Process of Getting Pre-Approved | First Time Home Buyer Education

In this interview with Dylan Bird, a mortgage broker, we go over how you get started with the pre-approval process, what a pre-approval letter is, and so much more!

Transcript:

**Pardon the typos since it is an auto caption

hey i am joined today with dylan byrd with rpm mortgage and we are going to be talking a little bit more about what he does and how a mortgage lender will help you in the home buying experience

well thank you so much for having me i appreciate being here yeah it's great having you here uh so tell me a little bit more about yourself and uh what you do absolutely you know one of the first steps to buying a home even just preparing for a home purchase and what that looks like is really chatting with you know someone like me who's a mortgage specialist that would be able to help identify what's in alignment with your financial goals right having someone that is dependable and available and very knowledgeable is really going to help set you up for success i totally agree and i guess in terms of this whole thing uh i'm a little curious about like how do you even get started like is it something where once you talk to a lender you're kind of stuck with them or like how tell me a little bit more about that like onboarding process that you do good question yeah the benefit of that is that there is a plethora of flexibility really obtaining a mortgage pre-approval it's a crucial step you know in purchasing a home and really just preparing for a home purchase and you know really only takes a few minutes to chat with someone like me and to work that process and really you know you have the flexibility to work with whoever you want to work with right so i want to make sure that if we have a conversation that you're a good fit for me and i'm a good fit for you but again there's really no commitment no obligation at all once you're in a contract on a house you know then you really want to make sure you know exactly who you're working with and that is really what that looks like when you're making a transaction for a home yeah i totally agree and something that you can't do well it is possible but is it extremely difficult is to change lenders in between from the time you start a contract or get an offer accepted to the time you close if it happens it's probably going to be a little rough so that's why i always like to say like find it find that lender which dylan's a fantastic lender and there's a reason why i'm having a video with you right now find that lender that will work for you and it's one of those things where i mean as you probably know and understand there's a lot of products out there essentially for loans and different interest rates and things of that nature it's really going to be the person behind that and that's what i that's why i like dylan is because he's a local lender and i guess in that steps um so first we kind of went over the initial thing but like what are the those next steps that once you do get that pre-approved letter yeah yeah starting early you know is is so extremely beneficial right knowledge is power again making sure you're working with the right person that they have access to the products that you're looking for based on your unique situation you know and while working for that pre-approval process you know again working with a rock star realtor like william here you know is really going to help position you exactly to where you want to be right finding the people that can meet your needs and your values and really help you find that right home with the best deal by implementing strong negotiation skills you know and a lot of knowledge in the market so really once you make it through the pre-approval process which is just verifying income credit and assets that's all it takes right that's when the fun part begins when you can go out with will and you know begin to view homes that you can envision you and your family living it yeah that's one of those things like i usually don't even start showing homes to people because if they don't have a pre-approval letter because it's kind of like going window shopping you get really excited about a particular house and then like yeah but you're not pre-approved so we can't really even offer like anything we do offer is going to not look very substantial and there's a lot of rules and regulations and guidelines that change in this industry and the difference between a consumer perspective versus the lending perspective tends to be quite different in regards to what people think they can afford or what their income actually looks like if there's bonus or overtime or commission or a type of income that's variable so it's really good to speak with the lender so that you can understand the lending perspective and what you're actually pre-approved for and on top of that not just what you're pre-approved for but really what you're comfortable with as la as a monthly budget you know you might be pre-approved for 600 000 but really for you and your lifestyle the way you want to live your life maybe you want to find a house that's four to five hundred thousand right so really being able to put together and implement a game plan that's in alignment with your values it's exactly what i would be doing for you yeah and that's one of those things where personally i'm going towards that like the financial independence movement where like you don't need to be buying the most expensive house you need to find something that you can actually live in and let's say that there is some sort of recession or there's something where you lose your job like you shouldn't have to be worrying about the mortgage part of that and that's one thing that i love about utilities that you have that conversation because a lot of lenders or some i'm not sure how many but a lot of them i feel like don't have that conversation of like this is really how much you feel comfortable affording and again like you can go to any lender they can pre-approve you for a thousand or sorry a hundred thousand over what you're actually going to be able to maintain for a mortgage payment yeah and it's one of those things where it's just like for me i never want to put my my anyone that i know in that position where they're really worried about having to pay the freaking mortgage and then worry about the place they live in or the reason why i got in all this but i guess one of the things i'm a little curious about is in terms of what other qualities kind of differentiate the average lender versus a great lender absolutely good question you know i think you're just touching on it right there and this is the biggest reason why it's an absolute joy to work with you will is we both prioritize our clients and their needs over the transaction itself right and that right there tends to be a huge competitive edge you know when finding someone that you want to work with is you can have a conversation you know with multiple realtors multiple lenders whatever and oftentimes what you'll find is that many are very transactional pretty cut and dry and you know it's really hard to get a hold of a lot of people with that personal touch and availability and really being dependable so you know in working with me and working with you right we're available we're accessible and we're really aware of the best options right best options towards different types of properties best options towards you know loan programs that are available and really what we're all looking for is you know the best price the best product and the best service and working with you and i all three of those are check check and check yeah with that you bring up a great point i think there's some people who like look at chase for example and like other big banks could you tell me a little bit more the difference between a uh mortgage broker versus a mortgage originator if that makes sense yeah yeah it completely makes sense so the difference between the two many loan originators just have access to their in-house products and so they originate loans you know themselves through their in-house company which is great and can be a really awesome program but when you're working with a broker you know i'm able to broker loans and also originate loans so the difference between that when i broker it's you know um for different type of programs that could be advantageous for an individual buyer or for a family or household when you broker you're going to a credit union or you're going to you know i broke her out to different big banks right so big banks or credit unions or private investors oftentimes they have really competitive rates and advantages when it comes to unique situations so having the ability to broker out or the ability to originate in-house as well both have their own unique edge keeping things in-house is awesome when you the when the availability is there because we underwrite everything in-house we're all keeping it under the same roof you know when you're going through the transaction you know i can speak to my processor or my underwriter or my doc drawing team you know in the same building which just creates a lot of ease and efficiency for a smooth transaction okay and in terms of like a product like i feel like this is a fairly foreign concept like like as a five-year-old i'm like a product for a financial thing like what what like tell me a little bit more about like different products and like how to frankly just think about like how lenders have different products because to me it just i don't know what i initially did i just like i'm not it's not clicking for me oh my gosh totally right that word product or program or options kind of get tossed around a little bit you're like what do you mean i just want a loan right all the time i just need a loan here someone help me with my clients right so the home financing right there are many different types of programs or options or uh products available and what that has to do for the most part there's just a few different buckets you might have heard the word fha loan tossed around or conventional or jumbo loan or usda loan or a va loan and really these the list kind of goes on and on but really what it is is each of those programs has a difference in down payment options and flexibility in regards to your debt to income ratios as well offering really competitive options for people that are self-employed that tends to be another big thing is if you're self-employed you know your income is calculated much differently than that of someone who's w2 salaried right so these different programs can really be customized to help you be very flexible with your home purchase in regards to again your debts your income your credit score down payment options or even closing cost assistance is something that me and my company help with as well for a lot of our first time home buyers so speaking with me i'll be able to educate and put together a customized purchase plan that we can break down you know on the computer and i can actually send you a link and we can review those different options side by side together so we compare and contrast what option or program makes most sense for you i get this question a lot and i think that when you're like kind of thinking about okay should i even buy a house i'm a little curious about what your thoughts on like when someone should maybe keep on renting versus when someone would buy a house because this is one of those things where as a realtor it's great to be like yeah you should buy a house but in reality like if it's not something that fits your lifestyle i'm not going to push you to buy a house but from a mortgage stand standpoint i'm a little curious about kind of like when would it be a good idea to rent versus buy a house yeah yeah such a good question you know should i buy or should i rent whatever that is right well to start really a mortgage cost is going to stay the same on a 30-year fixed loan or 15-year fixed loan whereas on the other hand rents rise yep right not itself right kind of speaks for itself you know and if you get a fixed mortgage on a home purchase you know that mortgage payment's never going to change you know again on the other hand when you rent you know you risk that cost going up each year so really being a home buyer creates a lot of budget stability right yeah and not to mention you know it's it's like having a for savings account yeah right when you purchase a home right you're growing equity and value into a house yeah that's true and that's one of those things where if you think about it when you rent you are actually paying someone else's mortgage you're paying them to essentially get that equity and that's where like for me that's why i really think that buying a home is an investment yes it is a great place to stay i guess the only times when i'm like you probably shouldn't buy is when you don't frankly can't afford it in the sense of like if you're already strapped for cash and you're pushing yourself so hard that's where obviously maybe it's you buy a condo or maybe lower those sites and then build that equity over time and then buy something else absolutely yeah you know just like you were saying owning a home is a form of investment and it's a form that many people understand more than you know buying stocks or indexes or commodities because you get the tangible daily lifestyle benefit of actually living in that home wild appreciates while you're growing equity you know by making that monthly payment or you know even renting it out right so you have someone else literally paying you for your mortgage you know so all of those are really huge advantages in owning a home home and really you know owning a home just like you were saying it's when people say like when's the good time you know or if they can afford it it's really a good time whenever it's a good time for you right so there's no need to put that pressure on yourself if you're not financially in a place to own a home but that's why working with someone like you and with me right we can help them paint a picture of what it visibly looks like to see if it's a viable option yeah and that's one of the things that i love about you dylan is in the sense that education is my thing like that's kind of the want to give as much information as possible i feel like a lot of real estate is like just like hey just don't know anything about this trust these people with the pro probably i think the most biggest uh or the biggest purchase of your life like you're buying a car yeah that's anywhere between if depending on who you are and what your pay scale is anywhere between 15 to maybe a max 60 grand says nowaday at least some of the houses i've seen are at uh half a million and even if you're starting it's like 350. yeah yeah that 50 to 60 thousand dollars for a car is your down payment on a house right that's just into a house but again you know being a first time home buyer there's a lot of flexible options depending upon your situation where you can do zero percent down or three percent down right making it very flexible and affordable to get into a home yeah and then in terms of obviously we're still in the middle of the pandemic but i'm a little curious about what your thoughts are on the market and kind of how things have changed or if like what your thoughts on are on how to be competitive and if not yeah it's quite interesting you know how covid has impacted our local market you know as a response initially you know 2019 and march i mean the very first thing that happened is mortgage rates just just dropped you know significantly making it very very cost efficient you know to get a fixed loan you know what happened is that a lot of investors refocus their attention and when i say investors i mean mortgage-backed investors okay that's a bond market okay there's stocks and bonds this is a bond market all right and so when investors focused their attention to the bond market to protect their money in place of investing in companies with stocks this led to mortgage rates decreasing significantly right to more than what they've been in the past decade right this is actually historically all-time low and we are still in the all-time low range um additionally in response to significantly low interest rates the the economy you know as it was changing and morphing and jobs were changing and the amount of new jobs and new home builds were changing lenders did tighten their mortgage requirements from the pandemic but since you know the past year and a half has gone by things have loosened back up we're really exactly where we used to be in terms of having a lot of flexibility on the different loan programs that are available to people so really you know if you're looking for obtaining a mortgage during this time of pandemic it's really exactly what it used to be back in the day in regards to having standard guidelines and a lot of flexibility towards down payment options is it something so obviously when rates drop i'm a little curious about like you're buying power in terms of like let's say that you could afford at the time before rates dropped uh 350 thousand dollar home like how much more points why like amount wise would you be able to afford now if you were only in that 350 range absolutely yeah depending upon the different loan program that you were looking into and depending upon your income that you have right now i mean a difference just to put it into perspective if the interest rate was to change you know by let's just say half a point and maybe that's saving you a hundred bucks a month on your mortgage payment every 100 that you save in your mortgage payment actually allows you to qualify for an extra twenty thousand dollars in a loan so if you were pre-approved for uh 350 000 in your example and now with the change in rates let's say that you're saving 100 bucks a month based on the lower rate really you can actually qualify for an extra twenty thousand wow to break that down a little more yeah the the term the the idea i usually think about is every fifty dollars in mortgage payment that you save allows you 10 000 more in purchase power okay so that really shifts you to like maybe from the 350 you're able to afford that much more like maybe in the 400s to 500 range in terms of price or i'm just trying to like make a comparison jump like obviously when rates go down you can just buy more essentially buy more home for yeah exactly yeah your mortgage payment is going to be less so it gives you more purchase power and also just gives you more peace of mind knowing that you are going to be making less interest over the life of the loan allowing more money to go into the principle you know which is right into the equity and the value of your house directly okay that makes a lot of sense one of the things like obviously it's great that the interest rates are super low but they're they vary day to day what do you tell clients when they're like oh no it just went up like an eighth of a point and like absolutely yeah thinking you know honestly when it comes down to it regardless we're in historical lows right so whether or not it's a fraction of a percentage difference it really is quite insignificant over the long term and when it comes down to it you can never time the market with a house right the house comes first okay the house absolutely comes first when you find the home that you feel called to that you envision you know living in yourself or laying down roots to grow a family i mean that is more important than the difference of a fraction of an interest rate on a loan right plus many people don't keep a home for 30 years you're going to refinance it or you're going to sell it or you're going to take a cash out against it whatever it is all those things regardless of what your interest rate is it kind of gets reset whenever you make those changes on the home so really it's it's one of those things where you just got to do what feels best to you in regards to where you want to land and what space you want to be yours so that's usually kind of the spin that i put on it yeah and i mean for the most part it's not like you're trying to flip the house you like most of the time like if you're trying to flip the house then you're obviously dealing with a whole different level of time time frame but for like the first time homebuyer you're probably gonna be in there for at least five to seven years and that means your mortgage is really not changing for the next five to seven years i think the amount of equity you get like in this past year i think it's it's been absolutely insane in terms of appreciation and mind you that this is not not normal and i hope it actually cools off soon because it's just caused a lot of stress in terms of buyers been hectic you know and actually an interesting fact you know from the nar national association of realtors they came out with a report that showed that appreciation year of the year for the past 12 months in the pacific northwest region we have gone up in depreciation by 14 which is a 12 year high 12-year high from the previous like 11 we used to be like the highest appreciation in a whole year so the fact that we blew that out of the water is absolutely wild and really just goes to show the investment opportunity that does exist in a home purchase and while this is a bit of an anomaly you know it is expected to be quite high next year in the year after and you know the average appreciation tends to be like five to six percent which is still an exceptional amount of return on a six-figure investment yeah and i agree and that's just one of those things where like you're just in a sense appreciation even on it like a maybe normal 30-year time span in the past 30 years is anywhere between five to seven percent depending on the area you are in um but even then like if you kind of look in that i think portland in general uh is 18.2 percent ish it's hovering between 17 18.2 for appreciation that means every time every month you don't buy a house you're losing potentially seven thousand around seven thousand dollars and that's when you're like looking at the points and you're like oh i if i even hold off for another month and i don't get another thing on a contract like that's probably definitely much more than the like eighth of a point you're gonna lose so really puts it into perspective doesn't it yeah that's the hardest thing is especially when you're down in the trenches and you're like just kind of like being frugal uh this is the best way of saying it because that's definitely something that i do you just have to kind of look at it at that bigger picture was there any other thoughts or anything else that you wanted to kind of go over before we wrapped up yeah i think you know we touch base on a lot of good topics absolutely i think the only thing that really comes to mind you know is you know the thought of does my lender and does my realtor work together and should they work together or how do they work together and you know as you can see you know yes william and i work together you know in harmony right and not all of us do okay not not all realtors and mortgage brokers are going to work together smoothly it could have forced to eventually once you're in contract right but really you want to have rapport and relationship and you it's ideal when we know like and trust each other to make this an efficient process right having a strong connection between your lender and realtor as they communicate clearly and frequently with one another helping you feel peace of mind it's an absolute must yeah i totally agree with that on in terms of like if you go with the bigger banks with quicken loans yes they again they have the product that is going to be probably the very low interest rate and all of these like other great things and that's great but if i can't talk to them and it's really hard to get a hold of them to get a free approval letter then it becomes extremely hard for me to like make sure that the you stay in contract and you actually get that home especially if anything comes up with underwriting that's when like when you're thinking about building this team essentially like the lender realtor yeah and just everything that kind of goes along with that it's one of those things where you want to have a good team that works together because you've probably been on teams where there's no good teamwork and it causes things that could have been fixed to not be fixed and cause major issues so absolutely you know and and on and sometimes you know it leads to a failed transaction right and when a transaction fails i mean it's devastating right because the client feels let down you know they're out of pocket a good amount of money right depending upon how far you've made it you know through inspections and appraisal you know you could be out a few hundred to a few thousand right so not only are you buying you know a loan and the service that comes with that but you're also there's so many factors in this industry based on economic events right you're also buying the execution and a successful closing of your home right and just so one of those things that it depends kind of on the situation but sometimes i've heard some horror stories where like let's say that the lender doesn't close on the right date every day you don't close which means that you complete the transaction you get your keys every day you don't close you could potentially be losing two to five hundred dollars a day so it's really critical to be like oh if there's an issue then we fix it now and not have to then have to pay the seller that fee every single day just to make sure that you complete that that transaction like yeah yeah yeah there's a lot of lenders out there there's a lot of realtors out there some are excellent some are not unfortunately and you know the great ones distinguish themselves very clearly with the ability of having genuine care and being knowledgeable and being reliable and that's exactly what william and i are here to do is there anything else you want to add on to that or if you like that i think yeah no i think we touched all of it you know really the goal of having a great lender and an awesome realtor you know is to help you understand all the factors at play and really help evaluate the best loan options and home purchased scenarios that really fit your lifestyle you know we'll ask the right questions to really get to know you make sure that we're able to help you get exactly where it is you want to be yeah i totally agree well dylan tell me a little bit more about how someone can find you reach you and i'll make sure to like add and contact information either below above somewhere but tell us where we can find you seven days a week before and after hours weekends are great too you know i know a lot of people are available on the weekends more in the weekdays we all work we all got a job we have family life kids you can reach me you know my cell phone call or text is wonderful or by email as well and i'm sure we'll have that linked in the descriptions somewhere in here and uh my phone number is 503

is definitely the best way to get a hold of me okay awesome well thank you very much for your time i appreciate it and we will hopefully see you back on to explain a bunch of the terms and uh get to know you a little bit better there's a lot of terminology and vocabulary and i'm excited to share that alrighty bye so much gratitude thank you