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When you’re buying a house, there is a ton of paperwork and terminology thrown at you. 

Today we’re going to decipher and explain all the essentials you need to know to get a great deal on your mortgage! 

Getting a Great Mortgage When Buying a House

Even if you’re excited and ready to buy a house, it can still be stressful.

Last week I mentioned that my mom is moving into the Raleigh area after getting a job offer.

She’s getting all that paperwork done for work and keeping her current home in tiptop shape since it’s on the market to sell.

And whenever she’s in town to take care of her work stuff, we’re also driving around looking at places and neighborhoods.

Being with her reminds me of our own house hunt and I remember how at times things seemed overwhelming.

Buying a home is a huge purchase and while you’re trying to make sure it’s the right fit for you, you’re also sorting through all this paperwork.

When you’re getting a mortgage, your lender is combing through your finances and it feels like they request every scrap of information they can get.

And then when you do find a home, you make the offer – hopefully they accept. You have a home inspection, have the house appraised, and get paperwork like title insurance done.

It’s a lot.

And the first time around, we knew we paid a fair price, but we were a little lost.

The second time, though, we felt confident about buying the house.

One part that made a huge difference for us was getting our loan officer to walk us through.

Having your loan officer in your corner, along with a great agent makes the process enjoyable and rewarding.

We’re so grateful to have had that.

And I want you to feel the same way.

So if you’re in the market to buy or you know in the future you’d want to buy a home, I think you’ll enjoy this episode.

I’m sharing one of my favorite interviews on the topic, my chat with Wendy Dawson. She's the Vice President of Mortgage Lending at Coastal.

In this episode we’ll discuss:

  • What you need to keep in mind about mortgages
  • All the fees and expenses that typically come with buying a house – its more than just the down payment
  • How to decipher the paperwork

I want you to feel comfortable and confident you’re getting a great deal with your mortgage.

I hope you enjoy!

Resources on Getting a Great Deal on Your Mortgage

If you’re looking to buy, here are some resources to help you find a great deal with your mortgage

If you’d like to chat about your money moves for this year, you can join us in the Thriving Families Facebook community. We're a fun and supportive group.

We swap ideas, questions, stories, advice. When we try to help one another out with our family and financial goals.

We'd love to see you there!

Thank You to Our Sponsor Coastal!

Learn more about our sponsor coastal credit union

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

See how Coastal can help you with your mortgage needs!

Common Mistakes Home Buyers Make

Elle Martinez: With your experience of 20 plus years with mortgages and lending, what mistakes have you seen first-time homebuyers make when they're making a purchase?

Wendy Dawson: I think the biggest…I hate to call it a mistake… or maybe it's more of a misstep is not asking the right question. Doing your homework. You know, the whole thing as far as if you fail to plan, plan to fail.

I think that one of the big things that's coming about and I think recognizes what the CFP, that's the Consumer Financial Protection Bureau is the know before you owe. And that just resonates with asking the right questions.

Ask about the kind of car, what kind of fees they would be looking at the time of closing.

Ask for a good faith estimate. You know, there's nothing wrong with inquiring. Also know your lender beforehand.

A lot of people go out looking, you houses, you driving around and all of a sudden you find something. Maybe you get to book time to go and look at a property and you've never even been pre-qualified or pre-approved.

Build that relationship for an interview that loan officer so know before you owe.

There are many layers to that. That loan officer, if they're doing your fiduciary responsibility, you're gonna go through the scenarios and they're also going to look at and ask the questions or help them frame or get to those questions.

What's your disposable income? What's their comfort level in spending and what are the thing or what are they currently paying in rent? And is this a comfort level for them so they can back into that? No.

Because a lot of young couples, especially first time homebuyers, they don't realize there are gonna be some additional fees once that loan is closed.

Like you can't call a landlord when the plumbing issues, no creative sell that is on you. But make sure you've got some reserves to know before you owe and ask the right questions.

And there's not a question out there that is the wrong question. Sometimes the concepts can be very intimidating.

Interview your loan officer and develop that relationship so that, you know, before you owe. And they will kind of craft it and frame it on. You know, they might even give you some direction on real estate agent.

I often encourage that with first-time homebuyers having an exclusive buyer's agent, somebody that's going to be looking out for your interest.

North Carolina, you know. Yes. And an agent can carry you a dual agency. But I really personally, I encourage buyer's agent.

Finding the Best Lender for You

Elle Martinez: How would a couple find a lender like where should they start off when they are looking at possible lenders?

Wendy Dawson: You know, one thing to do is look at your own personal financing. What do you do your duty as far as your banking went, whether that's your credit union or community bank?

Go in and ask the questions they'll list. All of them are going to have financial advisors or mortgage lenders on staff there.

Elle Martinez: Now, I also wanted to know you mentioned some other costs that maybe as a home owner are different than renters. Any other expenses that maybe homebuyers need to plan and save for?

Wendy Dawson: One of the things that we can do once you've found the lender that you resonate with.

You've got to level with them and they're giving you what they call a good faith estimate. And they've gone through the fees for summaries and they can give you that snapshot of what you're going to be expected to pay at closing.

The Day to Day Costs of Buying a House

Wendy Dawson: OK, but then there's the next step and that's the after what I call the after-party when they get into the home.

They forget sometimes that there are things like they're internal and external furnishings. They thought where you place some of their furnishings and so forth. But they're going to be, of course, moving cost-utility, set up a lawnmower.

You may have to have there are some other additional expenses. And so they really kind of need to look at their reserve.

That's why when the lender is going through the summary and preapproval, they'll ask them to make sure that they have a few month reserves on hand for the credit qualify, but they need to have money available outside that as well, because for repairs there are a lot of layers to the the the the actual equation here than just a snapshot of how much the property coffee and what the walk in the door fee.

Elle Martinez: I remember when we were buying our home, we had looked at the numbers ourselves because we wanted to know about how much we could qualify.

One of the lenders, they gave us a completely different number. Basically, we could afford a house, but we couldn't do anything else besides that.

What considerations would you advise a couple when they are trying to run the numbers themselves before they, you know, talk to a lender?

Wendy Dawson: You know, one of the things that I mentioned, the CFPB, the Consumer Financial Protection Bureau. They have a website as well.

No one thinks they you can go on that Web site and you can actually go through and they'll give you the tool and it's for artificial intelligence.

And now, you know, you can play with it and you put in the mouse and you put in your dad and you put away the cute shot. It's on online. You can find what rate you're going. It's all over the media.

So they can kind of play and see what kind of payment they seem to feel comfortable with and cross-check their kind of do their own QC on their lender of choice.

The other thing that I think those a tool that they need. But the other the other flipside of that is that when you block interview your lender, it's great to start your own community bank or your credit union, but shop your lender, OK?

Mortgage bankers. I would definitely think that's a great way to start with. One where you keep your personal savings checking relationship. Definitely take that scenario and shop at Coastal.

We encourage shop. We want what's best for our members and we feel like what's good for our members. OK. It's good for coastal.

We believe in these new disclosures when you can your requirements and the other changes, the rest on the teller. You know, they're going to improve the transparency in getting the mortgage.

I think it empowers the borrower, especially in homeownership. So we encourage that. I think one of the things you'll find with our biggest partners and also I want to believe that other lenders out there, too, will do the same thing.

That means discussing the changes, going through the scenarios, looking at all the options out there for the first-time homebuyer.

If they've got an array of products and incentives out there from the mortgage credit certificates to the 100 percent. Give me a hundred percent financing. We've even got some debts and DPA down payment assistance.

There are a lot of programs out there embracing, you know, first-time homebuyers and encouraging them. So just ask the right question and not be afraid to ask this question because I am telling you, they go into.

I can give an example where one of our members came into one of our branch services and asked one of our member services about, you know, I've been renter for several years and I know probably I won't be able to afford a home.

And I probably a silly question, but any chance I could maybe talk one and talk to one of your mortgage representatives or make an appointment and within two minutes.


One of our business development ran across the hall into the lobby. Sit down.

We'll do that without putting your money because you give them the time they need it. And I think it was in a comfortable setting and they didn't feel intimidated in asking the kind of question. It's you're creating an atmosphere.

Proud to say that working on the home today, which is great, could have the.

Mortgage Jargon: Interest Rate, APR, and APY

Elle Martinez: Now, I know like first time home homebuyers, but even those that maybe already have purchased a home when they get there thinking about selling or buying a new one. A lot of them are thrown off by the jargon.

They're not familiar with what they hear and saying I seen when you're looking at the interest rates and rates period, you see two numbers, you'll see the interest rate and then you see why PR could explain the difference between the two.

Wendy Dawson: Yes, I know a lot of times that acronym leaking the acronym you to death in this world. But it's the APRA is the annual percentage rate OK, versus the interest rate? Those are two different things.

OK, it's very simple, really. The AP or it just includes any and all additional costs associated with the transaction. It's really relative. It is the truth in lending. We can give you an Easter break and then we look at all of these that we know you're going to incur with this loan. And then what we have to do is we have to add those fees up and translate it, convert it to a factor. And over the term of the loan that the borrowers choosing. So what is the rate that you're realizing over 360? That's your API.

That truth in lending. So one of the things that we always this is not isolated to first time homebuyer. We encourage this. We want people to ask about the EPR, because that tells the real story. That tells you what you're really paying.

There are a lot of rates out there that are extremely low and you're going to want that three-point two rate. But the AP on that is four and a quarter. It's because they're a discount point that origination fees that are associated with that low rate. So it goes back to you now know, before you go and ask the question. Compare the rates, compare the summary.

Elle Martinez: Think that was a big hang up when we started. I remember asking my husband, did he know the difference? And that had thrown us for a loop because sometimes, like you mentioned, you might have a big difference in the interest rates and you're wondering why ones lower. But when you look at the AP. That makes more sense.

Wendy Dawson: Exactly, it does. And, you know, you have to make an informed decision not to do that.

You make sure that your loan officer is giving you information for you to do that. And you might entertain the lower rate, compare them to the higher one because and then compare the APRA and see what you maximize the return.

Yes, it may save you 60 to 70 dollars a month. OK. Depending on the rate differential. But then what did you pay for that rate?

How long did it take you to maximize the return on that upfront cash to buy that rate down?

Origination Fee and Discount Points

Elle Martinez: Another one. Origination and points because usually right next to each other.

Could you explain how that works? Because I think a lot of people are kind of confused on that to me now and then.

Wendy Dawson: That's a good point. It's part of the origination fee. It's just about it. OK. That is the lender. See, there's no getting around that. That's what a lender determines, what that will be.

Now understand and discount point a pre-paid interest, OK? Sometimes they can run hand-in-hand because the way the interest rates are tiered in the market with the buy prices, they can operate.

I'm sure you've probably seen this. We're gonna give you three in 70, 30 year fixed money with zero origination, zero discount point or they've just basically that's just called premium pricing, the rate they're bumping your rate up to absorb the origination fee and any discount point, any pre-paid interest they had to basically pay or whatever the price is on that. OK. So a lot of it just depends.

They'll differentiate, you know, origination fee and discount point and sometimes they run hand-in-hand.

Elle Martinez: Ok. Thank you. Definitely. I know a lot of people they're kind of nervous to ask because they they feel now, you know, I'm making this big purchase. Maybe they don't think I'm ready for it. But as you pointed out, knowing before you owe something for 15, 30 years is important.

Wendy Dawson: But it is and it really is. And they need it. And then if I go back there, you know, it'll be your loan officer.

You're going to interview a real estate agent, interview your loan off the debt, make sure that they are going to at least encourage you or prompt you and guide you, navigate you to ask those questions.

The first thing I advise on a first-time homebuyer or really any homebuyer, they may have missed it the first time. They didn't know the question to ask.

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Music Credit

Like the music in this episode? Our theme song is by Gentle Regime. Additional music by Lee Rosevere.

this episode was originally released

About Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..