Getting A Mortgage These Days May Boil Down To Education


Times have changed when it comes to the home buying process.

The age-old way of buying a first-time home, or even a larger home was to save to have 20% down and sign on to a 30-year-mortgage.

Other parts of the equation included maintaining a high credit score and paying off debts so you could get a good rate.  

But now some people are finding they need to be re-educated about the process of home buying in their search for the best home and the best price.

Elizabeth Rose is with Mortgage 300 in Dallas, TX and says even though interest rates have gone up and will continue to, home ownership is still something to strive for.

“Home ownership is still a great, great thing” Rose said. “It is a hedge against inflation, historically it shows the most consistent opportunity to build wealth. The barriers to entry may not be as difficult as you think, and you don’t know till you talk to somebody.”

Rose added knowing who to talk to can be key to getting on the path to home ownership.

“Part of it is maybe lack of information,” said Rose. “Or specific information about their specific situation. There are still a lot of misconceptions no matter how much people in my industry try to share the reality.”

She added the old way is just that, old.

“A lot of people believe they have to have 20% down,” Rose said. “They may have had their parents or grandparents saying, ‘No, you have to do it this way.’ And they are wanting to save that 20%. You and I know it can take a long time to save that kind of money.”

Rose added waiting can cost you in the short term and in the long term.

“Where they could have bought last year for 3% or 5% down, but they are saving for that 20%,” she said. “In the DFW area from December 2020 to December 2021, our houses have gone up 26%. So now, that house that would have cost them 300k would now cost 350k. This is going to cost them more in down payment dollars, they have lost a whole year of opportunity where they could have benefitted from that price appreciation. But instead, they were waiting because Mom and Dad, or someone was telling them they had to have 20% down.”

Shannon Volkodov is an Atlanta area real estate agent with Virtual Properties Realty and feels it is not only beneficial to be creative with lending, but also to be flexible in making offers.

“It has been surprising to me to realize how many buyers don’t understand the buying process and sellers who don’t understand the selling process,” Volkodov said. “Every real estate transaction is unique, so it is really matching the needs of both to maximize the opportunity for a successful real estate transaction.”

She said there are a few ways to make offers seem more appealing to both buyers and sellers, especially in flexibility.

“Every seller has different priorities,” Volkodov said. “Some sellers may need more time in their home. So, it may be important to have a temporary occupancy agreement. I also find that adding appraisal gap coverage is helpful because it guarantees to the seller a sale price higher than the appraised value. Buyers can also offer option money to sweeten their offer to the seller. Option money is attractive because option money is theirs to keep where the transaction makes it to the closing table or not.”

Both Rose and Volkodov agree that planning and educating yourself can be crucial in buying a home, whether you are a first-time buyer, or just have not bought a home in several years.

Things change and education changes as well.

“If you are looking to buy a home in the future,” Volkodov said. “Start talking to a lender now. A good lender can be extremely beneficial to someone who wants to buy a home, but they are not quite ready. They can help you figure out exactly what you need to do and come up with a plan.”

Volkodov points out that a lot of people, especially after the pandemic period, have credit issues.

“There is information lenders can provide clients to help them,” she said. “Not only can they offer information to help you build a game plan, but many lenders also offer credit repair programs to help get buyers where they need to be so that, one day, they can purchase a home.”

Volkodov added it is as crucial to be educated as a seller as it is to be educated as a buyer.

“Sometimes, you have to have hard conversations with sellers,” she said. “A lot of sellers have dollar signs in their eyes right now. They keep hearing that properties are selling for tens of thousands of dollars over list price. But, they fail to understand that there are many factors involved in that. These include the price point of the home and the location. Some markets are like that, other markets, not so much.”

She said it is not always easy to explain to a seller their property is not as valuable as they think it is and overpricing a property, be it residential or even commercial, can be the kiss of death.

“Buyers are already frustrated,” she said. “Many buyers over the past year have made offer after offer on home after home. So, when they see a home overpriced from the start, it can really upset them.”

Volkodov advises that when dealing with real estate, never act alone. Do not sell alone and do not buy alone.

“It is important to understand that a listing agent represents the seller,” Volkodov said. “The loyalty is always to going to be to the seller.”

For the buyer, there are dedicated realtors.

“An experienced, qualified, dedicated realtor is going to help ensure a buyer makes a good investment and the property they buy is going to meet their needs,” she said. “A realtor can also protect a buyer from paying too much for a property.”

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