Pros & Cons of Living in A Neighborhood with an HOA
St. Louis, MO – January 31st, 2023 – When finding your[...]
St. Louis – October 14th, 2021 – Gershman Mortgage is excited to be celebrating Financial Planning Month! Whether you are thinking about purchase or refinancing a home, financial planning is a critical component of homeownership. But it can tough to know where to start with financial planning.
Don’t sweat- Gershman Mortgage has you covered with a financial planning Q&A with Chelsey Sullivan, Vice President and Loan Officer at our Chesterfield, Missouri office.
Q: What can you as a Loan Officer provide first time borrowers who may not have much knowledge on the financial aspect of owning a home?
A [Chelsey Sullivan]: One thing I feel very passionate about is educating home buyers, especially those doing it for their first time. There are many financial aspects to consider when buying a home. It’s much more than just getting preapproved.
I see it all too often in the industry that when a prospective buyer is ready to purchase a home, they think they just need to get a “preapproval letter.”
What I can offer is a more all-inclusive home buyer consultation that will break down the different steps in the home buying and mortgage approval process so that first time home buyers go into the process better informed, which can take away a lot of the stressors that come along with home buying.
Things I discuss with first time home buyers include understanding what one’s budget would be for their mortgage payment, then helping them back that into what their range should be. It’s also important to understand the different loan types and the benefits to each of them, as well as understanding closing costs and helping to create a game plan for those.
Additionally, I discuss things they will encounter along the way and help them understand what they should keep in mind after they purchase too. This would include things like, getting a home inspection, understanding their escrow account, keeping money in reserves for regular maintenance and future repairs.
As I mentioned before, there are several financial aspects to consider before buying and I feel that the more prepared we make our first home buyers, the better experience they will have.
Q: What would you recommend a borrower does if they suddenly lose their job and cannot afford a mortgage payment?
A: The first thing they should do, would be to call their mortgage servicer and explain the situation and see what options they have for them. The likely answer would be some sort of Loan Modification or possibly a Forbearance, which would give them reprieve until they are back on their feet.
The better option would be to prepare for the possibility of this happening ahead of time and have 3-6 months of their living expenses saved up prior to closing on a home. This way, in the event of a devasting sudden job loss they have the means necessary to pay the mortgage payment for a few months while they find a new job.
Q: Based on the loan program that a borrower qualifies for; how much money would you recommend they have ready as a down payment?
A: There are programs that require little to no money down, but I think it’s extremely important to have at least 3-5% saved up so in the event the programs change, or they wind up losing a credit of some sort, they have something to pull from. If they are lucky enough to get into the home with little to no money down, then they have reserves for future repairs or hardships.
Q: How much does a credit score affect the chances of a borrower in the mortgage process, from getting preapproved to financing and interest rate?
A: Credit Score holds a lot of weight. There are minimum credit scores for each loan type and your credit score does directly impact your interest rate. The higher the credit, the better terms you will be able to secure which will help you pay less overtime.
Q: What is the different between a fixed rate and an adjustable-rate mortgage? How do Loan Officers assess if borrowers are better suited for one verse the other?
A: The difference between a fixed rate and an adjustable rate is that a fixed rate is one that cannot change during your loan term. On the flip side, with an adjustable rate mortgage, the rate can adjust during the loan term which could cause your monthly payment to change. Typically, an adjustable rate is “fixed” for a certain number of years in the beginning of the mortgage term. Three, five, and seven-year adjustable rate mortgages are the most popular. After the initial term, the rate can adjust a certain percent over and above the current rate.
The main factor loan officers use to assess which is better suited for clients, is the current market rate and how long you plan to be in a home.
Q: What are the major do’s/don’ts once you have applied for a mortgage loan?
Interested in talking with Chelsey Sullivan about your homeownership dream? Contact Chelsey today!
About Gershman: Communities, families, and homes are at the heart of what we do at Gershman Mortgage. Our founding principles are based on the core values of honesty, integrity, the entrepreneurial spirit, and putting our customers first. We are passionate and committed to customer service and strive to ensure that we exceed the expectations of our customers. We are a customer-centric company devoted to creating and maintaining long-lasting relationships.
NMLS #138063 16253 Swingley Ridge Road Suite 400 Chesterfield, MO 63017 (800) 457-2357 Equal Housing Lender.