May 3, 2019
There's a lot that goes into getting a mortgage. Join Jeremy as he interviews Ryan Langley, VP Branch Manager of Ruoff Mortgage in Bloomington, IN, on just how to get there.
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Full Transcript:
Jeremy Goodrich: I'll introduce you again and then I'll pick the one I like better.
Ryan Langley: Okay. No problem.
Jeremy: We'll see how this intro goes. All right. Hey this is Jeremy from Shine Insurance and today I've got a special guest on our channel and his name is Ryan Langley. Ryan is the vice president branch manager of Ruoff Mortgage here in Bloomington, Indiana. He's a mortgage lander, and he has tons of information for us about exactly how to go about getting a mortgage and the processes you should think about. Now, in this video we're not going to talk about kinda the back end of very ends of the process. We're going to talk about maybe the most important part of the mortgage getting process. I don't even know if that's an actual phrase, but we're going to talk about the five steps you need to take before even considering buying a house. So Ryan, thank you so much for being with us today.
Ryan: Thanks for having me.
Jeremy: Okay. I'm really excited, I've decided I want to buy a house. I'm going to go out, I'm going to get a realtor, I'm going to start looking at houses right away. Is that what I should do?
Ryan: No.
Jeremy: And so why not?
Ryan: Yeah. Getting the realtor is definitely part of the process.
Jeremy: Mm-hmm (affirmative).
Ryan: You're going to want to kinda keep that part of mind up front. But there's several steps that you should take prior to going out and rushing out and making an offer on a home. For starters, most realtors are going to want to make sure that you've got your ducks in a row and have taken some steps to make sure that you're ready to buy a house before they can even start showing you the home.
Jeremy: What do you mean by ready to buy a house? What do I need to be to be ready to buy a house?
Ryan: Sure, sure. The first thing that I will always advise anybody that comes into office that's just thinking about it, just at the very early stages, is to take care of those things that you know might be an issue in your credit report.
Jeremy: Mm-hmm (affirmative).
Ryan: You know that you've got some late pays, or you routinely pay late on the credit cards, due loans, auto loans, you name it, on the type of debts that you may have out there. Make sure you get your house in order regarding your current debt obligations. That doesn't mean pay them off necessarily, but that definitely means make sure that you're current on every single payment and that you have been current on them. If you're habitually late on your payments each month, that's often times viewed as a negative on your credit report and your credit score will reflect that.
Jeremy: Mm-hmm (affirmative).
Ryan: That would be one of the very first things that you should think about if you're thinking about purchasing a home, is making sure that everything's up to date and you're paying things on time.
Jeremy: So figuring out your credit score is really that number one?
Ryan: Mm-hmm (affirmative).
Jeremy: Being up to date on payments is one way of addressing your credit score. When you see people trying to fix their credit scores, are there some more important things than others?
Ryan: Number one thing is, on all debt is make sure that you're current. One of the worst things that you can do is to get late and stay late on it.
Jeremy: Mm-hmm (affirmative).
Ryan: If it's a... One or two here and there that are over 30 days. Most credit bureaus don't report until you're over 30 days late on a payment.
Jeremy: Mm-hmm (affirmative).
Ryan: You've got some leeway time in there most often. But you really want to make sure that everything is paid on time. Now paid off necessarily, 'cause some debt's a good thing. But you want to make sure that everything's current.
Jeremy: Having your credit in order, and the best way you can do that is by keeping everything current, keeping your debts paid. Not necessarily paid up completely, like paid down.
Ryan: Mm-hmm (affirmative).
Jeremy: But your debt's up to date. Okay. What's the next thing we should do to get our house in order before buying a house?
Ryan: Next thing you should consider is taking a look at your finances and getting a good idea of what you feel you may be able to afford.
Jeremy: Mm-hmm (affirmative).
Ryan: That may not be necessarily what the lender will tell you later on, but it's always helpful for a lender if we got a general sense of the price range that you're looking in.
Jeremy: Mm-hmm (affirmative).
Ryan: For a first time home buyers, it obviously depends on your current income situation.
Jeremy: Mm-hmm (affirmative).
Ryan: It depends on if you're single. Depends on if you've got multiple incomes in a household. There's a lot of factors that you would take into consideration yourself and there's all kinds of calculators out there online that you can log on and see to get a general sense of what a payment may look like and what they may look for. And a very good starting spot would be what are you paying in rent each month.
Jeremy: Mm-hmm (affirmative).
Ryan: Are you struggling to make that payment as it is right now? Or, are you making it easily and you can afford some more payment? A very good starting spot would be to kinda look at where you're at on your rent payments, versus what you might be able to afford on a monthly basis on a mortgage.
Jeremy: Okay, cool. If I wanted to look up one of those calculators, what might I choose for my Google search?
Ryan: You can go to ruoff.com.
Jeremy: Okay.
Ryan: We've got calculators on our website that you can use, and that's typically where I would direct you to go and find a good calculator to use. You can also use any numerous websites, bankrate.com. There's a lot of other ones out there-
Jeremy: Okay.
Ryan: That would be sufficient.
Jeremy: Mortgage calculator.
Ryan: You can type in "mortgage calculator", and you'll get a 100 different options on finding it.
Jeremy: Okay.
Ryan: They're all going to be accurate. You put in, for the most part, most first time home buyers are going to be looking for a 30 year fix mortgage, so you type in "mortgage calculator", use the rate that they've got in there just for an example, that doesn't mean that's what rates are currently, but that does give you a general sense of where you would be on a monthly payment.
Jeremy: Okay. I'm going to get my credit in order, I'm gonna look at what I might be able to do as far as a payment goes using my rent as a great example of a place to start.
Ryan: Mm-hmm (affirmative).
Jeremy: Then ruoff.com mortgage calculator would be another wonderful place to kinda figure that out. Okay, that's the first two. What's the next thing I should do?
Ryan: Next thing you should do, before reaching out to a lender, which will be step four, but before we get to step four, step three is to start thinking about the preliminary documentation. Yes, it does take a lot of paperwork, or what can feel like a lot of paperwork at times...
Jeremy: Mm-hmm (affirmative).
Ryan: To get a mortgage, to obtain a mortgage.
Jeremy: Mm-hmm (affirmative).
Ryan: The base amount of documentation that almost every single mortgage lender will ask you for would be a driver's licence or a passport, your last two years federal tax returns, last two years W2s. If you receive W2s, your most recent pay stub, and your last two months complete bank statements that may show any assets that you have available for down payment. That would be the core group of items that you would need to get. Of course, it will always depend on your situation, depends on if you're self employed, depends on if you've got additional businesses that are attached to that. Those things can change, but that would a very good list of things that you should think about, just getting upfront before even calling the mortgage loan officer.
Jeremy: Cool. If you didn't write that down, we put it down in the notes right below this video. You can look at the list of things that you should have ready before you even call a mortgage lender. Okay, so that was step three, get your documentation in order.
Ryan: Mm-hmm (affirmative).
Jeremy: Step four, you've kind of already alluded to, let's go for it.
Ryan: Step four, that's when you're calling the mortgage lender and you set an appointment. Often times, as a first time home buyer, it would be helpful to meet face to face, but anymore in this day of age where we can access anything online, the vast majority of mortgage lenders are going to have that option for you to go out and apply for a mortgage online.
Jeremy: Mm-hmm (affirmative).
Ryan: Though, anytime a first time home buyer, if you're looking... The mortgage lending process has become so complex and there's so many regulations and so many documents out there, any time that you can get face to face with a lender I would suggest that you do so.
Jeremy: Mm-hmm (affirmative).
Ryan: So that they can help thoroughly explain the cost and the fees and everything that's associated with the process. More often than not, the mortgage pre-approval process should take anywhere from an hour to an hour and a half.
Jeremy: Mm-hmm (affirmative).
Ryan: It shouldn't take much more time than that.
Jeremy: Mm-hmm (affirmative).
Ryan: If it does, you can go back to our previous video and hear what I have to say about the communication piece.
Jeremy: Mm-hmm (affirmative), and that is the-
Ryan: It all comes back to communication.
Jeremy: Yeah, and that video is the three different things to think about when you're choosing a mortgage lender, and you can see that on the Shine Insurance YouTube channel as well. Step four, going ahead and contacting the mortgage broker and getting pre-approved for a loan. Okay, what's step five?
Ryan: Well, step five, what I did have is you want to save some down payment. Well, that may not necessarily be true for everybody's scenario.
Jeremy: Mm-hmm (affirmative).
Ryan: We do have loan programs where you can have zero percent down, loan programs where it only takes three percent or three and a half, and that money may be coming from a relative in the form of a gift.
Jeremy: Mm-hmm (affirmative).
Ryan: That's definitely something we can add to our list if you're considering receiving a gift there's different loan programs that we will accept it and different loan programs that will not.
Jeremy: Receiving a gift as a down payment for a mortgage?
Ryan: Sure. Certainly.
Jeremy: I see. So, your dad or mom wants to pay the down payment as a gift and some tax benefit potentially happens there.
Ryan: Certainly.
Jeremy: Some companies will let that happen and some won't.
Ryan: Well, most companies will, but it does depend on the mortgage product itself. It depends on whether or not it's FAG or conventional loan, USDA, or a home ready product where it allows for a three percent down.
Jeremy: Mm-hmm (affirmative).
Ryan: There's a lot of programs that have different rules and regulations, which you really want to make sure that the mortgage lender that you're working with is knowledgeable and understands those rules, and which products can be used... Either that you use a down payment as a gift form and which ones you can not.
Jeremy: Right, okay.
Ryan: But I would say the fifth and final thing that we should discuss leading up to the mortgage is get a general sense of who you're going to want to work with as a realtor, if you're going to be shopping for homes.
Jeremy: Mm-hmm (affirmative).
Ryan: And also get a general sense in your home owners insurance, which is a very important piece that's always, or often times, not always, but often times overlooked in the beginning stages of the process is you want to kinda have a general idea of who you may want to work. I would always, always encourage you to use a local insurance company versus going online, just like I would always encourage you to use a local lender verus going online to find a lender.
Jeremy: For the same reasons, because the advice is better, the contact is better, the communication is better and then that's true for I think both sides. Okay, so step five was...
Ryan: Step five would be to get a general sense of who you're going to use for as a real estate agent and who you would be using for your home owner's insurance.
Jeremy: Okay. All right, cool. Well, that sounds really good. All those things, and I think what's so great about talking about this right now is both you and I see, as we see people purchasing homes, that they don't do a lot of this stuff ahead of time. Then it becomes a disappointing scenario. Instead, I really think buying a house should be fun.
Ryan: Yeah.
Jeremy: But it can very quickly turn into a lot of work, tragedy, disappointment, things of that nature. I think the five steps you've talked to us about today will help folks to avoid that.
Ryan: Absolutely.
Jeremy: Okay. If folks want to come and find you for a mortgage, how can they do that Ryan?
Ryan: The best way to contact me would be to call, phone number here in Bloomington, which is 812-650-3800, and also be found online at www.ruoff.com. That's R-U-O-F-F.com Or send an email directly to Ryan.langley@ruoff.com.
Jeremy: All right. Well, thank you so much for taking some time out of your schedule today to help us understand mortgages a little bit better.
Ryan: Thank you for having me.