There are so many questions to answer, so many papers requiring a signature, and so many dollar signs. For first-time homebuyers, the process of securing a mortgage can be an intimidating one--not just because it’s a step toward the largest purchase of their lives, but also because it involves terms and procedures that can seem alien to those who haven’t been through the experience before.
Thankfully, there are ways to make it easier, and substantially reduce the fear factor that can be involved with purchasing a first home. By dealing with mortgage lenders at a community bank, first-time homebuyers can have face-to-face talks that make clear all the requirements and steps involved. The goal: no surprises, no confusion, and a smooth transaction facilitated by banking associates who are also your neighbors.
“The first thing I like to do with a first-time home buyer is have a conversation,” says Jim Nichols, chief retail officer with Prospect Bank, headquartered in Paris, Ill. “Face-to-face is always a good thing, but if that’s not possible in today’s environment, a telephone conversation can be good. I believe that we have people who do a great job of explaining the process of first-time home-buying, especially if you’ve done it thousands of times with people like I have. But you have to go through the process with them.”
To a national mortgage lender in a far-off office, homebuyers can be mere numbers on a piece of paper. National lenders also typically work off commission, and may propose mortgage products that may not be best for the customer. A national lender might also be too quick to give a client preliminary approval, raising hopes that are dashed when something like an employment question or credit hiccup appears later on.
Building a connection with customers
Compare that to the process at a community institution like Prospect Bank, which has nine branches throughout Central Illinois. “We try to do our homework on the front end to make sure that we can truly finance the home for that borrower,” Nichols says. “There are a lot of lenders that will tell you, ‘Based on your credit score and what you’ve told me, you can get a loan.’ But sometimes things fall through because they don’t have all the details. We try to get as many details up front and be as thorough as possible.”
Local lenders like those at Prospect Bank also typically have the luxury of knowing the address involved. For every home purchase he’s involved with, Nichols looks up the residence on sites like Google Earth. If the home is in Paris, he’ll ride by to see it for himself.
“That’s not just because I don’t want to be surprised by anything, but because I’m interested,” he says. “I’m really and truly interested and invested in the experience of our customer. To me, it connects us to our customers. I believe being a local community bank, the thing we do that differentiates us from the national mortgage people is spend time with our customers to really get to know them, understand their situation, and advise them.”
Local lenders like Prospect Bank can also prepare first-time homebuyers for the detailed conversations they’ll be having as the process continues. Could the home’s physical location qualify the borrowers for a loan with more favorable terms? How much cash can the borrowers put down, and have they taken into account that they’ll likely need an extra $3,000 for closing costs? Have the borrowers been in the same line of work for at least two years? And how good is their credit score?
If any of those questions raise a red flag, local lenders like Prospect Bank have the ability to work with borrowers to correct the situation before the process gets too far down the line. A community bank can also offer advice to help buyers with the appraisal, a critical inspection verifying that the collateral in the home justifies the amount of the loan.
For instance, buyers might think they’ve found a deal in a foreclosed fixer-upper. “But for a first-time homebuyer,” Nichols says, “it is infinitely more complicated to finance that kind of home than it would be one that’s move-in ready.”
Eliminating surprises, engendering trust
Lenders at an institution like Prospect Bank will also walk first-time customers though the different loan types available, finding the best fit for them. For many, that’s a “Home Ready” product which requires just 3 percent down and can be ideal for a first-time buyer. For others, it can be a USDA loan, which requires no money down if the home is in a specific area.
For the borrower, a big step is receiving a preapproval letter, which means they’re preapproved by the bank to purchase a home up to a specific value. In a hot real estate market, most agents won’t take first-time buyers to look at homes until a prequalification letter is in hand. “When Prospect Bank drafts a preapproval letter to a borrower and they hand it to a Realtor,” Nichols says, “they can depend on the fact that if they buy a house, we are going to finance it.”
It’s all part of the same goal--smoothing the process, eliminating surprises, and engendering trust. The mortgage associates at Prospect Bank are also members of your community, whom you might encounter at the supermarket or the hardware store. They want their neighbors to have a good experience on their way to a place they can call home.
“I don’t ever want to ever see anybody in a store who’s mad at me or thinks I gave them false information,” Nichols says. “I want to be able to stop and talk with everyone I see who I’ve done business with, and I want to have a positive experience when I do that.”
Are you considering a first-time home purchase and are interested in exploring what a Prospect Bank mortgage can do for you? Visit one of its nine locations across Central Illinois including the main branch at 177 West Wood St. in Paris, call (877) 465-4154, or visit BankProspect.com for further information.