Homebuying Made Simple: Q&A with a Mortgage Loan Originator

Episode 86: Pocket Change Podcast

What are common misconceptions about the mortgage process?

Misconception #1: You must use an escrow account.

Truth: While many loans require escrow, borrowers with at least 20% down may have the option to pay their property taxes and homeowners insurance directly instead of through an escrow account, depending on their lender.

Misconception #2: You must put at least 20% down.

Truth: A 20% down payment isn't required. Many loan programs allow qualified borrowers to put down less, and some offer 100% financing. While putting more money down can lower your monthly payment and may help you avoid private mortgage insurance (PMI), there are many financing options available to fit different budgets and goals.

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Full Transcript

Shea:

Hey, this is Shea.

Carrie:

And this is Carrie.

Shea:

Welcome to the Pocket Change Podcast.

Carrie:

Where you'll learn better ways to spend, save, and invest and take control of your financial journey.

Shea:

Carrie, you know, the mortgage process, something we don't often do. You know, maybe a couple times a year, but it's a…

Carrie:

A couple of times a year. You buying a house a couple of times a year?

Shea:

Couple of times in our lifetime. But definitely something that you need expert advice on.

Carrie:

That's right. Our guest today has been doing this for a very long time, so I would definitely call her an expert. And she's going to be able to help streamline that process for our members.

We're excited to welcome our guest Kelli Bryan, a Mortgage Champion here at Leaders. Welcome to Pocket Change, Kelli.

Kelli Bryan:

Thank you. It's so nice to be here with you all today.

Carrie:

Okay. So tell us a little bit about yourself and how you got here at Leaders.

Kelli Bryan:

How I got to Leaders. Okay. Well, I have been doing mortgages for quite some time. I started in 1997, so I'm working in my 29th year. I keep forgetting to tell people it's almost 30 years, but it's a long time.

Carrie:

That is a long time.

Kelli Bryan:

I don't know what I want to do when I grow up, but right now this is what I'm doing. So, I got to Leaders because a board member came to me, asked me if I could do a mortgage on a piece of property that they were selling to someone local that was on, you know, I think I think she was on the sheriff's department at the time. And I said, absolutely. And I used that word very a lot before I even came, before it became a Leaders, you know, part of our culture. But I told her absolutely, I'd be happy to help her with that. And I did the mortgage, and I did it really quickly, because the mortgage that the lady was trying to get before had been turned down and I was able to do it. And that board member came to Todd and Spencer and said, I don't care what you're doing, but you need her here.

Carrie:

We want her.

Kelli Bryan:

Her now. And so it was a cold call that Spencer made to me and said, we're really interested in talking to you, what we have here. So that's how I got here.

Carrie:

Awesome. We're so happy you are. I know you’re a pivotal part…

Kelli Bryan:

Well, thank you.

Carrie:

All part of our company.

Kelli Bryan:

Well, I've watched the mortgage division grow.

Shea:

You’ve seen it from very.

Kelli Bryan:

Early when it was just four of us, 4 or 5 of us. And now it's a lot of us.

Carrie:

Yes!

Kelli Bryan:

So it's grown a lot.

Shea:

So you had a little stint in real estate, too, is that right?

Kelli Bryan:

I did. I before I got to mortgages. I was a realtor for four years, and I just had a life event that said I needed to do something else. And the lady that I used to refer the loans to when I was a realtor said, hey, why don't you give this a shot? Because there's so many realtors out there working for business, but there's only a handful of mortgage loan officers in our area. Why don't you give it a shot? And so I said, why not? Everything else is changing in life. Why don't I change my career too? So that's what I did.

Carrie:

The rest is history.

Kelli Bryan:

Rest is history, like I said.

Carrie:

So what are some common misconceptions with the mortgage process?

Kelli Bryan:

Sure. There are quite a few. Had one at the closing table this morning we started talking about do I have to escrow? You know, a lot of times people think that you have to escrow your monthly your monthly taxes and insurance in your payment, and it's not a requirement on a conventional loan as long as you have a minimum of 20% down. So you can wave those escrow if you don't want to. Now the gov loans, you have to have your taxes and insurance included. And the other big misconception that we hear all the time, all the time, that is, is that you have to put 20% down on a mortgage, and that's just simply not true. There are so many products out there that allow you to do 100% financing, or first-time homebuyers with 3% or 3.5%. So it's, it is a big misconception. And, you know, there's just so much material on Google and things that you can read and it just becomes overwhelming. So I think it gets kind of lost in all of the material, so.

Carrie:

I agree.

Kelli Bryan:

Those are just a couple.

Carrie:

It’s overwhelming.

Kelli Bryan:

It is overwhelming. So yeah.

Shea:

I think that's good that we're having this conversation today to hopefully give some insight into the process and share about a lot of the questions people may have, because it is a 1 or 2, you know, not often we do this buying a home. So. Right. It's just a few times during our lifetime, maybe that we may go through a mortgage or buy a house. So it's good that we can talk about those things.

Kelli Bryan:

And things change so much from year to year, so much they change so.

Shea:

And so. There are different options, like you say, you know, first time homebuyer programs. VA for military. What are some of those loan options and what makes them each unique?

Kelli Bryan:

Unique? Yes. They're basically four types of loan programs that are out there. There are conventional loans which also offer a first-time home buyer loan program. That's a minimum of 3% down. And you also have typically a lower mortgage insurance premium because you're only putting 3% down. And because you're a first-time home buyer, your premiums a little bit less. There are FHA loans. FHA loans are very, very popular. A lot of people get FHA loans because there's only a requirement of 3.5% down. They also are a little bit more forgiving with your credit. Or if you've had, you know, something unfortunate happen, you know, in the past with credit, it's much more forgiving for FHA. And then there is VA, which is for our veterans, which is 100% loan product, which is an exceptional loan program. And then there is USDA, which is or we use another term, rural development, USDA loans. Those are also 100% financing, but they do dictate where you have to purchase. So it's based on population census. So there are areas and there's a link that you can look at that online and plug in and address and it'll tell you. Yes it's in the correct area or no it's not available for that. So those are just a few. And then of course you have your other products that you have to couple with that. Which are your first-time home buyer programs like THDA, Tennessee Housing Development Agency, has a program where you can get assistance with down payment and closing costs. And then we also have that Federal Home Loan Bank grant that comes out, rolls out first of the year. That's super popular and goes real quick, right. And of course, there are some other products in Memphis, in the greater Memphis area that are just for the greater Memphis area. So there's lots of options. There's hardly anything that we don't do. And then we have a whole plethora of in-house loan programs and products that we do too. So we're not just, I don't want to say we're a one stop shop because that's kind of an old term. But if we can't help you, then we've pretty much failed because there's just so many options out there.

Shea:

And I think, you know, we'll find a way.

Kelli Bryan:

We'll find a way.

Carrie:

That’s right.

Kelli Bryan:

If we can make it happen, we're going to make it happen. We'll find a way.

Carrie:

As we often say, we meet our members where they're at.

Kelli Bryan:

That's right.

Carrie:

Whatever journey they're going through in life. That's right. You can try to find something to work.

Kelli Bryan:

That is exactly correct.

Carrie:

So for those that are in a journey of maybe buying their first home, what would their first steps be?

Kelli Bryan:

Their first steps are to reach out to a loan officer a mortgage loan officer at Leaders. It's a great time to start the conversation. You've got to start the conversation so you know what kind of options are out there. And to be honest, you know, a realtor is going to want you to be approved if you're going to be working with a realtor, if they want to know that you're approved to be able to purchase. So it's really, really important to just take that first step by making that phone call or stopping in one of our branches. We have loan officers at several of our branches, not all, but several. And wherever you typically bank, if it's a branch that you frequent a lot, you'll, they'll be able to tell you if there's a loan officer there or where you can go. And of course, we have the off, the main office off of Stonebridge, which there are a few loan officers that are at that branch.

Shea:

So the best thing to make an appointment.

Kelli Bryan:

Make an appointment, make that call.

Shea:

Call…

Kelli Bryan:

And, you know, we make appointments easy because you can do that online. So you're able to find one of us that you want to sit down with.

Carrie:

So and the first step would just obviously be that. But then get pre-approved.

Kelli Bryan:

Then to get pre-approved if you're ready to, you know, to go further with the journey and you're ready to actually sit down and provide documentation, you have the choice to do it in person. Or you can do it online, and all of that can be electronically uploaded. You don't have to come to us, you know, I don't want you to feel like you have to come see us first because that is not true. You definitely can start that journey first online. And it's not unheard of that I don't meet people until we go to closing, because I do go to my closings. So it's not uncommon for me not to meet you until we're actually physically there because we've had all these conversations via email, text messages and, you know, on, on the phone. So that's...

Carrie:

We try to make it as convenient as possible.

Kelli Bryan:

Convenient as possible. But if you are a first-time home buyer, I say make that first journey, make that phone call, even if it's just a phone call to speak with a loan officer, because there's just so much information out there that gets muddled, gets confusing, and it gets very difficult.

Carrie:

Ask the right people.

Kelli Bryan:

Ask the right people. Yep.

Shea:

Yeah. Well, back to the pre-approval. You talked about the importance of that and realtors want to see that. So what does that tell a realtor that you know about a borrower?

Kelli Bryan:

About a borrower… what our pre-approval say because…

Shea:

How does that stand up again others?

Kelli Bryan:

Yeah it does. It's a little different than others because our pre-approval are a little bit more... They're, they're stronger I guess is a good word to use because we want to see pay stubs. We want to see your W-2. We want to see your bank statements. If you don't bank it, Leaders Credit Union and you bank at another financial institution, we are always willing to help anyone and everyone. You don't have to be a member to get a mortgage loan here, right? So we want to see those bank statements and sometimes tax returns, depending on what type of loan program and product that you're getting, dictates what kind of documentation we need, but we want to physically put our eyes on that because truly, a pre-approval is a conversation. Okay? But if you're wanting to get an approval, put on paper so you can hand it to your realtor to say, you know you are approved for X, we want to see that documentation because we're putting our name on that letter with you saying that we've seen this and we know that you can get prequalified and we have run it through the automated underwriting system, and we've done our due diligence to make sure that your approval will stand up. So we've looked at all of those things. We've talked about what's on your credit. We've discussed all of those things. So it's a strong letter. When we hand that letter to you, it's a solid letter. And a realtor in this town and other communities know that it's a solid letter when they get it from Leaders. So and that's not always the case.

Shea:

It's well informed. And so they know they can make a they want to buy, you know, make an offer today. They can do it because they have it.

Kelli Bryan:

They can do it. That's exactly right.

Shea and Carrie:

That's great.

Kelli Bryan:

Yeah. Great.

Carrie:

So we all want to know what does the home buying market look like today?

Kelli Bryan:

Well you know there's a lot of people say a lot of things, you know, and everyone's like oh the rates are so high. The rates are too high, the rates are too high. And you know, if you really look at the history of interest rates, the interest rates really aren't high. It's just, it's really hard to get the public off the perception when we were in the twos and threes and the fours for a while, it's not 2020 anymore. It's not 2021. So. Interest rates are you know they're in there in the sixes. You can buy some points down to get them down into the fives. That's not a bad interest rate. It's not a one size fits all for interest rates unfortunately, or a one size fits all for product because every product has different interest rates with them. So it's having the conversation of what's going on and what the rates are. So it is busy. We're busy Leaders is busy. I don't think I've ever worked here when I wasn't busy. And I've been here, I'm working in close to my 15th year now. I don't think I've ever had downtime because we have a wonderful, wonderful membership that keeps us on our toes and keeps us going. So there are a lot of people getting pre-qualified right now, a lot of people looking at homes. So it's it is a good time to buy. If rates go down, then we issue coupons at closing. That says if you'd like to refinance or repurchase in the next five years, we're going to stand behind this and we're going to pay our lender fees on our behalf. We're going to pay those for you so you can refinance, have the comfort of knowing that if you purchase right now and your rate may be a little higher than what you want, and if rates drop and they come down, then we'll refinance you and we'll pay our lender fees. So that's, you know it's a good deal. So the longer you wait the housing market will just continue to rise as far as price is concerned. So even if the rates do come down the price is going up. You're still at the same situation that you were when you decided not to buy.

Carrie:

Right!

Kelli Bryan:

So. Buy now get out there.

Shea:

We can certainly be grateful that they're not double-digit rates. I mean, we are. Correct six seven or whatever it is.

Kelli Bryan:

Hey, when I start, when I started almost 30 years ago, rates were in the eights, okay? They were eight and we're in the sixes and fives. Come on.

Carrie:

Perspective right there.

Kelli Bryan:

Yeah it's perspective I mean you know when I started it was in the eights, you know, and I talked to other people that have been in a much longer than me and they'll say, well, it was fifteen or, you know, when we when we finished. And I think my mom and dad, when they first got a house, I think I remember looking through paperwork a long, long back in the sevens, the rates was like twenty something.

Kelli Bryan:

And I was like, how did they do that? But, you know.

Carrie:

I think you're right.

Kelli Bryan:

Things are….

Carrie:

Perspective right now.

Kelli Bryan:

Yeah, it's a buzzword. It is so.

Shea:

And they're just changing so often it seems so. Yeah.

Kelli Bryan:

Just get off the fence.

Shea:

Yeah.

Kelli Bryan:

And purchase.

Shea:

Yeah. Take that step.

Kelli Bryan:

Take the step.

Shea:

So what encouragement would you have for somebody... You know credit is a part of looking at a mortgage, a home loan. So if they have less than stellar credit but want to buy a home.

Kelli Bryan:

Sure.

Shea:

What does that look like and what are some of the requirements for some of the loan products out there?

Kelli Bryan:

Yeah. Yeah, absolutely. A lot of people know, you know, they have a pretty good feeling on what their interest rates, I mean, what their credit scores are, because, you know, we make that so easy for everyone. You know, we show it on our app, you know. And everyone can look at Credit Karma and all the other places that they can look. I just always start my conversation with individuals. Just please remember that as a consumer credit score, that is not a mortgage credit score. Mortgage credit scores are a little different. The scoring module is different. There's hundreds of scoring modules out there. So the scoring module for mortgages is a little bit more stern. Maybe is a good word. It looks deeper into the credit further back then what some consumer credit scores do. But don't let that stop you because it we want you to have that conversation. We want you to start with a conversation and, and figure out what loan product would be good for you. You don't have to have perfect A-1-700 hundred credit score requirements in order to purchase. So when you look at programs and products, conventional loans for a first-time home buyer typically want you to have a little bit higher score. But they are also, right now, Fannie Mae has actually removed some credit score requirements, and we can run through automated underwriting. And even with lower scores or no scores and get approvals. However, I say that with a, however, we still have investors that haven't lifted their guidelines from being able to take those loans. So that's changing, okay. And it's going to continue to change. But as far as FHA is concerned, FHA credit scores go down to 580, you know, but there are some alternatives that you have to have to fit into the profile. And as far as USDA, it's 640 or greater. VA is like 620. They'll take some that are lower if there's some extenuating circumstances and also some credit, alternative credit issues. So every one of the programs is a little bit different as far as what kind of scores they're looking for. So like I do say FHA is a little bit more forgiving. So if they go down to the 580.

Shea:

Yeah, I think that's important. Someone along the line maybe they've had issues in the past. But you know we're working on it or want to build that up wherever they are.

Kelli Bryan:

And we want to start we want to start that path with you. Because if it's not right now, don't take it as a no, okay. It's just not right now. But we want to create the path for you and help you and counsel you on what you need to do to get the credit scores where you need them to be in order to purchase.

Carrie:

Right.

Shea:

Absolutely.

Carrie:

So we're here to help.

Kelli Bryan:

We're here to help.

Carrie:

Yes. So do you have a member success story you'd like to share?

Kelli Bryan:

I do, I do, I actually do. I have a lady that I worked with about 14, about 14 years ago here. She came and she was a hairdresser and she owned her own business. And so she's self-employed. And if anyone that's never been self-employed out there knows, they probably don't know. But you had the ability to be creative with your tax return filing. I would say that's a good word. Creative. A lot of CPAs should show you what you can and can't do if you hire a good CPA. I always say a good CPA is going to make sure you don't have to pay very much in taxes at the end of the, you know, they're going to figure out a way to be able to have write offs, which that's a double edged sword in our world, because doing that, if you've got a lot in gross receipts at the top of that lovely schedule C, and then in the middle of that schedule, see you did all these write offs. There are only a few things that we can actually add back. So when you subtract it and you get down to your net and that net is a negative, or that net is like, how do you live on $5,000 a year, that's a that's a problem for us. Okay. Because we're looking at income. Right? Okay. And income is what you have paid taxes on. So when you don't pay taxes on that income we can't count it. Right. So I sat down with her, pulled her credit, looked at her tax returns, and it was a oh moment of, oh, your CPA is wonderful because you're not paying much in taxes. But the other side to that is there's no income for me to use. And she said, what do I need to do? And we walked through the path of what you needed to do. We also walked through the path of what you needed to fix on credit. And while she did that and then filed a tax return, that made sense for us to be able to use for income, we were able to get her into a home. And, the happiest woman you've ever met in your life. And she to this day still has her shop as a hairdresser. She only does hairdressing part time, only has a few customers because she stepped out and decided to do what she really loves to do, which is sell houses.

Carrie:

Oh wow.

Kelli Bryan:

So she's a realtor now?

Carrie:

Full circle.

Kelli Bryan:

So a full circle. And now she's sending her clients to me. So it's been a true blessing for her and for me. So it's worked out.

Carrie:

So I feel like that's a story of many members to not just one person…

Kelli Bryan:

Yes, it is.

Carrie:

But it is like because many people share that same type of story.

Kelli Bryan:

Correct? Correct. And we're coaching her, you know, clients now. So and we've been able to get several in just put her niece into a home that had unfortunately gone through a divorce with three small children and she was a hairdresser too. But she listened to her aunt when her aunt said, you've got to file your tax returns with income. You've got to pay taxes on your income. Don't write everything off. So she had already worked with her niece and prepared her for that. So when she came to me, we were able to use the Federal Home Loan Grant program for her. Had she not been able to get that money, she wouldn't have been able to purchase.

Carrie:

That's wonderful.

Kelli Bryan:

So she was able to get the home that she needed for her children. And so it was a true blessing this year.

Carrie:

You know, that goes a little deeper to me. That right there shows how you can break the cycle of something.

Kelli Bryan:

You can break the cycle. You can. You absolutely can. So,

Carrie:

It was, it's education.

Kelli Bryan:

It's education. It's that simple phone call. It's the simple phone call to get someone to talk and share your story. And, you know, a lot of times people think, oh, well, you've probably not heard this before, but I'm, I'm kind of like, I probably have heard it before. But, you know, some stories are new, but I don't think I've heard one in a long time that I haven't heard before. And it can be fixed.

Carrie:

Which is good, because you've got that experience and you know.

Kelli Bryan:

It can be fixed. It can definitely be fixed. So that's what we're here to do.

Shea:

You talked a little bit just now about breaking cycles. And why else do you think homeownership is important?

Kelli Bryan:

I think homeowners homeownership is important because it creates a generational wealth that is really hard to do for a lot of people because, you know, they may be, a blue collar worker that works in a manufacturing plant. And while they may have a great 401k… this, if they purchase now starts that stepping stone of being able to make sure that they're where they need to be by the time they get ready to retire. It creates that generational wealth. And it's just so important. It's so important.

Shea:

Yeah.

Carrie:

It's great.

Kelli Bryan:

And it gives a person a perception of pride when they're a homeowner. It really, really does. I mean, you can paint the walls any color you want. That's right. You know, you can move a wall if you want to. You can't do those things when you rent. And, you know, renting is great for a period of time when some in someone's season that they need to. But having a home, it just creates a more rounded person. I believe it's my perception of it is that they're more rounded and they take pride in their community. They take pride in their home.

Shea:

They are a contributor to the community.

Kelli Bryan:

Yeah, they're a contributor.

Shea:

Paying taxes and properties.

Kelli Bryan:

Right. That's right.

Shea:

Keeping up their grass.

Kelli Bryan:

Correct. You have a vote. You have a you have a voice to complain because you know.

Carrie:

Well, and it's just a smart investment.

Kelli Bryan:

It is. It's so smart. And it just it does create generational wealth.

Carrie:

So okay so you're great at giving advice. You've seen it all. But what has been the best financial advice that you've ever been given?

Kelli Bryan:

Oh that's easy for me that that comes straight from my mother. And believe it or not, she told me many years ago when I was looking at purchasing, she said, honey, you know, don't buy and let the home own you. You need to own your home. So don't get into a payment that is going to strap you. So own your own home. Don't let it own you. And I've always taken that advice.

Carrie:

I've always heard that, and I agree with that. Don't be married to your home.

Kelli Bryan:

Don't be married to your home because there's, you know, you want you want to have a life. You want to be able to go out to dinner. You want to be able to go to the movies if you want to. And I haven't been in a while, but my son, told me the other day how expensive it was. I said, I don't think I'm going to be going to the movies anytime soon. But, you know, it's just life.

Shea:

Life happens to enjoy life.

Kelli Bryan:

Yeah. You want to be able to enjoy it. You don't want to be stuck in a house that has no furniture, because you can afford to buy any because of the mortgage payment. So yeah.

Carrie:

And it's also one of those things where, you know, invest in that home now. And it doesn't have to be the largest home.

Kelli Bryan:

No it doesn’t.

Carrie:

But in time you can…

Kelli Bryan:

step up and step up.

Carrie:

Exactly.

Kelli Bryan:

Yeah. That's creating that generational wealth. So you can take that equity from that home to be able to purchase a better home or a bigger home, or purchase a different home and then put a pool in or, you know, there's just so many.

Carrie:

Or maybe even a vacation home.

Kelli Bryan:

Exactly a vacation house. Right? So, yes. Absolutely.

Shea:

Well, if you had some extra change in your pocket, since this is the Pocket Change podcast, what would you spend that on?

Kelli Bryan:

I always have extra change and we, we hoard a little bit in a little bucket, kind of like a little piggy bank or whatever at home. And we always cash that money in when we get ready to go on vacation so that we do a nice dinner or a tour or something. So yeah.

Carrie:

Yeah. I love that.

Shea:

Saving it up for vacation.

Kelli Bryan:

And saving it up, you just you never know how far that pocket change will go.

Carrie:

That's true.

Kelli Bryan:

You never know.

Shea:

You can get a lot out of it.

Kelli Bryan:

You can get a lot of it. I see a lot of people come in with a lot of pocket change.

Carrie:

Well, thanks so much for joining us today.

Kelli Bryan:

Thank you. Thank you very, very much I enjoyed it.

Carrie:

Thanks for tuning in to the Pocket Change Podcast.

Shea:

Be sure to rate, review and subscribe and check out our full episodes on YouTube.

Carrie:

Pocket Change Podcast is brought to you by Leaders Credit Union.

Shea:

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