And... if you need a Realtor to assist in finding and purchasing a home, be sure to give Owen or JoAnn "Your Memphis Agent" a call. Office 901-260-4780, Owen 901-359-3093, JoAnn 901-359-3095/
From loan approval... to finding a home... to a successful closing, we have it covered.
We look forward to helping you find and finance your dream home!
Have you ever wondered why some homeowners default on their mortgage? Perhaps it’s from job loss, a death in the family, or other tragic circumstances. However, I have experienced as a lender that some homeowners default on their mortgage because they were not educated on the front end of the financial requirements and impacts of owning a home. Oftentimes, lenders will pre-approve a buyer for x amount, but the buyer will not understand their total monthly payment. The lender will use words and phrases like “you can afford x sales price”, “your gross income supports x purchase price”, and “your lack of debt allows you to purchase more”. These phrases can be misleading to a buyer because the lender will end up not explaining the total monthly payments on the front end and the financial requirements of the mortgage.
Home ownership requires a large commitment from the buyer. Proper education and understanding between the lender and buyer should be created before that commitment is in place. Prior to accepting a contract, it is imperative, particularly to first time home buyers, that there is an explicit understanding of the financial impact of a mortgage and home ownership. Guidance and budgeting are part of the equation. Because gross income is used to calculate a mortgage approval amount, buyers need to know on the front end their monthly mortgage payment. This is to ensure they are committed and able to afford that monthly payment once they close.
Mortgage programs for the most part have evolved back into the fixed rate era, eliminating the guess as to what one’s payment will be once the reset date has hit. (ARMs are still available but offered only to those with some financial sophistication.) With rates at historical lows, the opportunity to borrow ‘cheap money’ is still at hand. As enticing as this sounds, a loan is a loan and a borrower must demonstrate their preparedness to meet the debt obligation regardless of how low the monthly payment or rate is.
With this is mind, I would encourage all lenders to take the extra step to meet face to face with a client. It is at this time that the customer relationship building begins and the introduction of the loan process is explained with a real hand shake and not an email.
Despite new rules and regulations, the lending community as a whole has an obligation to reach out and meet new home buyers and go beyond what the CFPB requires. Questions and concerns are to be answered sooner (pre-contract, pre-house shopping explorations) rather than later. Once that has happened, the home buying experience can be just what it is supposed to be: fun, exciting, and fulfilling.
I am committed to meeting each client and educating them on their financial decision, whether it be in 30 days or in 3 years. I owe it to the industry but most importantly, I owe it to my community.
