Guild Mortgage (NYSE: GHLD), a rapidly growing mortgage company that has originated and serviced residential loans since 1960, is the recipient of the J.D. Power award for “Highest in Customer Satisfaction with Primary Mortgage Origination in the U.S.,” in its 2021 Primary Mortgage Origination Satisfaction Study℠. This was one of five areas that Guild ranked No. 1. In acknowledging the awards, Mary Ann McGarry, CEO, said “More than anything, ranking number one in Overall Customer Satisfaction is a direct reflection of our culture of customer service and our business model, which focuses on our branch offices where loan officers can make personal connections with clients.”
For over 20 years, Don Conwell and his team in Tulsa, have served clients in eight states and modeled Guild’s dedication to service, character, and integrity. His passion to provide financial guidance to clients led him to provide these insights into the process.
“Buying a home is a commitment and people will often begin their search without properly preparing. You can count on this: Once you start looking for a new home you will fall in love quickly, and maybe more than once.” To save time, money, frustration, and disappointment Don advises asking the following questions.
1. Is it the right time to purchase a home?
“I am not referring to the ups and downs of the housing market or interest rates. We often hear that now is the time to buy because of low interest rates. While it is true that rates are climbing, I do not advise clients to chase a rate if a home purchase does not currently make sense in their life. If you are making wise financial decisions, the interest rate should not make a house affordable or unaffordable. You are wiser buying at the right time than chasing a low rate at the wrong time. Owning your first home, or moving to a new home can be a very positive step. The decision of when to do it is critical.” Consider not only the financial cost and responsibilities but also how other aspects of life influence the timing of a home purchase. Things such as job stability, career goals, retirement, future financial resources and obligations, changing family structure or age of children all should be factored in. A home purchase is not a short-term commitment. Ask, “Does this fit into my plans for the next 3-7 years”. If so, you are ready for the next step.
2. What monthly payment am I comfortable making?
“Let me note here I am not talking about just principal and interest. It is dishonest when someone discusses a payment with you but only includes principal and interest and excludes taxes, insurance and other obligations. It sounds great but it is not reality. In addition, you would think that after all we have been through in the past 15 years that you could not be approved to buy more house than you can afford. This is not true. Even with government guidelines aimed at preventing you from getting in too deep, you can still drown if you are not careful. In fact, I would go so far as to say the amount you can qualify to buy is, if not irrelevant, the absolute wrong question to start with.”
There is not a one-size-fits-all.
“Regardless of income and other financial considerations, each person views a home differently. We all have limited resources. The choices you make here will have a ripple effect in what money is available for other things. Are you a person whose home is your castle? Is it where you like to spend most of your time? Does your family, relaxation, entertainment and social life mainly involve activities in your home? On the flip side are you just looking for a place to drop your backpack and rejuvenate before your next trip to the Amazon? Giving consideration to how the home, and in turn the monthly payment, fits your lifestyle is critical to home ownership being a joyful experience. You do not want to end up, house rich, and life poor.”
3. How much money should I put into a home purchase?
This will determine the types of loans available, the cost of those loans and the offer you will make on a home. Like the timing and monthly payment decisions, the answer to this question will also need to align with not only your current situation but your longer-term plans. If you have few dollars available, or by choice or necessity you would like to get into a home with as little money as possible, options for financing will be more limited. If, on the other end of the scale you could pay cash for a home, you are still faced with the decision of what is the best way to use your money. This can be a complicated decision which should always involve your financial advisor.
Regardless of how much money is available to put down on a home there are a couple of things that everyone needs to ask themselves. The first being “What other cash needs will owning a home involve?” First time home buyers can be surprised at the number of items needed to furnish and maintain a home. Even seasoned homeowners find that: “There is no way that old furniture is going in our new home”. Credit card financing of these “wants” and ”needs” is not wise. Adding new debt on top of a new house payment is not a recipe for financial health or a peaceful night’s sleep.
Another point is that simply maintaining a home takes money. Opinions of how much to plan for annually vary, but a good estimate is 1% of your home’s value. The ever-present hailstorm in May, the air conditioning unit in August or the chilling ice storms in December are all easier experiences to endure if you have prepared financially. Typically, the older the home the more “maintenance surprises” you will have. A well-maintained existing home or a newly constructed home can significantly reduce unexpected maintenance costs.
Even if the house does not throw you a curve, life may. You need to ask “After my home closes will I have enough money left over to cover unexpected life expenses? Cash needs such as medical expenses, car repair or replacement or even a drop in income need to be considered. To prepare for these requires discipline and the establishment of what is often called an “emergency fund”. A good goal for this fund would be 3- 6 times your monthly income. Having this safety net when purchasing a home should be a top priority.
4. What don’t I know about the process?
At the same time you are trying to answer the timing, down payment, and monthly payment questions, you should also be meeting with an experienced professional. Find someone you can trust who can put all the pieces together. It is important that your advisor can map out a plan that takes into account where you are, where you want to be, and the resources you have available.
This pre-approval process is normally required before submitting an offer and will also give you the confidence to know that when all is said and done you are where you want to be. The lender will look at every aspect of your finances to discover and assist with any unknown opportunities or hurdles. Your credit history, income, debt, banking and investment information, taxes, legal documents, etc. will need to be provided. In all honesty, this can be the most annoying and intimidating aspect of the process. Your lender should proactively and peacefully guide you through this stage.
Understand that the choice of when and how to buy a home will ripple across your entire financial well-being. Whether your goal is to buy a home in 30 days or 3 years, taking this thoughtful approach to buying a home will assure that when you do fall in love you can make it to the altar.
Guild Mortgage is located at 8126 S. Mingo Road, Suite 200, Tulsa, OK 74133. For more information call 918.505.5920 or email Don at DConwell@GuildMortgage.com.