Are you a first time home buyer? Here are the critical pieces to the home buying puzzle.

Branch NMLS number 33041, Rick Ripma's NMLS number 664589 equal housing lender some restrictions apply.

Welcome and thank you so much for joining me today. I appreciate it very much. Today we're going to talk about a variety of things. One of the items I want to talk about- just some of the basic first-time homebuyer. And really, it goes for any home buyer, anybody looking to buy a home, we just have so many people out there looking to buy a home, we have tremendous number of first-time homebuyers. So, I want to talk about that. Every Wednesday, we do a class for first time homebuyers. We do it online. So, if you know of anybody or you are a first-time homebuyer and you would like to participate in the class, it's all done online. You don't have to go anywhere, you can do it right out of your house, just let me know, or go to hardworkingmortgageguy.com That's hardworkingmortgageguy.com. Or just contact me let me know that you want to be included in the first-time homebuyer and we'll make sure you get an invitation to sign up for that class. In fact, let's do it that way.  I may be able to put a link there on my site that gives you a place to sign up for the next class. So, if you or anybody you know wants to do first time homebuyer class, please go to the website and look for that. There's just so much to talk about. There’re so many things involved in buying homes. And it's different depending on your market, the price range. There's just so many things(involved) that it really helps, I think, for a lot of people to do the first-time homebuyer’s class.  I've done this for three weeks, three times now, every two weeks. We've had 250 people so far, as part of it's probably a little less than that right to 48 to 47. People who have who have signed up and come to the seminar, and most people have been very excited about it. They've liked it. We've done quite a few pre approvals, and help them to get prepared in some and here's the other part with a first-time homebuyer with anybody. Sometimes there's issues.... sometimes you have credit issues, or maybe we need to have more money down, you know, there's things that need to happen. Well, that's all part of meeting with me, talking to me over the phone. So that we can go through your situation, because what we want to do is make a plan.  We want to help people buy homes, or even refinance and get the very best options you can possibly get. So, in order to do that, we need to make sure if there's something that we can do on credit to get the credit scores up.  I've helped many, many people I've taken, we've taken the credit score. And let's say, I'll just do one I've just had. We had a credit score come in; it came in under 700. Not a lot under 700, but a little bit under 700. So, we ran a program that we have, through our credit reporting company, and it told us exactly what to do. We sent that report to them, they did what they were supposed to do. It didn't get their credit score up a ton. But it got it over 700. And it made a difference of an eighth of a percent in their interest rate. An eighth of a percent in their interest rate was like $25 a month. All they had to do is do some really minor things, it's definitely worth it. We really want to give you the best options possible. I know everybody thinks we just want to sell a mortgage. And obviously I want to do your mortgage. But I also want you to have the best possible option.  I want to help you get to that. And if increasing your credit score will do that; It doesn't help everybody, because some people have sterling credit, or sometimes I can't get it up in a timely fashion, but if we can work on that, even if it takes six months, seven months, we can help you get to where it needs to be, so that you can move on. We would love to help you do that, especially to buy a house. It's just really great for people. All the benefits you can have. You can gain by owning a home. You know it's funny because I was, and I may have these numbers a little bit a little bit off but, a homeowner compared to a renter has I believe it's on average $244,000 in additional net worth. So by owning a home, the average homeowner has a net worth of $250,000, where the average renter has net worth of $6,000. That's $244,000, because by owning a home. Why? Because you buy a house and you’re making a payment, and part of that

payment is going towards the principal, lowering the balance of the mortgage. So, you're gaining equity there. You're gaining net worth there. Alright. But that's only a piece of it. The other piece is the house is increasing in value. Last year, like we said, an increase in Indianapolis somewhere in the neighborhood of 14%, year over year from September to September. So, 14%. If you bought a $200,000 house, that 14%, means your house is worth $228,000and you gain $28,000 in net worth. Plus, whatever you gained in equity, by paying down the mortgage, which may not have been a whole lot, it may have only been $4,000. So now you're at $32,000. In additional net worth, you take that for a few years, and it just keeps compounding, it gets better and better. Obviously, 14% to $228 is more than $28,000. So, let's say it's $31,000. So now instead of being worth $228,000, you're now worth $254,000 or whatever that number is. So, you just keep increasing the value of your net worth. And it doesn't take long. It sounds like it's a lot of money. And it sounds like it might take some time. But it really doesn't, as opposed to when you're just paying the rent, and you're not getting anything in return, you’re getting a place to live in return, but you're not gaining any equity in the property. And that can make a big difference. So, if you haven't owned a home before, or you know somebody who hasn't, it really does make sense to encourage them to at least start thinking about it. And looking at the possibility of buying a home. It doesn't have to be right now, but it certainly does make sense. Now, you know, we know that it's for first time homebuyers, but you know I’d say for first time, but I've watched this for people who bought homes, you know, maybe 1,2,3 homes, four homes, they still have a lot of the same feelings. They’re concerned, they're stressed out, they're intimidated. Some not so much intimidated, if you bought a bunch of homes, but you're stressed, anxious, uncertain. The uncertainty, it's amazing to me, the many, many people who have phenomenal credit are phenomenally well prepared to buy a home are the most concerned about it, they just feel the very, very nervous about this whole situation and wonder if they're going to get approved. Because no matter where you are, there's always that little piece in the back of your mind. So, the very best thing you can do, if you're looking at buying a home, first time homebuyer or not, the very best thing you can do is we can look you know, we want to do a pre-approval. We want to talk about the pre-approval, we want to go through a pre-approval, get the application and pre approve you. So that you know. Now-- you know, (if you say) I want to buy a home in two years, let's do that now. For the most part, we don't want to do it that early. Now, there could be reasons to do it that early. So if you're somebody you say, I have I have some issues in my credit,  then we might want to look at it really early. So, we can get those things corrected, tell you what needs to be done, get you on the path, in order to get those credit scores up, to get the very best options, maybe even gets you from not qualifying to qualifying or maybe get you from qualifying at this rate to a much better, better rate.

The other thing that we would want to look at is what's called debt to income ratios. Those are also extremely important when we’re looking at qualifying somebody. The debt to income is going to kind of matter. And that's another piece we can look at and go "Well, you know, here, let's get this taken care of, let's lower this, let's do this". So that we know we can get that debt to income in line, if that's what needs to happen. Vast majority of people quite honestly, you're we're going to run it, we're going to go through it, and you're going to qualify and everything's going to look good. But most people know if they have issues or if there's something there, maybe they have no credit, whatever it happens to be that you think there might be an issue, we really want to talk about that. Then some people who think they have no issues and really don't, there may be something in their credit report or there may be something that isn't theirs, that they didn’t know about it, or most of the time it's

 not theirs because they had perfect credit but something shows up and then we can work on getting rid of that, so that the it goes away and it doesn't it doesn't cause any issue. So, it is something that does make a tremendous amount of sense to do before you start going looking at homes, before you get too excited. So go to hardworkingmortgageguy.com and contact me from there. It's got my web site or at my website, it's got my email address. It's got my phone numbers, you can text me, you can contact me directly from the website. If you want to fill out an application and you would rather, do it online then have my person my loan origination manager gives you a call, then you can, at the top of the at the top of the website it says "Apply now", click there you can apply now. You put that information in and then we can talk about it and figure out what we need to do to help you either buy a home today or get you prepared to buy a home. Or if you're looking at refinancing, possibly cash out, anything like that, we can talk about that. We'll have all the information after the break, we're going to go over a little bit more on the steps to homeownership for first time homebuyers.

Thank you so much for joining me today. I truly appreciate it. I appreciate you taking some time out of your Saturday to talk about homeownership. Real Estate and mortgages. I've been in this, in real estate mortgages, basically most of my adult life. I've been in it for well over 30 years. And it's something that I really enjoy. I love doing it.  Everybody always asked, you know, Rick when are you going to retire? It’s like, I don't see any reason to retire. Because my hobby is work. I like doing what I do. I like helping people. I'll probably slow down at some point, you know, but it's not really my thing. I like to work. I like to work with people. And so, you know, once you've done something long enough, and you have a good idea how to do it, you feel pretty confident in what you do, you understand the process, you understand the market, you understand what's going on, you know, for the most part, it’s an enjoyable process, it's an enjoyable time. Just know that anytime you're doing a mortgage, or even buying a home, there's a lot of stress through that that time period. So sometimes we react differently as a buyer of a home or somebody doing a mortgage, where, you know, it's just the stress that comes under all that has to happen. And with mortgages, it's gotten a little better since COVID is, you know, not gone, of course, but kind of slowed down. Some of the rules have eased up a little bit. But I will tell you, if you're a self-employed borrower, just know, it's going to be a little bit more difficult. It can all be done, it just takes more paperwork, it takes more verifications, because it's just through conventional or FHA financing, that's what they've done. They've just set the rules up for the self-employed borrower to be a little bit because they've had so many things...... fraud committed.... that they just want to verify everything. It isn't difficult, but it is time consuming, takes a little bit of time. But it's worth it. Especially if you're buying a house or refinancing, saving a bunch of money. Now it's time for questions with the gurus.

I had a customer call me the other day. And they had been thinking about refinancing for quite some time. I know we've been talking about buying a home. But we've been thinking about refinancing for quite some time and understand rates have gone up a little bit. Not significantly, we're still in the low threes on a 30-year fixed. So, it's still very good. But they were actually over 5%.  I do the same thing, you know, I don't go get my oil change sometimes as soon as I ought to, things like that. It's just things that you know you should do but you just don't do it. That's the way they were. Everything was great. They just had put it off. And it is amazing, though how much you can save. I remember just in this case, they were saving in the first five years on let's say $140,000 loan, I could be a little off, but they were saving almost $10,000 in the first five years.  That's a huge amount of savings, that's even after the cost of doing the mortgage. And then lowering the payment, because they went back to a 30 year, they were lowering their payments $600, $700 a month. I mean, we're talking about huge savings, really life changing savings. If we take somebody like this, where they take that money, they take that $600/$700 a month, yes, they went on the 30 years can take them longer to pay off their loan. But if you take that $600 or $700 a month and you start putting that into an investment, and you just get the normal, average return in the Dow of 8%. I just saw I think last year the Dow was like 40% or something. It was some ridiculous number. But if you just get 8%. Now some years you're going to get less, some years you're going to get more and you're only paying an interest Rate somewhere in the low threes and your even mid threes four, even 4%, you're getting an 8%, you're getting more. And that money is growing and you keep putting that in there, it is amazing what that can do for you. Not only will you save enough to pay off the loan anytime you want, but you're also going to have that money saved, that you can do with it as you please. Certainly, would help you towards retirement or if you decided you wanted to you know, pay college expenses, things like that. The other nice thing about doing that is that money sitting in an investment, as long as it's not a retirement investment, just in the market, you can get back out and you can get it out rather rapidly. If you have the equity in your home, it's not that easy to get out. You have to either refinance the home, take the 30,35, 40 days to get it refinance and get your money, maybe do a home equity line of credit. But let's say it's an emergency, you need it right away, or let's say something's happened, you've lost your job and you need money to live off of. And you have all this money, which I've seen this happen, especially through COVID, you have all this money in your house, you have all this equity in the home. But you don't have a job to make the payment. So, your choices really come down to sell your house, because you can't refinance because you don't have a job, so nobody's going to refinance you, or get the money some other place. Or if you had investments where you could just pull the money, everything's fine, the stress isn't there. So, it can make a tremendous amount of sense to go back to a 30 year, if you've done that, it can also make sense. And I know it sounds (like) Well he's telling us both of them make sense. They do because there is no one right answer to this. It can make a lot of sense to do a 15 year, this person if that five over 5% can be down in the low twos, mid twos on a refinance that that is a huge amount of savings, probably still lower their payment. And pay the home off in a timely fashion. And really, you know, again a lot of equity and save and save quite a bit of money. But you have to do what's right for you because it makes a lot of sense to do the 30 year, it makes a lot of sense to do the 15. All depends on what you're trying to accomplish. And you know, like for me personally, a lot of people think I would want to do the 15, but I'm actually the 30-year type person. I would do the 30 year. I'd rather take that money and put it in investments. But let's get back to a first-time homebuyer.... it's really not just for first time homebuyer, but we're going to talk more about first time homebuyer. The very first thing that that you want to do actually, if you're a first-time homebuyer, come to my class. Go to hardworkingmortgageguy.com. Send me send me your information, call me text me, send me an email, my email addresses are there, you can contact me direct from the website. Tell me that you would like to know about the first-time homebuyer seminar and we will make sure that you get an invitation.

That'd be the first thing. The very next thing that you want to do, and this goes for everybody, whether you're a first-time homebuyer or not, the very next thing you want to do, we've talked about this a bunch- is get pre-approved. Pre-approval is critical to moving forward to buying a home. And it's critical for a variety of reasons. Number one, and these are not in like "this is the number one number one", but just one item is when you're ready to make an offer, that offer needs, especially in this market but really in any market, it needs to go in with a pre-approval letter, because when they get offers, especially when you get multiple offers, in any market you're getting multiple offers.... think about it for yourself. If you were selling your house, and you had four offers, three people were pre-qualified, had a pre-approval letter, had all their ducks in a row and one person didn't have a pre-approval letter, they weren't paying cash, they were financing, what are you going to do? You're not even going to look at that one without a pre-approval letter. So, you have to be prepared to be one of the people they at least look at because they have to know you're a viable candidate for their home. They don't want a problem with closing on the home. Many of these same people, when they send an offer in the real estate agent, the listing agent will call the lender, they'll call me and (I can't tell them everything) they just want to make sure that I've done my job and that the person is well qualified. That happens probably 60 to 70% of the time. It's critical that you do that or if you don’t, you likely will not get your offer accepted. So, a pre-approval letter is critical. Another piece of that is you want to make sure that you're looking at the right price range of home and this doesn't mean that you don't want to look too low, you don't want to look too high. Here's what I have found. The vast majority of people want to be in a lower price range than they end up. It's just the way it is. So, you want to be pre-qualified. Let's say we pre-qualified somebody and we say, okay, you can afford, we're going to pre-qualify you to the top dollar amount. Let's say you can afford $400,000. Well, I want to be at $250. That's great. We issue a pre-approval letter for $250,000; we'll issue one for$ 400, maybe a couple in between in case you want to go up. But as you look at homes, and you realize this person may realize $250000 doesn't get them what they want. Home prices have increased. They realize $250 doesn't get them what they want. So what do they do, they go up, it's nice to know what your top range is, what the top is that you can buy. That's why you want to do that, so that you're in the right price range. It's also critical that you don't go over the price range you can afford. For a lot of reasons, it's very difficult to do that and really be able to keep on top of things. When you start looking at homes, think about you're looking at a $500,000 house. At $500,000, there's certain things that you're going to get, there are certain things in the home, certain neighborhood, that type of thing, and then you find out you can't afford it. You can't afford $500, you can't qualify for $500, you can only qualify for $300,000. It's really difficult to drop down to that $300,000 range. I've seen many people try. It's very, very difficult. So, you really want to be in the correct price range. Because especially as a first-time homebuyer, it makes a lot of sense to buy a home. You know, if you're selling your home and buying another one, this doesn't tend to happen as much. But when you're a first-time homebuyer, it's critical that you get into the homeownership because like we talked, you’re going to have a lot more money in the long run based on having the equity build up, and both the appreciation of the home and the equity build up on paying down the mortgage. So, it is critical that you do that. The next thing is that now once you've been pre-approved, now you're ready to hunt for a home. Now, you may need to get a real estate agent if you hadn't already. Now when we're doing a pre-qualified or pre approval, we're going to make sure if you don't have an agent, we will certainly help you find one. I work with a tremendous number of agents; I know a lot of them in the city. If you're in certain areas, you want certain agents. You don't want an agent out of Anderson, Indiana, if

you're buying in Greenwood, Indiana. That's not really what you want. They aren't going to know your market, most of them wouldn't even wouldn't even do that. Because they know they don't know the market. So, you need an agent who knows your market, understands the market. And we want to help you find them. We can certainly do that if you don't have somebody. But then your out-house hunting, you search, you find the house. This is a lot of fun, you're out looking for homes, and you find the house that you want. So, the next thing you do, once you found the home, you're going to make an offer, the offer goes in normally and then there's a negotiation, and understanding negotiation, you can negotiate pretty much anything. You can negotiate the time when you're going to close on the home. You can negotiate the price; you can negotiate when you take possession of the home. There's just a variety of things that you can negotiate. Different markets will require different situations. Right now, you might negotiate on how you're going to do the inspection, the inspection response. I would caution anyone just as a side note, wanting to waive the inspection do not do that. I think that's a very dangerous thing to do. Trying to get a property. I think you still need the inspection and anybody you know, should be okay with you. You put in a limit, you know, I won't I won't ask for anything fixed under a certain dollar amount. So, they're not nickeled and dimed to death. But you know, let's say you think everything's great. And that inspector comes back and there's mold in the house. You don't want to end up with that house. And so, you want that protection, because I’ve seen that happen. I've seen it happen when people have told me this house is perfect, I'm not worried about it. We're going to get an inspection anyway; they get the inspection and then there's something major wrong with the house. So, you don't want that to happen. So, you can negotiate those things. The home inspection we already talked about, it's certainly something you need to do. You also need to shop for homeowners’ insurance, homeowners’ insurance is critical. Homeowners insurance is insuring the home. If you buy a condo, they're going to have the insurance to cover the building but you're still going to need homeowners’ insurance and the lender is still going to need the homeowner’s insurance so you're going to need to do that. We don’t want you shopping for that too late because we don't want an issue causing us something where we can't close. And when we’re qualifying you, one of the things about qualifying is you have to understand I'm qualifying somebody to a payment because one of the big things you know, obviously there's credit we look at credit, we look at income and assets, but debt to income another critical piece to being qualified and debt to income is the total housing payment. So, it's your principal interest taxes and insurance, homeowners’ association dues, if there's flood insurance, anything like that, compared to your income, that's the we'll call the front ratio. And then all other debt plus those is the back ratio. But we have to look at that. So, when we qualify you to a loan amount, we're actually qualifying you to a payment with numbers that we're estimating, and then giving you a full, you know, here's what, here's what we you know what you can afford, here, we're giving you a price, because you can't really go shopping on a on a payment, you have to go shopping with a price. So that's what we qualify you on. But those taxes, insurance, homeowners’ association dues flood insurance, that will affect your qualification. So, we need to go through that and make sure we have that. That's why it's important if we if we think they're going to be $100 a month on homeowners’ insurance, that it's, you know, that if, if you're at the top end of what you can do, we want to make sure that we're, we're really in, you know, fine tune there. So, we don't have a problem for closing, that we finalize the financing, of course, you want to find the financing, all finalized. And once it's all done, what happens is you've got your house, everything's finalized, you're getting ready for closing, before closing at least three days before closing, you're going to get something called a closing disclosure, it's going to give you all the numbers, that won't be 100% Correct at that point, because there are still things that the lender doesn't know. Or could be most of the time, it's very, very close. But sometimes there's little things that that we're still figuring out. And then and we have to get that out and have it signed three days in advance of closing, if we don't do that, then we can't close. So, it has to go out even if it's not 100% accurate, then in that, then that time between sending that out and getting signed and closing, if there's anything that needs to be changed, we get that we get that corrected, we fix those things. And then you saw, then you get a new Closing Disclosure, right, you know, a day before closing approximately, so you can go get your money. And wire that to the closing, if that's what it needs to be or get a cashier's check. And once you have that, then you go to the closing. And you close and then you're able to move in. And you know, I had a question the other day about moving in. 

This person that noticed somebody had sold a house down the street, and they had a going away party for them in the neighborhood. And he said, well, they closed on Friday. But I saw them back on Sunday in the house, and is that normal. It's one of those things we talked about, you can negotiate anything. That could have been perfectly normal, it is something that happens where you don't get possession the day of closing, a lot of people do get possession the day of closing, but sometimes you don't give possession the day of closing. Or sometimes something happens at the closing where the person needs access to the house, one of the things that I've seen happen a lot is they weren't able to get everything out of the house. So, they left a few things in the garage at closing. They verify with the home the buyer that they can do that. And then they leave the one garage door opener in the house so that they have it but they go back and pick up the last few items after closing. So, it is something that can happen is definitely something that that does happen, and not something to be concerned about. But you want to do all those things, you just have to make sure that you have a very good agent who can walk you through that entire process. It is critical that you do understand the process and that you have a real estate agent that can walk you through that entire process. If you have any questions, you need a real estate agent or you want to understand the pre-approval process, or you want to get signed up to do the first-time homebuyer seminar, please go to my website. It's hardworkingmortgageguy.com You have all my contact information there. And we'll walk you through all the processes do the very best we can to make sure that you're very comfortable with whatever it is that you're trying to accomplish. Again, I appreciate you joining me today. Thank you so much. I hope you have a great Saturday.