First-Time Homebuying with LemonBrew
On this episode of Financially Naked: Stories from The Financial Gym, our host is Terri Bennett, Financial Trainer, and she is joined by Brent from LemonBrew Lending.
Podcast Notes
The first step when buying a home is to speak with a mortgage broker to get a better idea of how much of a loan you qualify for. Income, credit, and equity (ICE) is what they will review.
Big banks typically have a lot of overhead. Mortgage brokers are smaller and have access to wholesale mortgage rates with some of the largest banks in the country. Quicken is one of the largest mortgage lender, but if you contact them directly, you will get the retail price. If you contact LemonBrew, you will get the wholesale rate. A broker can get you the best deal.
There are certain margins a broker can set. LemonBrew is a low margin, high volume mortgage broker. They make up the low margin by doing a lot of mortgages and they pass the savings onto the client.
Mortgage brokers are typically local and you can sit down with them and get a level of service. They typically have a handful of loans in their pipeline and they can provide better service and more experience compared to big banks.
Once you receive a prequalification letter from a mortgage broker, find a real estate agent. LemonBrew has a platform that connects people with agents, mortgage brokers, and title companies. Once you find an agent, let them know what you are looking for regarding type of home, price range, square foot, location, etc. After you find a home, you will make an offer and put some escrow money down.
Once you are under contract, you will go back to the mortgage broker. The real estate agent is somewhat finished and it is up to the mortgage broker to finish the deal. You will fill out an application for a mortgage, and the broker will need to do a credit check.
The loan will then go into underwriting, and you will need to provide documentation like W-2s, paystubs, bank statements, homeowners insurance quote, etc. The underwriter will issue an approval, which shows that you are qualified with your income, credit, and down payment.
The broker will then need to make sure there are no liens or judgments on the title of the home you are about to buy.
Brent recommends that people get a home inspection done. This isn’t required by the lender, it is for you, the buyer, to insure you are getting a home with good bones and no surprises. This gives the buyer leverage to go back to the seller and ask to have things fixed if needed.
Real estate agents earn about 3% for each transaction, but the industry is changing rapidly. Some agents specialize in specific home types, like condos and co-ops, or specific price ranges.
Interest rates are at an all-time low and refinances are very popular right now. The pandemic has catapulted remote work, and, as a result, people are moving from cities to rural and suburban areas. This means closing on homes and refinances are taking 60 or 90 days instead of three weeks.
If you are considering purchasing a home or refinancing, you need to be concerned with two things: the interest rate and closing costs. Most banks and brokers have lender/bank fees, but LemonBrew doesn’t charge these. For the third party title fees, they are pretty cut and dried and there isn’t really much your lender can do about these rates.
Resources Mentioned
LemonBrew: https://www.lemonbrew.com/
Mortgage Division: https://sdcapitalfunding.com
Brent’s Phone Number: 803-431-4843