This is the seventh of ten articles set to run in the Minnesota Spokesman-Recorder between April-June 2023.
As we continue our series of articles on the successful pursuit of homeownership, we’d be remiss if we didn’t discuss what to look for in a lender. These professionals have an important role to play in advancing homeownership equity, and you need to make sure the lender you choose to work with will take the time to accommodate your unique needs. This is especially true when it comes to utilizing special programs such as first-time buyer financing and down payment assistance.
The fact is most loan officers are paid on commission. That is, they make more money by successfully closing more loans. Just as there are myths around homeownership that cause people to believe its simply not achievable for them, there are myths in the mortgage industry around working with lower income buyers using FHA financing or down payment assistance that cause some loan officers to believe such transactions are risky. The Minnesota Homeownership Center and the Homeownership Opportunity Alliance are working with the state’s lender professional organizations to dispel these myths, which are listed below so you know what to look for as you talk to mortgage lender professionals:
MYTH: Transactions using down payment assistance are less likely to close successfully.
FACT: There’s no difference in the closing rate between transactions using down payment assistance and those not using this resource.
MYTH: Processing transactions using down payment assistance takes too much time and effort.
FACT: Teams with the expertise onboard to quickly and efficiently process down payment assistance transactions have a larger and growing pool of potential business to draw from. Down payment assistance is becoming more and more common in transactions due to rising home prices and interest rates.
MYTH: You can’t use more than one down payment assistance program in a single transaction.
FACT: Many down payment assistance programs can be combined, or layered, in a single transaction. Guidelines around this vary from program to program, and from institution to institution.
MYTH: Working with lower-income households lowers my annual earnings.
FACT: Since lower-income households are one of the fastest-growing segments of the homebuyer market, there’s more business available at this level than any other. More transactions equal higher income.
MYTH: Transactions using government loans such as FHA or VA are riskier for sellers than conventionally financed transactions.
FACT: Buyers approved for government loans are no riskier than those using conventional financing. Government loans do require a more stringent property appraisal process than conventional loans, but the required fixes to complete the sale are not likely to derail the transaction. Additionally, from a practical standpoint, government loan buyers are a fast-growing segment of the market, and strong growth will likely continue as rising home prices and interest rates attract more and more buyers looking for a down payment they can afford.
As you can see, in order to ensure your own success in the homebuying process, it’s important to enlist the services of a lender who specializes in this important work. The good news is there’s lots of them out there!
To assist your search even more, we asked several local lending representatives active in the Homeownership Opportunity Alliance for their best pieces of advice. Here’s what they had to say:
“Anyone looking toward homeownership and who has questions, doubts or just need help on where to start, should reach out to a local housing non-profit agency. There is a large network of organizations that specialize in helping people create a path to homeownership. Many of these services come at no cost to the buyer and provide education and resources that will demystify the process and help make their homeownership dreams a reality.”
— Brian Crosby, VP Community Accountability Officer, Associated Bank
“Just get started and take that first step. Talk to a homeownership advisor. Attend a homebuying class. Meet with a lender. Learn ‘where you are’ so you know what you need to do to get where you need to be. You may be surprised to learn you are already there! Homeownership Is Within Reach!”
— Tiffany Phillips, Mortgage Community Development Loan Officer, Bell Bank Mortgage
“Buy the home you can AFFORD. Sit down with a homeownership advisor. Take a class. Sit down with a lender and do a consultation. Learn about your options (FHA; conventional; etc…). And there’s no such thing as a closing with no money brought to the table. Even with down payment assistance, there are still other costs such as prepaid escrow and title fees that need to be accounted for. Most important, you should never settle for a ‘fast no.’ There are lots of lenders willing to work with you as you work to get to ‘yes,’ no matter how long it takes.”
— Trent Bowman, VP Community Impact Manager, Bremer Mortgage
As you can see, each of these lenders lists working with a homeownership advisor and taking a homeownership education class as critical components for success. You can find advisors and classes for yourself at HOCMN.org.
Homeownership is possible. We can show you how.
For more information on the Minnesota Homeownership Center and its advisor and education services, visit www.HOCMN.org.