Common Misconceptions People Have About Buying a House
To hear about mortgages, Finance Monthly caught up with expert James Darby, President and Broker at USA Financial Consultants (USAFC) and USAFC Realty.
What are the key misconceptions among buyers in relation to mortgages?
Most buyers are scared of a mortgage payment, as they feel the weight of it when compared to renting. I like to educate my clients on the difference between buying and renting. Take for example $1,500 a month in rent, which translates to $360,000 in 20 years that you will pay a landlord. Now, if you had a mortgage for the same amount of money, you keep this money and in most cases, there will even be a return of investment.
What are the key challenges that your clients face before applying for a mortgage and how do you help them overcome them?
Honestly, down payment and affordability are the key challenges that most clients face. I have several down payment assistance programs available for clients who have been trying to save but would qualify for a certain program which benefits them. I also educate my clients on the benefits of buying what they can afford. Most people want $100,000 more than what they can afford – I have clients who want a $500,000 mortgage but only qualify for a $400,000 mortgage. It is interesting to see how most people want $100,000 more than what they qualify for in terms of mortgages. This trend of wanting more is always a variable even with clients who want a $1,200,000 mortgage.
What strategies do you implement to minimise financial burdens in regards to mortgages for your clients?
I qualify my clients based on what they can afford. I also give them realistic expectations. It is better to try to pay off what you might owe little by little than to think that your mortgage payment will be lowered with a refinance in the future. A mortgage is a long-term commitment and home prices and rates have many ups and downs during its lifetime.
Most buyers are scared of a mortgage payment, as they feel the weight of it when compared to renting.
What are the particular challenges that mortgage brokers in the US have been facing over the past year in relation to changes in what customers expect in terms of products and services?
Mortgage brokers have the best options. As brokers, we can shop around several lenders and give our clients the best rates and terms, while direct lenders can only provide what their one lender can offer. This is the lenders’ biggest challenge. In some cases, they can shop around different lenders but this comes at a higher cost for the client.
What motivates you about helping people with their mortgages?
I keep trying to perfect my entire process by adding value. I want my clients to save money and enjoy the process. Each loan has some sort of complication and I am addicted to helping my clients overcome them, as seeing them happy is very rewarding.
What would you say are the specific challenges of assisting clients with mortgages?
We need more programs. I think it’s time for the 40-year fixed mortgage loan and cheaper down payment assistance programs to become present – this will open the doors to a lot of new buyers. We have all types of buyers and need all types of programs.
Buying a home has been a cornerstone of the American Dream. It brings us joy and gives us a sense of pride. It also stimulates the economy by providing work to architects, engineers and contractors. A proud homeowner will eventually also want to buy a barbeque grill to add to their new home and that continuous investment in their house will continue for years to come. Projects are never-ending – I am a homeowner and there is always a project we want to do in our home.
For more information, please go to https://www.USAFC.com