budget and looking
at the numbers.
So you'll get what's called aloan estimate when you get
pre-qualified and you get yourpurchase agreement in and your
disclosures.
That's going to break yourclosing costs down.
Typically, you're probablygoing to have about $5,000
between the title company andjust your lender fees.
(50:01):
But you're also, on top of that, going to have your taxes and
insurances to be set up, whichis called your escrow account.
So it's not going to just bethat little amount.
You could get up and possiblyto 10,000, depending on the
dollar amount of your insurance,because you have to pay a year
up front.
So my thing would be to knowyour numbers and to know what
(50:21):
you could afford.
Work your numbers, work yourbudget.
Speaker 3 (50:27):
I would say, have realistic expectations about how
the process is going to go.
Average is 30 days frombeginning to end.
We have to order an appraisal,we have to order title work, we
have to gather all of yourdocuments from you.
So I would familiarize yourselfon what the lender is going to
be asking for documentation-wiseand have expectations that this
(50:51):
won't be completed in a week.
You know, and people getspoiled and you know Neighbors
has a great auto lending process.
I know some of those deals getfunded same day.
All you have to do is show thema couple of pay stubs.
This is different.
We're going to be asking for alot more and it's going to take
some time because there's thirdparties involved that have to do
(51:12):
their piece and you know thisis a huge commitment that we're
entering into with you.
So about 30 days to get itclosed if there's no issues, but
sometimes there's issues and ittakes longer.
Speaker 5 (51:25):
Okay, ms Deneitra, and mine would be to focus on
being informed so that you canrun your race, so that you can
close confidently, and I thinkthat that just sums up
everything that we've just kindof said here.
Knowing the numbers isimportant, being patient and
knowing the timeline isimportant.
So the more informed you areabout what that home buying
(51:49):
journey is and what it lookslike for you as your individual
race that you're running, Ithink that that helps you to
again plan properly and positionyourself for the best closing
experience possible.
Speaker 2 (52:05):
And I think if our guests are actually listening to
this podcast, they're alreadymaking smart moves.
And so I'll definitely kind ofplug shamelessly our Blueprint
for Financial Success programfree financial counseling where
you can come in, we can look atyour credit, we can look at your
DTI, we can get you on the roadfor home ownership.
Speaker 5 (52:22):
But then I also want to make sure Ms is Denetria
D-E-N-E-T-R-I-A at DB, soDenetria and Burris, which
really actually is an acronymfor another company we have
(52:42):
called Dream Boost.
We'll have to talk about thaton another episode, but
dbcloserscom, and that's closerswith an S?
C?
L?
O S E?
R Scom is a good way to startoff with an email.
I'll also share my phone numberwith Ms Kim.
Matt knows how to talk.
Get in touch with me as well.
(53:03):
So anything that I can helpwith, I'm happy to do so and
hopefully we'll even kind of puta course or class together to
get some people pre-qualified.
I think that that would be funfor us to kind of do as a follow
up to this.
For those that are interested,let's embark on that journey
together rather than just kindof twiddling our thumbs and
(53:26):
saying I think I want to do it.
There's no better time thanright now to see if you qualify,
and if you do, then then we'llput that plan in place to get
started.
Speaker 2 (53:36):
And Matt, we'll let you in with telling them how
they can go on our website andfind the application.
Speaker 3 (53:41):
Yes, neighborsfcuorg.
Go to the mortgage page.
There's a button that saysapply now.
Or you can text me or call me.
My cell is 225-953-5076.
I can text you a link.
We have a mobile application.
We have a new system.
That's great.
Everything's through thatsystem.
(54:01):
That's where we'll send youstuff to sign, where you upload
things.
It really streamlined the wholeprocess.
Speaker 2 (54:07):
All right.
Well, thank you all, Denetra.
Definitely we'll have you back.
Thank you again, Matt andBridget.
Speaker 5 (54:13):
You're welcome, thank you.
Thank you for having me, guys.
Thanks for inviting me.
Speaker 1 (54:18):
It's time for Blueprint Building Blocks small
changes that lead to bigfinancial wins.
Let's stack up for success.
Speaker 2 (54:28):
Check your credit score early.
Your credit score affects yourloan approval and interest rate.
Review it now and take steps toimprove it if needed.
Go ahead, get that pre-approvalbefore you start shopping.
Pre-approvals help youunderstand what you can afford
and show sellers you're aserious buyer.
And then save for more thanjust that down payment Budget
(54:49):
for closing costs, inspections,insurance and moving expenses.
These often can catch you offguard and finally know your real
budget.
Don't just focus on a mortgagepayment.
Factor in taxes, insurance andmaintenance to avoid becoming
house poor.
Speaker 1 (55:06):
That's a wrap on today's Blueprint Building
Blocks.
Stay on track with yourfinancial journey.
Subscribe to the Money Matterspodcast and visit
neighborsfcuorg slash financialwellness for more tools to help
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Welcome to Money Matters, the podcast that
focuses on how to use the moneyyou have, make the money you
need and save the money you want.
Now here is your host, ms Kim.
Speaker 2 (00:12):
Chapman.
Well, welcome to anotheredition of Money Matters.
I'm your host, kim Chapman, andwe're going to be talking about
home buying because, of course,june is National Home Buying
Month, and so I have somereturning guests with me.
Of course, our National HomeBuying Month, and so I have some
returning guests with me.
Of course, our VP of Mortgage,ms Bridget White, and, of course
, matthew Coy Relax, matthew, Ineed you to take that deep
(00:33):
breath, matthew our loanoriginator.
And then, of course, we have aguest with us today, ms Denetria
Burris, a realtor, and so we'regoing to talk about all the ins
and outs of what you need toknow if you're ready to make
that first time purchase or ifyou just want to get some
information so you can figureout what are those next steps.
So welcome everybody.
(00:53):
Thank you for having us sobefore we get started, just for
any guests that may not befamiliar with Bridget and
Matthew, I'll let you tell alittle bit about what each of
you do, and then, of course,we'll definitely have Ms
Denetria talk a little bit abouther background.
Speaker 4 (01:06):
Okay, I'm the VP of Mortgage Lending.
I've been with neighbors forabout 23 years now and I oversee
our mortgage department.
Speaker 3 (01:15):
I'm our mortgage loan originator.
I've been here for six yearsand I'm basically the
front-facing person thatborrowers deal with when looking
to get a mortgage.
Speaker 5 (01:32):
And I am Denetria.
I'm a Louisiana, mississippi,licensed realtor.
I'm also a Louisiana licensedreal estate title agent.
I co-own a local title companyand have been around the real
estate industry most of my life.
Speaker 2 (01:42):
All right, so we're ready to dive in, yes, and so of
course you know some of thesequestions I might direct to a
person, but anybody can reallychime in, because I know you
have a lot of experience andsome of the different answers
may really help reach somebodyand give them the exact
information they need.
So when someone says I thinkI'm ready to buy a house and we
hear that a lot what's the veryfirst thing they should do
(02:04):
financially house and we hearthat a lot.
Speaker 5 (02:06):
What's the very first thing they should do
financially?
So I'll be glad to take thatone.
So I think that the first thingis a financial check and I
think that most people's firstcall is to a realtor, and that's
a great thing, but I think thatmost realtors or at least
everyone on my team and who Iwork with our very next phone
(02:26):
call is to a lender to get thempre-qualified so we know that
they're buying power.
Okay, Richard or Matt, you wantto?
Speaker 2 (02:34):
chime in.
Speaker 3 (02:36):
Yeah, a lot of people are kind of clueless if they've
never done that before as tothe steps that need to be taken.
But if you reach out to a loanoriginator they can run an
application on you.
And you know, some people cometo me and they just say, oh, I
really just put a number here,but I'm looking to see what the
max I could qualify for would be.
And you know, we can kind ofwork backwards and see what we
(02:58):
can get them pre qualified for.
Speaker 5 (03:00):
And I think that a lot of people do start there.
What's the mix that I canqualify for?
I think a better question thatI don't see people reverse into
is what is the amount that I canactually afford to?
pay there you go and I thinkthat that's that's a real big, a
(03:21):
bigger, more important numberthan just what you qualify for.
Because you may qualify for amillion dollar house
hypothetically speaking, butwhen you factor in the lifestyle
and all of your other expenses,can you afford the mortgage
continuously on that particularhouse if something unexpected
happened?
Yeah, because just because youcan does not mean you should on
(03:42):
that particular house ifsomething unexpected happened.
Speaker 4 (03:44):
Yeah, because just because you can does not mean
you should, that's right, yeah.
Speaker 2 (03:49):
And so of course I'm sure we all pick up the phone at
some point in time and somebodysays, hey, I'm ready to make
that purchase, I want to be afirst-time homebuyer.
But what are some red flagsthat each of you initially see?
Maybe right off the bat thatsays that this individual or
this couple is not quite readyto make that leap yet.
Speaker 4 (04:10):
Poor credit, like if they call in and they're getting
pre-qualified and we see thecredit and it's poor.
Then we have to coach them onwhat they need to do to get
their credit up.
But other than that, one of thefirst questions is okay, well,
you pay rent.
Do you pay rent right now andare you comfortable with the
rent that you're paying?
Do you struggle to feed yourfamily each month or to buy your
(04:33):
groceries?
Do you struggle to pay yourbills?
If something were to happen andone of you lost a job, would
y'all go under?
Do you have any savings to backyou up?
Because if you're havingproblems paying your monthly
rent, you're going to haveproblems paying your monthly
mortgage and you're not readyyet.
You haven't set yourself up tobe prepared, or you may just be
paying too high of a rent andyou need to look for a home that
(04:55):
has a lesser payment than that,because Denetra made a very
good point.
You need to be able to affordit, not technically.
Find out what you can qualifyfor.
Find out what you can afford.
Speaker 2 (05:08):
And I think that's the key point, because sometimes
, like you mentioned, they'restruggling to pay rent and they
have to realize that itshouldn't be a struggle and that
you know it's not something.
Oh, if I'm struggling payingrent, I'll be fine struggling to
pay in a mortgage.
You don't want that particularscenario.
But let me allow Matt andDenetra to chime in.
Speaker 3 (05:26):
Yeah, I mean when I said the max, I just get people
that call me that say that.
But I always get nervousqualifying people at the line
because especially things likeinsurance now in Louisiana can
be all over the place.
So I estimate what I thinkthose costs will be up front.
(05:47):
But if we qualify someone rightat the max and there's some
variations there it can throw awrench in things, especially
when we have things liketerrorists always flying around
in the news.
Speaker 5 (05:57):
Yes, and it's not we.
I think that in life there'sonly so much you can plan for.
You know what I mean.
It's not the things that we'veplanned for.
That normally comes back tohaunt us.
It's the things that we haven'tconsidered.
So I think that oftentimes whenyou say, like what are the
things that kind of can say aperson is not quite ready,
(06:19):
someone that just is not, Iwould say, just, you haven't
even taken the time to reallylook at or putting a budget
together.
And even though you may not,there are some type A people
that have a budget that theyknow every dollar that they
spend.
We're not necessarily sayingthat you have to be that
(06:40):
detailed per se.
It really is at least having abaseline understanding, like
where you can just bucket inyour head like, okay, I know, I
have a car note, I have carinsurance, I have like
considering those other inputs.
Do I have daycare?
Do I have a summer school iscoming, or summer is coming,
will my kid have to go to summerschool?
(07:02):
Um, or will I need to put themin a camp?
And things that we may notthink about, that come down
later on, that are not here,especially if I'm buying per se,
like in the fall or what haveyou, when those dates are kind
of further down, further awayfrom from being top of mind.
I think that just having thosekind of conversations and some
people are like, well, I don'twant to do that, and that's a
(07:22):
red flag to me that I'm like Idon't think that just having
those kind of conversations andsome people are like, well, I
don't want to do that, andthat's a red flag to me.
They're like I don't think thatyou, you may not be quite ready
if you're still wanting to justspend in that way, because this
is a big commitment, it's thebiggest investment for most
people that they are, ever, thatthey will ever make.
And we do see.
I mean, y'all can probablyspeak to the numbers of
(07:44):
foreclosures, right?
I don't consider that a success.
I think that most times, from areal estate standpoint, we look
at just the number of peoplethat we close.
But I'm like let's go back andlook at those numbers and see
how many of them are stillhoused.
And I think that that's abetter reflection of how good of
a job we're doing in terms ofhelping the clients navigate
(08:08):
that purchase process to keepthe total peace in mind and not
just can I sign on these linesat this particular point point,
because on a loan applicationwe're not going to be
considering those types ofexpenses.
Speaker 3 (08:27):
So that's something you sort of need to think about
on your own, because I'm onlygoing to see things that report
on credit, child support, thingslike that.
But you know, life's expensesget in the way as well.
Speaker 2 (08:37):
Yeah, I agree with Denetra.
I think often, far too often,they look at how can I get to
that finish line, how can I getthe house?
But they don't think beyondthat.
What does it take to actuallysustain being in a house?
And like you said, and sothere's a difference between
being able to qualify and signon a dotted line no-transcript a
(09:31):
house.
Speaker 4 (09:32):
That's not how you do it.
Speaker 2 (09:33):
And I'll use myself as the poster child in terms of
being flexible, because I know,when my husband and I built our
house, we had our fiveyear planand two weeks before we signed
on the dotted line to close well, I found out I was expecting my
first child.
That wasn't in the plan.
The day after we closed on thehouse, I totaled my car.
So that wasn't in the plan and Iknow from the outside, looking
(09:56):
in, it's like, oh, they got anew house, they got a new baby,
got a new car, but we got awhole lot of whole new debt that
was thrown at us all at once.
And so, while, yes, you know,we had a five year plan, but it
didn't include that new car, itdidn't include that new baby at
that particular time.
So, definitely having thatflexibility and, like Matt said,
not necessarily getting rightto your maximum amount, because
(10:18):
you don't know what tomorrowwill bring yeah, and that's kind
of like one of the tags that Iuse.
Speaker 5 (10:27):
My saying is I want to help you close confidently,
right.
And so I think that that pieceis having the confidence and
knowing that the way that youget to that is through your
numbers.
You know, finding a particularproperty, most any realtor,
that's.
That's our number one job to dothose things, but to understand
(10:49):
those numbers and to pull outthe right questions.
It's not our job to tell youwhat to do, but it is my job to
help ask the right questions, tohelp you come to those
conclusions and guide yourselfin a way that makes sense for
your family.
And that's really my always myresponse when people say what's
a good house?
(11:09):
Is it a good thing to like?
Is it a good time to get into amarket?
The good time is when you'reready.
We can always take liabilitiesand turn those things into
leverage if we understand ourfinancial position of where we
are and where we're trying to go.
Speaker 2 (11:26):
So when you talk about when you're ready, I guess
the million dollar question ishow far in advance should
someone or a couple plan forhomeownership?
Because far too often I'll getthat call where somebody wants
to come in and sit down and dosome housing consultation, and
so I ask them what their timeframe is.
And it's always by the end ofthe year consultation and so I
ask them what their time frameis, and it's always by the end
(11:46):
of the year, whether that'sJanuary or whether that's
December, it's always by the endof the year.
And so what's a good time frame?
How far in advance shouldsomeone start planning if
they're ready to buy their firsthome or even their next home?
Speaker 3 (11:59):
I think it depends on the individual what your
savings look like, what yourcredit looks like, what what
your credit looks like, whatyour employment history looks
like.
We want to see stability andthat's generally a good sign
that this is going to work out.
But you know, sometimes peoplecome to me and they're not ready
and I will coach them, and I'vehad people that I've worked
(12:19):
with for over a year that youknow take my advice A lot of
times.
You help out with that as well.
For over a year that you knowtake my advice A lot of times.
You help out with that as well.
If they're willing to listenand take the advice.
Speaker 4 (12:34):
sometimes it takes a little longer.
Some people are ready the daythey walk in.
It's different for everyone.
Yeah, it's all dependent onwhere they're at at this point
in time in their life and as towhat Denetra said, and if
they're willing to understandwhat a budget is and work with
that.
Speaker 2 (12:46):
So definitely not a situation where you want instant
gratification.
You definitely need to walkinto that process with some
patience, and so we've talked alittle bit about individuals not
being really financiallyprepared, not seeing the whole
scope of it.
So can you talk to us about thedifference between what it
really means being house poorversus being ready for home
(13:08):
ownership?
Speaker 4 (13:09):
Yeah, house poor is where you or paying way more
than what you should of yourincome towards your home.
Technically, I wouldn't suggestthat anyone have more than 25%
of their net income going towardtheir house payment, because
you have to have a budget forother things.
You're going to have to havemaintenance on the house.
(13:30):
You may have HOA dues on thehouse.
If you're in a condo, you'llhave a larger HOA due.
You're going to have to feedyour household.
You're going to have to clotheyour household.
There's just many things in lifethat you're going to have to
deal with and, depending on yourlifestyle, if you want to
continue that same lifestyle,you'll need to make sure that
you have a budget that says,okay, this 25%, that's it.
(13:53):
That's all I'm putting on thethe house.
If you go above that a littlebit, not so bad.
It's really dependent on youroverall income, your stability,
your assets that you have savedup.
Do you have three months savedup in case something were to
happen and you get laid off andyou have to get another job?
Are you ready there?
Or are you 50 of your incomegoing to 40% of I shouldn't say
(14:16):
50 because I don't think you canget qualified for that, but 40%
of your income going completelyto your house, that's way too
much, because you have thevariables in life that you're
not prepared for, and if youdon't have a savings, then
you're going to go behind onyour house note and you're going
to go into foreclosure andyou're going to lose your house,
and then you're going to havebad credit and you're going to
(14:41):
be trying to get into aapartment and you can't get in
there.
So let's not go trying to keepup with the Joneses.
You get what is good for you.
Don't get what you want toportray as your life.
Speaker 5 (14:50):
So if I could just add in into that I think that
that's a big thing to considerlifestyle right Someone who
doesn't have responsibilities.
You don't have kids now, butI've always wanted them and I
(15:22):
want five children.
I only have one, or maybe twonow, but I know that that is the
lifestyle that I am curatingfor myself.
Those kind of inputs are thingsthat I think should be play or
way, a bigger have, a biggerweighty, I guess, component to
(15:43):
the decision of how or whenyou're going to buy.
But also timing Right.
This doesn't have to be yourforever home, so can we leverage
the liability here to turn itinto an asset by saying I'm
going to start off smaller untilI grow, so maybe I'll get a
smaller house as a start, a homethat could then be turned into
(16:06):
an investment for me later.
That's important to kind of keepthose things in mind, because
the price at which we buy thathouse you don't make money when
you sell property.
You make money when you buy theproperty, and that's so
important buying at the rightprice.
And so if we have those thingsin mind, then you kind of can
(16:27):
take those into consideration.
What is the school district?
Where am I doing this?
What is the rental income inthis particular area?
That's not something that y'allmay particularly look at, but
that is something that is goingto be factored into your
appraisal process, and so, oncewe're looking at those things,
can I then use this as a start ahome, put a couple of updates
(16:48):
into it that really balloons theequity that I have here, so
that, as I'm putting that five,10 year plan together, that I
can grow into my forever homeand I've gotten a good head
start.
Speaker 2 (17:02):
Yeah, I think a very, very valid point.
Sometimes people go into themindset that this is it, that
one and done purchase, and soI've got to get the mansion,
I've got to get it right thefirst time.
So how often would you eventhink that when you meet clients
, that you do have to kind ofhave that reality check and that
that Megan Dollar home may haveto wait just a little bit
longer?
Speaker 5 (17:22):
I think that that's part of the consultation process
for us.
We kind of start doing a reallydeep dive in the beginning to
understand clients.
It's more than just a sale,right?
I think that, as far as myself,I'm not very active on social
media, I'm not really big onadvertising, because when you do
(17:43):
good work, people will refer toyou.
I think word of mouth is betterthan any other in terms of
conversion, right, it's not thatyou don't people don don't get
are able to convert frommarketing.
I just think that most, if youlook at even your own numbers,
that the most of your, theirrepeats and or referrals from
(18:04):
people that you've closedsuccessfully, I think that that
that's a big piece of slowingdown in order to speed up, right
.
And so I think that taking thattime to again ask the right
questions because a person itjust may be that they that was
never presented to them as anopportunity or an idea, so it
(18:24):
wasn't top of mind but askingthose questions and saying, okay
, let's see where you want to beversus where do we qualify for.
That's why, on my side, it'simportant to partner with people
like Matt Matt is my buddyBecause we want to know that
before we start showingproperties.
(18:46):
If you go see a $500,000 houseor a million dollar house,
there's very few 150, 180,$200,000 houses that are going
to give you that same wow factor.
But it's not that you can't finda 2,000 or 2,500 square foot
house.
That doesn't give or have that.
(19:06):
It's just it's a harder thingto build up to because you're
looking at fixtures, notnecessarily that the house is
really worth that.
Much more than those things isreally probably location and the
finishings and fixtures thatare here, the types of floors,
the marble do you really needthat?
Yeah, right, it looks pretty,but if I have kids three, I'm
(19:29):
like I do not want white marblefloors and furniture because I
think I'd be having anxietyattacks pretty often just from
again it being destroyed.
And so again pointing thosethings out, because I think that
social media life I think youmentioned Bridget keeping up
(19:50):
with the Joneses I think that welive in a society now that is
very, very in your face aboutwhat everyone else is doing and
that making you feel a piece ofguilt for not necessarily being
where someone else is, and Ithink that that makes us run
other people's races and notours, right.
(20:12):
I was a sprinter but I am not along, um a long, uh.
Okay, I can't do a longdistance, not a mile, uh-uh not,
not even now, not even walking.
It's not my thing, um, but Ithink that just knowing that
that's just not your race andthat's not a bad thing, it
doesn't make you a loser either.
It just says it's just not foryou it's just different,
(20:34):
different, and that's okay Allright.
Speaker 2 (20:36):
So, bridget and Matt, I want to talk a little bit
about the nuts and bolts.
What would you consider, likethe top three or four things
that lenders are looking for interms of that pre-approval for
somebody to be ready for a home?
Speaker 4 (20:46):
You're looking at credit, income slash, employment
history and your assets,because that's your top three
factors there.
We've got to know that you havestable employment.
We're looking typically for atwo-year history or you know,
even so, someone coming out ofcollege or a technical school or
any type of school going intotheir field.
(21:07):
So we consider the time thatthey put into their schooling as
part of their overall jobhistory, because they're going
into their actual field.
So you know, we want to seethat there's some stability
there.
We want to look at credit.
Make sure everything is goodthere.
You have established credit andthat is at the score that you
need it to be.
(21:27):
You don't necessarily have tohave the best score to get into
a home, but you want your scoreto be as high as it can be to
get the better rate, and so youmaybe can afford more, because
then your payment would be alittle less.
Then you're looking at theassets.
You need to understand thatyou're going to have closing
costs and your sellers.
(21:48):
On a typical conventional loan,if you're only putting 5% down,
your sellers are allowed to pay3% of the purchase price toward
your closing costs.
So some people will come in andthey'll say, oh, I'll just get
the seller to pay everything.
Well, no, that's not the case.
It depends on what's allowedfor the seller to place into the
transaction.
So you're going to have somemoney that you have to come out
of pocket.
(22:08):
You need to anticipate this andhave your down payment saved up
, your closing costs saved upand, yes, there are other
products that you can get intothat you do not require a down
payment.
But overall, you do have tohave some funds saved up.
Speaker 2 (22:23):
So, credit wise, what are the biggest, I guess,
roadblock or barriers that youfind on credit reports that
really get in the way ofsomebody becoming a homeowner?
Speaker 3 (22:33):
Bankruptcy.
For sure, there's timeframesfrom completion of bankruptcy to
being able to qualify for aloan.
Definitely don't want to seerecent delinquent payments which
is considered anything over 30days late.
Those things ding your scorewhich, like Bridget said, will
affect your rate.
We want to see an established,varied credit history.
(22:56):
You know, have you paid off acouple of car loans?
Or you know, sometimes ifsomeone's just starting out,
maybe they only have like asecured credit card with a small
limit.
So we want to see a varied,established credit history.
Speaker 2 (23:10):
So and I know, besides credit, there's so many
different things that you'relooking at Can either of you
talk a little bit about debt toincome ratio?
Speaker 3 (23:17):
Yep.
So debt to income ratio is apercentage that shows your gross
monthly income versus yourtotal monthly obligations, which
would, in the case of a homepurchase, include the proposed
payment for what you're tryingto do On a conventional loan.
That needs to be below 43%.
We have an in-house productthat's 100% financing purchase
(23:40):
power, with no PMI.
That one is 40.
We also do a lot of land loans.
It's 38 on that.
So some people can do that workon their own without putting in
an application.
Just take what you're expectingyour new mortgage payment to be
.
Add in all your existingliabilities, which means items
(24:00):
that would appear on your creditreport, the minimum payment,
and then things like alimony andchild support we would consider
as well.
Speaker 5 (24:08):
And Kim, can I chime in Because I'm like I know this
is probably going to make youguys laugh when you're
mentioning that.
Probably going to make you guyslaugh when you're mentioning
that another big piece for us isdon't go get new credit.
Speaker 4 (24:23):
Wow, yes, you're in this process.
Oh yeah, a deal can fall apartat the last minute and we do
have a form and we tell themplease don't change anything on
your credit, don't charge up.
Don't go buy that house full offurniture that you want before
you close.
Charge up, don't go buy thathouse full of furniture that you
want before you close.
And you know you should bebudgeted for that already anyway
(24:44):
.
But we've had somebody go andpurchase a brand new car, like
they had no car, and then theycan't close because now their
DTI is out of whack.
You just put yourself out ofyour house to go buy a Mercedes.
Was it worth it?
Speaker 2 (24:58):
So let's talk a little bit about a pre-approval.
So what does the process looklike after someone submitted an
application and, assuming theychecked some boxes, what does a
pre-approval look like?
Speaker 3 (25:08):
So, we do a pre-qualification versus a
pre-approval, meaning we don'treview your income documents up
front.
We would do that once yousubmitted a purchase agreement.
So we do a pre-qualificationbased on the income that you
state that you make in theapplication, combined with a
credit poll, and then you know,give you a pre-qualification
letter if you want to make anoffer on a house.
(25:29):
Once we receive an acceptedcontract, then we go about
verifying all of that.
So I would also caution peopleto take care of the accuracy of
those numbers, because we alsoget deals where wait, you make
half of what you said you did.
You didn't think we'd look intothis, so accuracy is key.
(25:50):
On the application.
Speaker 2 (25:50):
You mean, we have to prove what we say.
Speaker 3 (25:55):
Right, and some people will upload their docs up
front.
I'll take a look at them to seeif you know anything looks
wildly off.
But then sometimes some folkshave side businesses which can
affect an income calculation.
If you have a Schedule Cbusiness under taxes showing a
loss, that will be negativeincome on a mortgage application
(26:16):
.
So that's another thing toconsider because some people do
that for tax benefits but thenit can cause a problem in this
process.
Speaker 2 (26:24):
Are there other common mistakes that people make
just during the applicationprocess that can, you know,
maybe warrant a denial?
That could just be a mistakethat they've made.
Speaker 3 (26:35):
Well, generally, that's why you have a loan
officer that will review theapplication and even denials.
I go over and verify everythingwith them just to make sure we
have it input correctly.
A lot of people get nervousthat they're going to put
something wrong on theapplication.
Can always be corrected once itcomes over to my side and you
know I will go over everythingwith them.
Speaker 4 (26:56):
So yeah, and to piggyback on that, I feel like a
lot of people leave out.
There's a section on there forreal estate owned.
A lot of people will leave out.
Oh, I didn't even think aboutthat.
Yeah, I have some land.
Well, you have to pay taxeseach year on that land, so we
need that for your, your debtsand things like that.
They'll leave that off, andsometimes people leave it off on
(27:21):
purpose, but we will find it.
Speaker 3 (27:22):
We don't like surprises.
Speaker 5 (27:24):
And Bridget.
I will mention this becausethis happened with my husband.
His parents put him on propertythat he did not like.
He's not paying the taxes, he'snot generating any of the
income, but he's on title, butthat still factors into the debt
(27:49):
numbers that you're calculating.
So I think that that was a goodpoint to bring out, because
it's those small things that youdon't consider, but that's also
shrinking your buying power toa degree.
Speaker 3 (27:59):
Yeah.
Speaker 2 (28:01):
So, denetra, of course you're often that first
point of contact for somebody.
What do you wish?
Homebuyers or prospectivehomebuyers knew you know before
they began the process.
Speaker 5 (28:12):
That it is.
I like to replace the wordprocess with journey.
Okay, right, that it is ajourney and it can be daunting
or overwhelming, but it doesn'thave to be when you have the
right mindset, the rightmotivations and we get your
money together.
So those are my three ends thatI'm like, if you say that this
(28:35):
is hard and that's where you are, it's going to be hard.
But if you say, like you know,it could be challenging, that's
where we have like an elitegroup of people that we work
with, right, putting you withthe right lender, the right loan
officer, you can have the rightproduct.
But at the same time, do thosetwo people jail?
(28:57):
And I've seen that happen whereit just the deal and everything
just had a lot of frictionbecause of who is involved, not
necessarily that a person didn'tqualify right.
So, understanding that thosethings all do play factors, but
that really is up to you how bigof a factor it plays.
(29:19):
Law officers are your friend.
They're not your enemy here,and so when they're telling you
you can't do something, it's notbecause they're targeting you
as an individual, it's listen,most of these things that I've
been putting to place are foryour benefit.
It's because you haven'tconsidered the cost.
So I'm a Bible person, I'm aspiritual person, and the Bible
(29:42):
does tell us that like who wouldfirst be without counting the
cost, and so I just hope thatpeople would kind of start them,
start at that place withgetting to the numbers and
understanding your money andwhat that means for you, and
that is not something that isgoing to be the going to be the
same.
So you and I are now friends.
(30:04):
If we're talking, our buyingjourneys are going to look
different because we havedifferent incomes, we have
different lifestyles.
And you have a husband, I have ahusband, but we don't know what
contributing factors ourhusbands may play in that role
too, right, and so you may be abreadwinner and your husband
(30:25):
still has an income, but thehousehold income is mostly on
your part, or vice versa yourincome may be a smaller
component, but it's heavy onyour husband's side, and being
able to understand those piecesthat says again, that's not
anything bad, it's just thatthat's not your race, it's a
(30:47):
different one.
And if we go into it with thosethings, then we can overcome it
and instead of having themindset that I'm going to be
denied, I don't really I thinkthat some people stay in rental
positions where I'm just renting, I'm just renting, they don't
buy because they are afraid ofbeing denied, like I'm not ready
(31:07):
.
Well, you don't, sometimes youactually may be ready and you
don't even realize that part,and so I would just also kind of
put that piece out there, thatwe don't focus on the denial,
that it may just be delayed,like I'm not going to tell you
never, right, we're going togive you a plan to put in place
to kind of get you to that point.
Speaker 3 (31:26):
I hear that so frequently and it's always
surprising to me.
I'm scared I'm going to bedenied Once we've pulled your
credit.
It really doesn't matter.
Denials don't get recordedanywhere.
We're just, you know, legallyrequired to inform you of the
decision, but you can try again.
There's no time frame.
You know, if you're denied,I'll tell you why and say here's
(31:50):
how we can get you out of this.
You know, or at least a goodloan officer will.
Speaker 2 (31:57):
All right.
So, speaking of getting out ofthis, you know I want to give
you two different scenarios andany of you can kind of chime in
in terms of what advice youwould give, because often we'll
get that person that has reallygood income really good, you
know, in terms of debt to income, but very poor or limited
credit, and then, on the otherextreme, we may have that person
(32:17):
that has really great credit,but then they have very limited
income.
So what recommendations, whatadvice, or is there hope for
individuals that sit in thatposition?
Speaker 3 (32:28):
So income, you know, may change over time, but
generally that's what you'reworking with.
So you're going to have to workon either the credit or your
current expenses.
A lot of times, if someone's ona fixed income you know social
security or a pension unlessthey're to go out and get a job,
(32:48):
that's what we have to workwith.
So you know we have to look atthat.
With credit, you know, havingobligations that are currently
passed to is a sign that you'realready living beyond your means
or at least you're not managingyour money properly.
Speaker 5 (33:13):
And that's not what we want to see.
When you know, entering a 30year commitment with you, and I
think that, if I'm just chimingin on the same thing that you're
alluding to here, is, if you'rein these positions working with
someone, there's other creativefinancing kind of deals that we
can structure right, and somaybe there is an opportunity to
do some owner financing in themeantime while we correct those
(33:37):
things, while we improve thecredit, and then can refinance
into a permanent financingvehicle through again coming
back to the bank.
That's where, again, startingwith the right people and having
the right team in place to helpkind of put together that plan
of where you are versus whereyou want to be, just again
(33:59):
getting in the door to get anevaluation of where you're at
helps that piece.
I think that banks do put a lotof emphasis on credit, and I
just personally, I don't thinkthat it's a very good indicator
of people's buying power,because I'm like, when we look
(34:19):
at the numbers of foreclosures,banks lend based off of credit,
right, and so we see that that'snot really the best, or always
the best, indicator.
The thing is, though, is so wecan't allow that.
I think people will holdthemselves back from getting
into this when it'sunderstanding why is your credit
bad.
Some people just don't paybills on time, so let's just get
(34:41):
that part together.
Like that, we put your stuff onauto pay Right, like you don't
have to go to a credit repairspecialist, and I think, miss
Kim, that's something that youhelp them with with in terms of
giving them steps that they cando to improve credit.
So getting some financialliteracy or education around
(35:02):
credit repair and not just goingto the credit repair gurus
online that's just doing a lotof deletions or charging you a
dispute in ways that, again, Ithink that those secondary
reports and things that you said, like if you have real estate,
the bank will still find it.
(35:23):
That means that there's otherreports and research and things
that they're doing on your side.
That's a part of this theirfiduciary responsibility to look
these things up.
I think that the more that wecan just come to terms with that
and say, look, I had a problemat this time, but we can put an
explanation to explain whathappened then allows you guys to
(35:45):
then make deviations or othersuggestions that maybe this one
was tight, but because we knowthis, you've had several
overdrafts.
Okay, can we put in a savingsaccount that gives you some
overdraft protection, Things tohelp you guys get to a place of
being comfortable with a personthat may have had bad credit
(36:07):
habits but are now just in aplace where, look, I've
recognized this, but here's thesteps or the plans I've put in
place to remediate that nowgoing forward, yeah, and to
speak on that like utilizationof credit cards, you want to
stay at 30 percent or lesscredit of your limit on your
(36:28):
balances and that'll help yourscore stay up.
Speaker 4 (36:31):
A score can go down really quickly.
When you get over that it canstart going down.
You could have had a 700 andliterally go down into lower
sixes in a matter of a month ofoverspending.
So don't get in the habit ofputting everything on a credit
card.
A credit card used properly isa good thing to build your
credit for you and get you agood score, but if you can't pay
(36:54):
it off monthly or keep it belowthe 30% of the limit, then you
probably shouldn't have one.
Speaker 2 (37:02):
And I think that you know it would be you know well
of us to talk a little bit aboutsome of those common mistakes,
because we use Google all thetime and so you'll get somebody
that gets information andthey'll say, oh, I don't have
any credit, so they'll go andopen five credit cards.
And then they'll come and say,hey, you know, I went online and
I didn't have any credit, andso I opened five credit cards
and then, to speak to whatBridget said, they didn't have
(37:23):
the education about utilizationand so they ran those credit
cards up.
What are some other commonmistakes you think individuals
make in the in the guise of oh,I'm trying to get myself ready
to buy a home, I'm trying to fixmy credit, I'm trying to build
credit.
What are some common mistakesthat people make up front?
Speaker 3 (37:42):
Well, danita mentioned credit repair earlier
and you know there's plenty ofpeople out there that are
legitimate that can help withthat stuff.
And you know there's plenty ofpeople out there that are
legitimate that can help withthat stuff.
But a lot of those people, fromwhat I've heard, they just
dispute accounts and you may seea temporary bump from that.
But if it's not resolved inyour favor, then a month later
you're back where you're at, andI think some of those
(38:05):
businesses operate by justcontinuously doing disputes, so
the problem never actually getsresolved.
You get a temporary bump, butthen you're back to where you
started.
So you know, I refer a ton ofpeople to you if they need more
detailed credit counseling thanwhat I can offer, but I would
recommend reaching out to afinancial institution for those
(38:28):
sorts of issues.
Speaker 5 (38:30):
And that's free right institution for those sorts of
issues.
And that's free, right,absolutely, that's free with you
guys.
I think that that part isimportant.
It costs a lot of money to beill-informed, right, and so
going to a person who says thefact that they have people that
specialize in credit repairtells you that it is a necessary
(38:51):
and needed thing.
But, again, being with an eliteservice provider is more
important than just the serviceitself, right?
Someone that actually knowswhat they're doing and can give
you those steps to take or pointyou into the right direction.
And, again, just counting thecost of those things, right, and
(39:11):
so deleting too much stuff.
So if you delete everything offof here, you don't have a
history.
And then Bridget mentioned or Ithink both of y'all kind of
spoke to, as I was justlistening some of having the
proper mix of credit is what youguys mentioned, and so those
are the kind of things that Ithink make a big difference too.
(39:33):
So you've had a car, you've hada student loan, you've had a
credit card, you've had theseother types of credit, and I
think that understanding that abank can also offer those things
.
So again, depending on thejourney that we're on, so again
depending on the journey thatwe're on, maybe you might need
(39:54):
to refinance your car as atemporary thing to give you the
ability, on something smaller,to again build credit.
That's something that y'allwould tell them yes, let's do
this, but you don't need torefinance a full amount, let's
just do a small amount orsecured type loan or whatever
the case may be, to again startto establish that credit history
and doing that early on.
(40:16):
I think that I wish someone hadtold me those things coming out
of college or while I was incollege no, I didn't need a
house at that point but ifsomeone were giving me steps
that I could do to preparemyself to purchase a house when
I was ready and knowing theimportance of how heavy I think
(40:36):
that, at least for me, my familyhas always been.
I think with Black families inparticular, credit is not a big
thing.
It's cash, cash, cash cash.
Like you know, especially olderones, like they buy everything
cash.
Their houses were bought cash,their cars were bought cash, and
so I just remember when mygrandfather had we pulled his
(41:00):
credit and he had a 500 creditscore and I was like no way with
all of the real estate and allthe things that he had wasn't
because his credit was bad, hejust didn't have one, he didn't
have any credit history, sothere was just nothing there for
it to calculate off of.
I think that that's a big piecethat I think is just always,
(41:21):
always missed, especially now,in this particular day and age.
Cash is not king, credit is,and you just have to have it.
In the scenario that youbrought up, the person that is
strapped for cash but hasexcellent credit, versus a
person that has a lot of cashbut bad credit, which one do you
have?
Which one would y'all say has ahigher likelihood of being
(41:42):
approved in a shorter amount oftime?
Probably the person with theyes, with a better credit with a
better credit over the personthat has the money and I.
I think that is such a conundrumin in my own mind, but at the
same time I'm like it doesn'tmatter what I feel about it
personally.
This is, this is what these arethe regulations, and whether
(42:03):
you don't like neighbors becausethey told you, when you go to
the next bank, the numbers maychange a little bit, whether or
not it's 600, 630, or whatever,but the thresholds of whatever
that minimum floor is, that'sregulated right.
Pretty much, yeah.
Speaker 2 (42:22):
So, since we're talking about cash, I think we
really want to kind of pause andtalk, dive a little bit into
the fact that, while, yes,credit is definitely going to be
important, let's talk aboutwhat does it mean?
Or why do you need 20%?
And then, for those mortgagesthat say no money down, why do
you still need cash?
What are some of those thingsthat people or individuals are
going to still need money in thebank for?
Speaker 4 (42:44):
Yeah Well, with the 20% down, that's like an optimal
goal for homeowners to avoidthe private mortgage insurance
payment, which is a defaultinsurance which is only
benefiting your lender, has nobenefit to you.
You must pay it.
It'll legally fall off at 78%of the value of the home
(43:05):
compared to where your balanceis, and that's based off of
where you start.
You can always request to haveit sooner removed, but then
you'll have to pay for anappraisal.
With FHA loans, though, yourPMI is on there for life, no
matter how much you put down.
But that's a good goal to beable to get you into the house
(43:26):
that you particularly want.
If you're wanting a much higherdollar amount house, it'd
probably behoove you to savesome more money down.
Depending on where you are atin life, you may make enough
money that it doesn't matter ifyou put 2% down or 20% down.
You're still going to be ableto get a house.
So it's not so much that youhave to have the 20% down, it's
(43:47):
just people prefer to have thatto avoid the PMI.
There's plenty of options for athree and a half percent down
on an FHA loan.
You can put 5% down on aconventional as little as that
and actually as little as 3% ona conventional the 100% products
out there.
We have a personal in-houseproduct that we created.
(44:08):
It's called Purchase Power andit allows you to get into the
house at technically withnothing down, because we allow
for 6% seller concession on that.
So that means typically all ofyour closing costs can be
covered if your seller's willingto do that for you.
And then you are putting nodown payment.
It's 100% financing.
(44:28):
So we have a little bitstricter guidelines on that.
And then we don't requireprivate mortgage insurance on
that either.
So you could possibly get into abetter house or a higher dollar
amount house with that, whereasyou couldn't if you had to put
a down payment.
Now the rate is a little bithigher on it because it's a, you
(44:48):
know, a bigger commitment forus on our side not to have our
default insurance on it.
Then you have VA, which is 100%financing, and then you also
have rural development, which is100% financing.
So it's all dependent on whereyou are in life.
As Denetra's kept, you know,alluding to that, you have to
have an overall good picture ofwhat can you afford.
(45:09):
So, but there's plenty ofproducts to get you into the
home that you can afford.
Speaker 2 (45:17):
All right, anybody else want to piggyback?
Speaker 5 (45:19):
on that, closing costs, right I think you said
the 6% but there are some thingsthat you have to pay outside of
closing before we get to thatpoint, right.
And so, having that in mind,your appraisal is going to be
something you're going tousually pay outside of closing
An inspection.
While you could waive it, Idon't think anyone should do
(45:41):
that, even on a new construction, absolutely, and probably even
more importantly, on a newconstruction.
(46:02):
So, again, having those things,but now from the I know
yourself to pay that agent, acommission, and what happens
there is again depending on theagent for which you're working
with and their ability tonegotiate on your behalf.
That's why, again, working withsomeone who is what I would
(46:23):
call of elite status helps youto understand all the numbers
that are potentially there.
Because if the agent doesn'thave you sign it legally, the it
that I'm referring to is abuyer's broker agreement.
That's another cost that,technically, is your cost and
(46:44):
agents, we're going to try toget that covered by the seller.
There's no guarantee to that.
There's nothing guaranteed.
You're not guaranteed, even inthis loan, that even as we sign
those things, that you're goingto 100% get approved.
That's why it's called apre-approval.
But you have to go throughthese steps right, and so
(47:04):
understanding that part is very,very important.
But again, reading is important.
What are you signing off onwith the buyer broker agreement?
What are you signing off onwith your application?
As you sign those things?
They're all saying that you'reswearing that this information
is true, right, the same thingthere.
(47:26):
You may work with or start withan agent You've signed a buyer
broker agreement.
You're not liking the way thosethings work out, and then you
say I want to come work with youor you want to come work with
me, or whomever.
The problem becomes is, ifyou've signed that and you've
not read it, I can't representyou if you're already working
(47:46):
with an agent that you've signedthat for.
So what's the length of timethat you signed?
Most people may want you tosign for a year, maybe six
months, maybe three months, andso those are a lot of things
that I think like factor intoyour home ownership journey that
you don't really realize.
(48:06):
But there's no.
You said 6% can be covered inyour sellers On that particular
product, on that particularproduct.
Does that include realtorcommissions or it depends, it
depends, it depends.
So that part right.
And so if you had to, if theseller wasn't willing to do both
, pay the real estate commissionand said I'm only doing 6%.
(48:28):
Well, that concession at thatpoint now is not going to alter
your total closing costs becauseyou are obligated if you signed
a three, four, five whateverthat percentage was with your
agent, you're obligated to paythat.
So it's gonna come out of thatseller's credit, if there is one
.
And so, again, being informedand partnering with the right
(48:50):
people is so, so importantduring this process Because, if
not, as I've said previously,being ill-informed is the most
expensive mistake that you canmake.
Speaker 2 (49:04):
And I definitely think that's some very good
information and almost to thepoint that, Denetra, I hope we
can get you to come back just sowe can have that conversation
in terms of why it's soimportant to have a realtor,
what role they play and how doyou even choose a good one and,
like I said, we definitelywouldn't even have time to touch
the surface of that, but Ithink the realtor part is so
important.
So, as we close out, you knowthinking about each of your
(49:27):
individual roles, what is that?
One piece of information youwant a listener to know, A
would-be homebuyer.
What should they be considering?
What's that one thing that youwant them to take away and focus
on?
Bridget, we'll let you go first.
Speaker 4 (49:39):
I would have them focus on the budget and looking
at the numbers.
So you'll get what's called aloan estimate when you get
pre-qualified and you get yourpurchase agreement in and your
disclosures.
That's going to break yourclosing costs down.
Typically, you're probablygoing to have about $5,000
between the title company andjust your lender fees.
(50:01):
But you're also, on top of that, going to have your taxes and
insurances to be set up, whichis called your escrow account.
So it's not going to just bethat little amount.
You could get up and possiblyto 10,000, depending on the
dollar amount of your insurance,because you have to pay a year
up front.
So my thing would be to knowyour numbers and to know what
(50:21):
you could afford.
Work your numbers, work yourbudget.
Speaker 3 (50:27):
I would say, have realistic expectations about how
the process is going to go.
Average is 30 days frombeginning to end.
We have to order an appraisal,we have to order title work, we
have to gather all of yourdocuments from you.
So I would familiarize yourselfon what the lender is going to
be asking for documentation-wiseand have expectations that this
(50:51):
won't be completed in a week.
You know, and people getspoiled and you know Neighbors
has a great auto lending process.
I know some of those deals getfunded same day.
All you have to do is show thema couple of pay stubs.
This is different.
We're going to be asking for alot more and it's going to take
some time because there's thirdparties involved that have to do
(51:12):
their piece and you know thisis a huge commitment that we're
entering into with you.
So about 30 days to get itclosed if there's no issues, but
sometimes there's issues and ittakes longer.
Speaker 5 (51:25):
Okay, ms Deneitra, and mine would be to focus on
being informed so that you canrun your race, so that you can
close confidently, and I thinkthat that just sums up
everything that we've just kindof said here.
Knowing the numbers isimportant, being patient and
knowing the timeline isimportant.
So the more informed you areabout what that home buying
(51:49):
journey is and what it lookslike for you as your individual
race that you're running, Ithink that that helps you to
again plan properly and positionyourself for the best closing
experience possible.
Speaker 2 (52:05):
And I think if our guests are actually listening to
this podcast, they're alreadymaking smart moves.
And so I'll definitely kind ofplug shamelessly our Blueprint
for Financial Success programfree financial counseling where
you can come in, we can look atyour credit, we can look at your
DTI, we can get you on the roadfor home ownership.
Speaker 5 (52:22):
But then I also want to make sure Ms is Denetria
D-E-N-E-T-R-I-A at DB, soDenetria and Burris, which
really actually is an acronymfor another company we have
(52:42):
called Dream Boost.
We'll have to talk about thaton another episode, but
dbcloserscom, and that's closerswith an S?
C?
L?
O S E?
R Scom is a good way to startoff with an email.
I'll also share my phone numberwith Ms Kim.
Matt knows how to talk.
Get in touch with me as well.
(53:03):
So anything that I can helpwith, I'm happy to do so and
hopefully we'll even kind of puta course or class together to
get some people pre-qualified.
I think that that would be funfor us to kind of do as a follow
up to this.
For those that are interested,let's embark on that journey
together rather than just kindof twiddling our thumbs and
(53:26):
saying I think I want to do it.
There's no better time thanright now to see if you qualify,
and if you do, then then we'llput that plan in place to get
started.
Speaker 2 (53:36):
And Matt, we'll let you in with telling them how
they can go on our website andfind the application.
Speaker 3 (53:41):
Yes, neighborsfcuorg.
Go to the mortgage page.
There's a button that saysapply now.
Or you can text me or call me.
My cell is 225-953-5076.
I can text you a link.
We have a mobile application.
We have a new system.
That's great.
Everything's through thatsystem.
(54:01):
That's where we'll send youstuff to sign, where you upload
things.
It really streamlined the wholeprocess.
Speaker 2 (54:07):
All right.
Well, thank you all, Denetra.
Definitely we'll have you back.
Thank you again, Matt andBridget.
Speaker 5 (54:13):
You're welcome, thank you.
Thank you for having me, guys.
Thanks for inviting me.
Speaker 1 (54:18):
It's time for Blueprint Building Blocks small
changes that lead to bigfinancial wins.
Let's stack up for success.
Speaker 2 (54:28):
Check your credit score early.
Your credit score affects yourloan approval and interest rate.
Review it now and take steps toimprove it if needed.
Go ahead, get that pre-approvalbefore you start shopping.
Pre-approvals help youunderstand what you can afford
and show sellers you're aserious buyer.
And then save for more thanjust that down payment Budget
(54:49):
for closing costs, inspections,insurance and moving expenses.
These often can catch you offguard and finally know your real
budget.
Don't just focus on a mortgagepayment.
Factor in taxes, insurance andmaintenance to avoid becoming
house poor.
Speaker 1 (55:06):
That's a wrap on today's Blueprint Building
Blocks.
Stay on track with yourfinancial journey.
Subscribe to the Money Matterspodcast and visit
neighborsfcuorg slash financialwellness for more tools to help
you build a strong financialfuture.
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