Prakash Chandran (Host): If you're considering buying a home in today's market, there are a lot of things to consider. After the whirlwind of activity that defined the housing market during the early parts of the pandemic, mortgage rates have increased, creating a slowdown in demand. That might give home buyers some of their negotiation power back. But before anyone jumps in, it's always best to understand all the variables with a professional. We're going to talk about it today with Alyssa Brown. She's a mortgage loan officer at Heritage Federal Credit. This is Talking Cents with Heritage, I'm your host, Prakash Chandran.

Host: So Alyssa, thank you so much for joining us today. I truly appreciate your time. So, there's a lot of questions to ask here, but I thought I would start with the people that are thinking about buying a home. So, the question is, what really is the first step when people decide that they want to buy a home? Should they get pre-qualified first? Should they start looking for houses first? What do you advise?

Alyssa Brown: Well, thank you for having me. One of the first steps is definitely getting with one of our local loan officers. If you're a member here at Heritage, I recommend walking into the branch or even calling, and we can set up an appointment. A lot of the times we can do everything over the phone as well, so whatever is your personal preference. But getting pre-qualified is going to allow you to create a budget for the home that you want and then, in turn, see what product you actually qualify for or what product you think you might qualify for, if we can fit you in something else that fits you. Ask those questions to your loan officer and go from there.

Host: Yeah, that makes a lot of sense. And I actually think, especially for first-time home buyers, they might not even know about the dynamics of a mortgage and about interest rates and even qualification. So, could you just like broadly explain that world for us?

Alyssa Brown: Oh yeah, absolutely. So, there are many different types of products that an individual could qualify for. And I think starting with that first step, as we talked, about getting pre-qualified, you can go over the different products that you could fit, that could fit you. So, a lot of people don't even know if they could qualify for a mortgage or maybe they're renting and, you know, maybe they don't make enough money or their credit isn't good enough. At Heritage, we offer a 100% financing for first-time home buyers, down payments as low as 3%. We also offer FHA, VA loans, USDA loans and renovation and construction as well. But overall, getting into that product that fits you best for your down payment and what assets you have available for that I think is one of the most important things.

Host: Totally. And in addition to that, one of the things that I was reading is you basically offer courses or informational courses for buyers to learn a little bit more about the buying experience. Is this something you can speak to?

Alyssa Brown: Right. And especially for first-time home buyers, we normally have like two first-time home buyer seminars a year and a couple construction seminars as well. But those first time home buyer seminars, like I've been doing this for two and a half years now, and the first one I went to, I learned more in that seminar than I did my first two weeks of just training to originate mortgages. So, we have like a title company there, an appraiser there, a realtor there and a home inspector and then, obviously, a loan originator as well, like somebody like me or one of my coworkers. And we go through the entire process from start to finish. It's free to sign up and you get a free appraisal if you go.

Host: So, you're saying anyone can come to that, anyone in the community can join that?

Alyssa Brown: Yes, absolutely. We share it on social media and they send an email, I believe, out to all of our members as well. But we share it on social media too. We usually have some free food there as well, so...

Host: There you go. Well, one of the things that I also wanted to focus on was the qualification process. I think this is something that I know confuses people sometimes, like what actually goes into qualification. So, is this something that you might be able to unpack for us a little bit?

Alyssa Brown: Every single person is different. There's always gray area when you're working with credit and your debt-to-income ratio, so what you owe like credit cards and car loans versus what you make. A lot of people don't even understand exactly. They're like, "Well, I pay my car insurance or I pay this." And even breaking that down further, when you're doing a mortgage qualification, it's really what's on your credit report. So, that's what we base that qualification off of, is that debt-to-income ratio off of your liabilities on the credit report, which again is like credit cards or car loans or student loans, something like that in combination with your credit score and overall income. And we can use other things as well to qualify, which a lot of people don't know, rental history. If you don't really have that much credit, having like 12 months of rental history, paying like a water bill or utility bill for over 12 months, we can use those types of things to actually create more credit for that buyer to get them into the house they want.

Host: Yeah. That's so cool that there are so many different things that can potentially be used to show history, history of worthiness for a loan or a mortgage. One of the things I wanted to ask about was PMI. And I know you have a lot of different products, some don't require you to put that full 20% down. And I know that factors into PMI sometimes. Can you talk broadly about what PMI is and how it affects a mortgage?

Alyssa Brown: Yeah, sure. This is a huge question, and this could be somebody that's bought a home like two or three times and they still don't really understand what PMI is, they just know that they've always had to pay it. And actually, a lot of people that I talk to, whenever I explain it, the acronym stands for private mortgage insurance. So, all this is is the type of insurance that protects the lender if that buyer stops making their payments. So if you don't put at least 20% down on the purchase price of the home, then the lender will take out private mortgage insurance on your loan to protect them as well, because they're allowing you or we're lending to you over 80% loan to value on that home. So, it's a higher risk for us if the property value were to depreciate because of X, Y, Z. So, that's basically all that it is. There's different ways that it can be removed. And, on a conventional loan, it will actually come off when you pay it down 20% as well. So, that's pretty much PMI in a nutshell. And at the credit union, we tend to have a lot lower rates for PMI than other bigger financial institutions as well.

Host: Yeah, that makes a lot of sense. So simply said, like if you can't afford to do 20%, and especially in this market, it's really hard to do that, there are other options. PMI is kind of insurance and that fluctuates depending on the type of product that you get, but your rates are traditionally lower, and it's definitely something that you can help evaluate with them, right?

Alyssa Brown: Absolutely. Yeah, for sure.

Host: Great. So, for someone that is considering buying a home for the first time, as we're discussing, there are so many variables, so many moving parts, so many things to understand. Do you have a set of tips that you might share with the audience to help them get started?

Alyssa Brown: Overall, I'd just say meeting with a loan officer that fits you is the most important. You want to have somebody you're comfortable with and that you can ask those questions with. And I've had so many conversations with members who have had conversations with someone they just didn't vibe with, you know, so they didn't feel comfortable asking those questions. I think that's the most important, because they are the ones you can rely on to hold your hand through that process, whether it be a first time home buyer, or whether it be somebody who hasn't bought a home in 10 years, because the process has definitely changed since the first time they bought the home. So, I think overall I just say find somebody who meets your needs and ask questions. That's my biggest tip that you can have, is having a loan officer you can trust to help you through the process.

Host: Yeah. And this is something that even for myself I didn't really understand when I bought my home. It's like they're a partner with you. You know, like I think so often we just go straight to like looking for the home and the money piece is the money piece. But if you find the right loan officer, they can really help you be a partner through that journey, make the right decisions for yourself for the financial implications of how you buy the home and just give you a more comprehensive understanding around the dynamics of all of the moving pieces around doing the actual purchase. Is that something that you find that you're able to help with with your clients?

Alyssa Brown: Oh, absolutely. I'd say that one of my biggest goals too is to gain their trust in making the process as easy on them as I can while informing them all of the details that they need to know for sure. I think overall at the credit union, I've worked here for five years this July, and I've done consumer loans as well. So, I think that just gaining that trust and partnership of our member or even if it's a new member, you know, they're going to come to you for everything. If they have questions about something, people will be like, "Hey, I'm looking for a car. Like, who can I get with?" And I'll get them with one of my coworkers. So, I think overall, like my main goal is always the member service portion to make sure that they trust me to make sure I'm getting my job done and then I'm also doing my due diligence to make sure they are at ease through the whole process and they're not surprised by anything at any point during it.

Host: So, I wanted to shift over to trying to buy a home right now. Obviously, there's a lot of fluctuations with the interest rates, fluctuating macro environment. Would you say that now is a good time to buy?

Alyssa Brown: I'd say now is a good time as any to buy a house. I wouldn't let anything deter you from buying your dream home or, if you're a first time home buyer and you're sick of renting, just getting out there and looking. Rates have stabilized for the most part. I mean, nobody can predict what's going to happen in the next year and a half with that. The housing market overall I think has stabilized. We're seeing a lot of homes, but definitely sellers market. You know, a lot of people are selling their houses pretty quickly. But it's not like it was in 2020 where you have like 40 offers on a house within 20 minutes. So, it's still a seller's market, but it's definitely stabilized enough that I would never let an interest rate or your fear of not being able to qualify ever get in the way of purchasing a home in any market.

Host: Yeah. And especially in this market and also in general, like I know that one thing that people often wonder about is the period of time that it takes to buy a home from start to finish. Do you give any like best practice, like rule of thumb around length from the start of the process to the end of it?

Alyssa Brown: Yeah. Actually, Heritage has very quick turnaround times. I've seen some get closed in less than two weeks, so 14 days and we are ready to close the loan. I think our new mission That heritage just came out with is just to improve lives and simplify banking. And one of my goals personally as a mortgage loan officer here is to make sure I can get that done as quick as possible. I don't want anybody waiting around to get into their dream home, especially not on me. But yeah, as low as 14 days is what we can do. I'd say as long as 30 possibly. But 14 days is definitely what the average turnaround time is right now with this.

Host: So, just as we close, like you've met with a lot of people and you've also helped a lot of people buy their dream home. Even I'm seeing on Facebook, I see you alongside with a lot of buyers that you've helped do this, if there is one piece of advice or one thing that you would like our audience to take away from this conversation, what might that be?

Alyssa Brown: I would just say overall, if you think that you cannot qualify for a home just because you have had bad credit in the past, or maybe you don't think you make enough money, every single person I meet with, I will try my best and do everything I can to get them qualified for what they want. You know, you may walk in to talk to me and think," Oh, I'm going to buy a $200,000 house and maybe we can only get you qualified for $120,000, but you may be able to find that home at that price rate and you'd be surprised."

So, I'd say I'm really passionate about affordable housing for people here in Evansville. I think a lot of people spend a lot of money on rent when they don't even know that they could qualify for a home and actually show that ownership. So overall, that takeaway would be just come in and talk to someone and you never know, you could be buying your dream home with us.

Host: Alyssa, I think that is the perfect place to end. Thank you so much.

Alyssa Brown: Awesome. Thank you.

Host: That was Alyssa Brown, a mortgage loan officer at Heritage Federal Credit Union. For more information, you can visit heritagefederal.org/homeloans. If you found this podcast to be helpful, please share it on your social channels and check out the full podcast library to find more topics of interest to you. Thanks again for listening to Talking Cents with Heritage. My name's Prakash Chandran. We'll talk next time. Loans may be subject to credit review and approval and property insurance may be required. Membership restrictions may apply $50 minimum balance to open for the rewards. Checking a p y equals annual percentage yield a p y is accurate as of September 30th, 2022. The a p Y range calculation is based on an assumed account balance cap of $25,000 plus a hundred thousand dollars.

disclaimer: The A P Y decreases as your balance increases above $25,000. Enrollments must be in place and all the following transactions and activities must post and settle to the member's kasasa cash account during each monthly qualification cycle to receive the 3.4% a p y. 12 pin based or signature based debit card purchases and enroll in and logged into digital banking and enrolled to receive E statements 0.05 a p y on all balances, even if qualifications are not met.

Ability to earn $849 yearly based on maintaining a monthly balance of $25,000 in the Kasasa cash account, and meeting all requirements to earn $70 and 83 cents each month times 12 equaling $849 and 96 cents. Rates and rewards are variable and may change at any time without notice after the account is opened, fees and other conditions could reduce earnings on the account.

Program rates. Terms and conditions are subject to change without notice. Rewards are variable and may change at any time without notice. After account is opened for the kasasa cash back. Checking 2.5% cash back on everyday debit card purchases. Earn up to $90 cash back per year, up to $7 and 50 per monthly qualification cycle.

The views and opinions expressed in this podcast are those of the speakers and do not necessarily reflect the views or position of Heritage Federal Credit Union. The views and opinions expressed in this podcast are those of the speakers and do not necessarily reflect the views or positions of Heritage Federal Credit Union.