Making Home-Buying Easier

[AUDIO LOGO] BRANDI:Hi. Welcome to our podcast, MakingCents, brought to you by Navy Federal Credit Union. I'm one of your hosts, Brandi Gomez, and I'll be taking your questions to the experts to help you make sense of your money. Pun intended. 

 

Hi. Welcome to the MakingCents podcast. I'm your host, Brandi Gomez, and today we'll be diving into how we move forward in 2023, what homebuyers should know in this market, and what we've learned from the past year. My guest today is Chris Davis, who's the assistant vice president of home lending at Navy Federal Credit Union, and we're excited to hear what he has to share with us. Welcome, Chris, so happy to have you on the show. 

 

CHRIS: Thank you so much, Brandi. I'm super excited to be here as well, and to talk about purchasing homes in 2023 is just what I want to do today. 

 

BRANDI: Great. Well, let's get things kicked off. Let's tell our listeners a little bit more about you, what do you do here at Navy Federal, your experience. 

 

CHRIS: So I came to Navy Federal Credit Union almost 13 years ago, but I've been in the home lending or the mortgage industry for over 30 years now. It's so exciting for me, the job that I get to do is helping our members to purchase homes. I work with our teams of mortgage loan officers, and every day we talk about "we get to". We get to share the joys of home ownership. We get to share the journey, the homebuying journey with our members. And what an exciting and fun job that is to do. 

 

BRANDI: It's got to be rewarding. I feel like home lending, you're part of that major milestone in the lives of our members, families, service members, helping them to potentially own their first home, refinance. So let's reflect on the last couple of years because we've certainly seen some lessons learned, some challenges. What did we observe in 2022? 

 

CHRIS: Yes. So 2022, the main lessons and the challenges that we saw, the observations, things that we learn throughout 2022. Really, the number one overall was, it was a tough year for the American dream. It was definitely a seller's market. What we saw was sellers that were receiving multiple offers from potential buyers, so they had their choices on what buyers to work with. 

 

There were a lot of buyers, institutional buyers even, had a lot of cash offers that were out there, that are competition for our members that were looking to also purchase homes. We saw some buyers that were waiving their contingencies such as appraisals or home inspections or repairs. We saw some buyers that were willing to pay above the market price in order to get homes. And a lot of this was fueled by the historically low interest rates that we saw throughout 2022. 

 

BRANDI: I think that's one of the biggest things I remember from last year was just hearing stories from my friends, from fellow service member friends, sharing how they kind of started to lose hope after a while because it was such a competitive market. But I feel like maybe we're turning the corner, turning the page. What can we expect now? 

 

CHRIS: We definitely are turning the corner. 2023 really proves to be a much changed year. March through the end of summer is generally what we refer to as the busy buying season. And so as we're coming up on that time period, current inventory is still relatively low, but buying demand is also significantly lower than it was a year ago. 

 

So there's far fewer institutional buyers and far fewer cash buyers that are in the market, in essence opening up the market for us, the everyday home buyer. Our members that want to get out and buy a home. There's some great new construction opportunities that likely didn't exist a year ago. And we're seeing it as the turn from the seller's market, even in such a way that we're now seeing some sellers offering concessions to help sell their home. Meaning the sellers are willing to bend to make the sale of their home a little bit more lucrative or better for the home buyers that are in the market today. 

 

BRANDI: So regardless of the market, I feel like there's just things that you should know, you should keep in mind when buying a home. So what are those things that matter most that you should take into consideration if you're even thinking about entering the home buying process. 

 

CHRIS: Right. And I like the way that you said, even if you're just thinking about entering the home buying market, what should you be thinking about? And the first thought that I would share with our members is the right home at the right time. And every person out there has individual needs, and all of those individual needs may be different. 

 

The idea of-- likely what's most important when we talk about the right time, the right home, is cash and payment. We're going to be most concerned about, how much cash am I going to need to put into the transaction? We're going to be most concerned about, what's that new monthly payment going to be? And our members need to have the information that's going to help them to make the right decisions regarding those two things first. 

 

I'll give a couple of examples though on why cash and payment is so important. Cash, don't go out and buy a fixer upper if you don't have the money in the bank to fix it up. And then, payment, why is payment so important? Well, don't crush your budget and purchase a home that's going to put demands on your lifestyle or change your lifestyle in order to be able to afford that home. 

 

BRANDI: You know I think that's a conversation that me and my husband, we have a lot. We talk about, I don't necessarily want to be house poor and live outside of our means, but I also don't necessarily want a fixer upper because it just doesn't work great for our family. I don't have the time, the resources like these TV shows do to truly make it feel like a home. 

 

So tell me a little bit more about how Navy Federal has learned to adapt to both kinds of markets. 

 

CHRIS: Yes. With the shift in the market that we're seeing today, and with the challenges that we saw in the market throughout 2022, one of the things that has become a very high priority for Navy Federal Credit Union is being able to meet our members closing time. We very strongly want to make sure that everybody out there knows, typically the normal closing time to purchase a home is going to be 30 to 35 days. And we're working well within that time period to be able to close loans now. 

 

So typically, it's going to take about 30 to 35 days to close a loan. But during the peak market time periods that may have been a challenge for some sellers to be willing to give that much time to close. And so, today, the opportunities to be able to meet our buyers needs for when they want to close, we are able to do that. 

 

BRANDI: I also think that communication is key throughout the entire process. You are truly building a relationship with your lending officer. And being able to communicate clearly to them about, you know, what are your expectations? But then, be able to have that courageous conversation, say, look, this is what's realistic. So I know I appreciated that throughout our home buying process. 

 

What are some other guidance or tips that might help buyers overcome higher rates? 

 

CHRIS: As we think about what is most important-- We talked earlier about things that matter most regardless of the market. And the ability to buy is one of those things. The need and the ability to be able to finance the home is certainly included within that. And when we talk about that in a mortgage for a home, the three things that are most important is your credit, your income, and your assets. 

 

And so, as we talk about those three things, as you look to consider about when is the right time to buy, number one on your list should be make sure your credit is in good standing. If there's bills that you can pay off now, pay those off. Make sure your job and your income are in good status. 

 

When we look at income, we're looking at qualifying income. And so not all incomes would count for qualifying income. If there's something that you were doing under the table or earning cash, you've got to be mindful of that. It may work great for your budget, but it is not necessarily going to be a piece that's going to help you in the qualifying for a home. 

 

Make sure you know your monthly budget, and know the monthly price range that you want to be in for a home. Those are really the top three things when we talk about credit, income, and assets to get prepared for in advance. 

 

Now the other thing I would tell you and make sure that you're aware of as you're preparing yourself, is also prepare by getting educated on the home buying process. Don't believe everything that you may have heard. Don't believe everything that is out there is going to necessarily impact you. And I'll give you an example of that. 

 

Navy Federal Credit Union is well known for the opportunities that we have in helping first time homebuyers. And a big part of the reason for that is our low and no-down payment loans. And so, the idea that you may have heard, I need 20% down or I need a large amount of money in order to be able to purchase a home is not always the case. And this is where I'd say, let Navy Federal Credit Union educate you on the programs that we have available and what it's going to take in order for you to be able to get into the market. 

 

BRANDI: So what I'm hearing, Chris, is really, you need to be able to do your homework. Take a really good look at your income, you and your partner's income, and know what is realistic for you and your wallet. But also, you need to have that trusted financial institution, the loan officer that's going to shoot it to you straight and tell you this is the process, this is what you really need to be looking into. So tell us a little bit more about, what are those educational resources that Navy Federal has available? 

 

CHRIS: We continue to make more and more of these member education resources available. On Navy Federal online, refer to our Member Education pages that are there, and go in-- and you can self-serve your education. You can work on and utilize some of the calculators that are available there to help you in determining or just considering what different payment ranges might mean for the purchase of a home. Get online and look at more of the MakingCents podcasts that are out there and available to you. There's a lot of member education resources online. 

 

But as you also get to know your loan officer, the loan officer that you're going to work with-- and you can connect with the loan officer online. You can connect by completing an application online. You can connect with the loan officer by walking into a branch. You can connect with the loan officer by calling the contact center. 

 

Once you're connected with the loan officer, they will also help you to you provide the other additional education opportunities that are out there. We are offering more and more live, and virtual, but in-person member education sessions. And I'd recommend every one of our members to look into this and take part in some of those that they can. 

 

BRANDI: Definitely. And MakingCents, I have read through the blogs and articles that they have on there and they really make it simple, so highly encourage you all to check that out. Something else that I don't want to skip over is, just as important as it is to have a solid relationship with your loan officer, it is with your real estate agent too. They need to be educated. They need to know how this process works. So how does Navy Federal work with real estate agents? 

 

CHRIS: Navy Federal is working closely with our real estate agents. And it's really a great partnership with our loan officers, and your real estate agent, and you yourself. The communication lines need to be open, and all three of those partner points need to be in regular communications to make sure that all of the needs throughout the transaction are going to be met. 

 

Our loan officers, if you don't already have a real estate agent, our loan officers would be able to help to advise on that as well. Navy Federal Credit Union has an outstanding member benefit that is called the Realty Plus program. And our loan officers can help to connect you through the Realty Plus program with the real estate agent that we know that you can trust, and that we've worked with in the past, and will work well with you. So I certainly recommend that you also check out the Realty Plus program. 

 

BRANDI: That's a huge benefit. I know from time to time, you don't necessarily want to use your friend that's a real estate agent, but you might want to use someone that you can trust. And if Navy Federal is recommending them and they've been vetted and reviewed, I feel like that takes another big lift off of your shoulders and what could be a stressful process. 

 

So one thing that I really appreciated in our process of buying our home was the VA loan. We were able to get a VA loan, and I didn't know necessarily all of the ins and outs of what was involved with that process. My real estate agent was informed, but Navy Federal made the process just so easy for me. So tell me a little bit about that and how Navy Federal can be a partner in that process. 

 

CHRIS: Sure. So Navy Federal Credit Union is the VA loan expert. It is our expertise. We are a top VA lender. Working with a lender that's experienced or a specialist with the VA loans is very, very important. That's why so many of our members come to Navy Federal Credit Union for their VA loans. It's our top program that we have available with the low or the no down payment, and that's the number one reason that the VA loan program is so beneficial to those that qualify for it. A VA loan is available for eligible service members, active duty or veterans, that met the service requirements and it is one of the greatest benefits that our service members get for serving or having served. 

 

BRANDI: And I think for the most part, me and my husband, we knew that we were eligible for a VA loan, but didn't necessarily know exactly what it was. So that helped to know that it was little to no down payment, we have specialists at Navy Federal that can help you explain it all. So I think for the most part, members, service members, veterans, they know what a VA loan is, but there are certainly some misconceptions out there. Can you tell us a little bit more about that? 

 

CHRIS: Sure. One of the things you said for yourself, you were well aware that you're eligible for that VA loan. But too many of the service members out there are not necessarily aware of it or just forget that this is an eligible benefit from them. So we've recently done a survey of 1,000 service members out there. And one of the things that we found out is that 29% of those homeowners who did not use a VA loan said the main reason they opted not to was either they didn't know or they just forgot about it. 

 

So there's a lot of misconceptions with the VA loans, and one of the things that we want to make sure that we're out there educating our veterans and our active duty service members on is all of the benefits of the VA loan. And making sure that they understand the ways that they can use it, and why it is such a strong program that they absolutely should consider using it. We don't want to say it's the right program all of the time, but I would go as far as to say it's the right program nearly all of the time. 

 

So some of the things that just to make sure that we talk about is that a VA loan allows you to finance 100% of the home of the home's value. Which is, again, just an outstanding benefit. The VA loan, the interest rates are lower because the VA loan is a government guaranteed or a government backed loan, and that allows lenders to be able to offer a lower interest rate. The qualifying for a VA loan is very typical to the same ways that you'd qualify for any other type of conventional loan that's out there, but if anything the VA loan may give extra qualifying criteria to our service members. 

 

BRANDI: That's great insight. And Navy Federal, you can talk to a loan officer and they'll walk you through what might be the best option for you. How else do you feel are members, those thinking about buying a house, can win this homebuying season? 

 

CHRIS: The greatest thing is to know if the timing is right for you, and then finding out what are the right ways to make this work for you. And again, Navy Federal Credit Union is so accustomed to working with first time homebuyers and working with those homebuyers that are looking for the low or the no down payment programs. That this is just such a great benefit to ease the requirements of what it's going to take to determine-- is the right time for us now? And again, the low and no down payment will make those choices much greater for our members. 

 

BRANDI: Great. Is there anything else you want to share with us today? 

 

CHRIS: Yeah, I do. Thank you. Thank you for having me today. And Brandi, what fun it is to talk about this. I talked briefly about how exciting it is for us. And this is our loan officers, this is our mortgage processors, this is our mortgage closers, and everyone in the home lending area and what we get to do. We often get to talk about what a joy it is to work in helping to make the American dream come through and just the opportunities to be able to do this. 

 

But also want to give a shout out to any of the real estate agent partners that we work with on a regular basis that might be tuning in to this podcast, because what a great opportunity it is for us to also work side by side with these great real estate agents. So many of the real estate agents that we partner with on a regular basis recognize our members, and I very often hear our real estate agents talk about our members as their members as well. And so, what great satisfaction we all get out of being able to help our members in these times, in the times of home purchasing. 

 

BRANDI: Thank you so much, Chris. So as you've heard it today-- if you're thinking about buying a home for the first time, maybe you're interested in using your VA loan or potentially even refinancing. Navy Federal can help connect you to a real estate agent, we can walk you through the process, and we're there to answer any of the questions you have. So thank you so much for joining us today, Chris. We appreciate your time, all of the tips that you shared with us, and look forward to having you on the podcast hopefully very soon. 

 

CHRIS: Thank you. 

 

NARRATOR: Navy Federal Credit Union is federally insured by the National Credit Union Administration. This podcast is intended to provide general information and shouldn't be considered legal, tax, or financial advice. It's always a good idea to consult a tax or financial professional for specific information on how certain laws may apply to your individual financial situation. References to and participation with the military community does not constitute organizational endorsement. Navy Federal is an equal housing lender. 

 

- Navy Federal Credit Union, our members are the mission. 

 

- Product features subject to approval. 100% financing loans may include an additional funding fee which may be financed up to the maximum loan amount. Available for purchase loans only. In order to fully benefit from Realty Plus services, you must be referred by Realty Plus before contracting with the real estate agent and be represented by the assigned Realty Plus real estate firm and agent at closing to qualify. Standard listing fees apply. Contact Realty Plus for terms and conditions.