Everwise Podcast: Homeownership in Today's Market

Jeremy Riffle: Hello and welcome to the Everwise podcast. At Everwise, we believe in putting people in control of their financial futures, and this series is designed to offer the tips and insights you need to feel confident in your financial decisions and in the people helping you make them. We're here with Jeff Ohman, a mortgage sales manager in Indianapolis. Hi, Jeff, thanks for joining us. Let's talk about mortgages a little bit. More specifically, people who are thinking about if now is the right time to buy a house, what should they be aware of as far as the initial first steps to kick off the process? Talk a little bit about sort of Mortgage 101, if you will. But to start us off, why don't you tell us a little bit about what the current housing market looks like from a general standpoint?

Jeff Oman: Sure. And thank you for having me and look forward to the conversation. As far as the current market, it's definitely been a challenging market. We've had a drastic increase in rates over a relatively short period of time - last 12 to 15 months - so that's been a challenge to deal with. But people are still buying. People are still refinancing. And I think it's important to really kind of take a personal inventory on what your current situation is, and then that will help kind of lay out the steps on maybe what that next step is going to be for you. Is it a good time to buy or not? But taking that personal inventory is going to help with that decision.

Jeremy Riffle: Okay. So, take us through this. Let's start with that. What should someone do when thinking about buying a home? So, they're wondering if now is the right time for them. What do they need to be thinking of as initial first steps?

Jeff Oman: Sure. Well, let's kind of talk about and look at first-time home buyers. And we can focus on, let's say, renters right now, because even though they are paying a monthly rental amount, the market is drastically different now than what it was a year or two ago. And that difference in interest rate is going to drastically impact what their monthly payment is going to be. So, what I would sort out is what do you think your budget is going to be, and do you have an idea of what you're going to be okay with for a mortgage payment? Do you want that comparable to your current rent payment? And kind of sorting out some of those questions. If you own a current home, then you're going to really want to think about, “Do I need to sell this house first before I buy a new one? Can I withstand two mortgage payments at the same time if I have to?” And those are some different questions you're going to have to answer yourself whether you currently own a home or you're renting.

Jeremy Riffle: And so, let's say you decide that it's time now, we should do this. What are some of the things that you need to get started? You know, how do you decide what best fits your budget? Tell us a little bit about pre-approvals versus pre-qualifications. Take us through some of those initial steps.

Jeff Oman: There are differences to each one of those. The similarities are credit will be pulled and an application will be done. Income/asset information will be reviewed. So, that loan officer that you're working with can give you a very good idea of what this picture is going to look like for you, not only payment wise, but interest rate and what type of programs that would be available to you. So, getting that pre-approval/pre qualification done is very important. But also keep in mind those run on time cycles. So, if you know you're not going to buy a property for 12 months or 15 months, if you know what your financial situation looks like and you have a good picture of that, you may want to hold off on doing that approval until you get closer to that time frame when you are serious about making an offer on a property.

Jeremy Riffle: Okay, so if I go through the pre-approval process, say, in January, but I know that I'm not going to buy until September, it would be 90 days from when that pre-approval gets run. Correct?

Jeff Oman: Correct. Pre-approvals, pre-qualifications. They run in 90-day cycles. And once that 90 days is up, if you haven't closed on a new property then what would happen is a new credit report would be pulled. Another evaluation would be done just to verify that there weren't any major changes in that profile. And then you'd be issued another pre-approval letter and then you have another 90 days.

Jeremy Riffle: Okay. And, Jeff, one more thing that people will want to consider as an initial step to buying a home is the question of a realtor. Do you use one? Do you not? How would you find one? Can you tell us a little bit about that whole process?

Jeff Oman: Sure, yeah. You always have your option open to you to use a realtor. I would start with friends and family and asking for, or at least using them, as a starting point to get a referral to talk to a realtor. And I would literally have an interview with 2 or 3 different realtors and just see what their different approaches are in helping you find that property, because you're going to be working with this person quite extensively, so you're going to want to have that rapport and that good relationship with them while they're helping you find your property.

Jeremy Riffle: Well, great. Thanks, Jeff. That's very helpful. I think that this is good information for people who are thinking about whether or not it's the right time to buy a house. Do you have anything else to add?

Jeff Oman: No. I just appreciate your time. Looking forward to doing the next one. And if anybody has any questions or like to research any further information, visit our website at everwisecu.com.

Jeremy Riffle: Thank you, Jeff. We appreciate it.