TSB Money Matters

Unlocking the Door to Homeownership: What First Time Homebuyers Should Know

May 01, 2024 The Savings Bank Season 1 Episode 4
Unlocking the Door to Homeownership: What First Time Homebuyers Should Know
TSB Money Matters
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TSB Money Matters
Unlocking the Door to Homeownership: What First Time Homebuyers Should Know
May 01, 2024 Season 1 Episode 4
The Savings Bank

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Discover how to conquer the often-bewildering world of purchasing your first home with insights from Jeff D'Alessandro and Mario Giamei of the Savings Bank, whose First Time Homebuyers Program has been demystifying the process since 1993. With their expertise, we peel back the layers of securing a mortgage with terms that are refreshingly accessible—imagine nudging the door to homeownership open with just an 11% down payment and no PMI in sight. Our exchange brings to light how the bank's local, in-house lending practices don't just talk the talk but walk the walk, providing a level of personalized service that turns daunting into doable.

Join us as we discuss how the Savings Bank is challenging the status quo with its one-size-fits-all mortgage rate policy. Forget the industry standard of confusing risk-based pricing; Jeff and Mario explain how this approach levels the playing field and offers crystal clear transparency for every applicant. We also uncover the significance of in-person underwriting, a methodology that replaces cold, calculating algorithms with genuine human connection and understanding, embodying the true spirit of community banking.

In our final segment, we lay out the vital steps to securing a solid pre-approval in the competitive real estate arena. Armed with the right knowledge and documentation, Jeff and Mario illustrate how a potential homebuyer can transition from hopeful to homeowner with confidence. They emphasize the edge that a bank's pre-approval confers in the market, and why professional guidance is key in steering clear of the common pitfalls that can snag your journey to that dream home. Tune in and transform your aspirations into a concrete plan for success on your path to that coveted set of keys.

The TSB Money Matter Podcast is produced by The Savings Bank, a community bank headquartered in Wakefield, Massachusetts. The information presented is for informational purposes and should not be considered financial, legal or tax advice. Consult with a banker or financial advisor about your personal or business finances.

Member FDIC. Member DIF. Equal Housing Lender.

Visit us at www.tsbdirect.bank

Show Notes Transcript Chapter Markers

Send us a Text Message.

Discover how to conquer the often-bewildering world of purchasing your first home with insights from Jeff D'Alessandro and Mario Giamei of the Savings Bank, whose First Time Homebuyers Program has been demystifying the process since 1993. With their expertise, we peel back the layers of securing a mortgage with terms that are refreshingly accessible—imagine nudging the door to homeownership open with just an 11% down payment and no PMI in sight. Our exchange brings to light how the bank's local, in-house lending practices don't just talk the talk but walk the walk, providing a level of personalized service that turns daunting into doable.

Join us as we discuss how the Savings Bank is challenging the status quo with its one-size-fits-all mortgage rate policy. Forget the industry standard of confusing risk-based pricing; Jeff and Mario explain how this approach levels the playing field and offers crystal clear transparency for every applicant. We also uncover the significance of in-person underwriting, a methodology that replaces cold, calculating algorithms with genuine human connection and understanding, embodying the true spirit of community banking.

In our final segment, we lay out the vital steps to securing a solid pre-approval in the competitive real estate arena. Armed with the right knowledge and documentation, Jeff and Mario illustrate how a potential homebuyer can transition from hopeful to homeowner with confidence. They emphasize the edge that a bank's pre-approval confers in the market, and why professional guidance is key in steering clear of the common pitfalls that can snag your journey to that dream home. Tune in and transform your aspirations into a concrete plan for success on your path to that coveted set of keys.

The TSB Money Matter Podcast is produced by The Savings Bank, a community bank headquartered in Wakefield, Massachusetts. The information presented is for informational purposes and should not be considered financial, legal or tax advice. Consult with a banker or financial advisor about your personal or business finances.

Member FDIC. Member DIF. Equal Housing Lender.

Visit us at www.tsbdirect.bank

Ally Houghton:

Welcome to the TSB Money Matters brought to you by the Savings Bank, where we deep dive into the dynamic world of banking, finance and everything in between. I'm your host, allie Houghton, and we'll tackle topics including landscape of financial institutions, economic trends and the ever-evolving technologies shaping the future of banking. Today, we are joined by Jeff D'Alessandro, senior Vice President and Senior Retail Lending Officer from the Savings Bank, and Mario Jumet, mortgage Originator from the Savings Bank, and today we'll be talking about the First Time Homebuyers Program. Thank you for both joining me.

Jeff D'Alessandro:

You're very welcome, thank you.

Ally Houghton:

So start telling me a little bit about the First Time Homebuyers Program.

Jeff D'Alessandro:

Sure, at the Savings Bank we've been offering this first time homebuying product since 1993. It's our signature product in retail lending product since 1993. It's our signature product in retail lending and as a community bank longstanding community bank we've had the opportunity to provide this product to our customers and it has some very unique features in terms of what we offer. It's a product, a 30-year fixed product or an adjustable rate product customer's choice and allows a customer to put as little as 11% down with no PMI. It also allows them to take advantage of our reduced closing costs and everything we do here at the Savings Bank in terms of retail lending is a portfolio in-house loan product. Everything is underwritten and reviewed here at the Savings Bank. We don't outsource that and it's a product that we've done very, very well with and you know Mario is as an originator has seen this product day in and day out be our signature product and our most popular offering.

Mario Giamei:

Yeah, absolutely.

Mario Giamei:

Just going into the product a little bit, what's unique about the product for us is we offer an opportunity for first-time homebuyers to buy a home with 11% down payment and they don't pay for PMI.

Mario Giamei:

And just a brief synopsis of PMI is an insurance that was developed many years ago for homeowners who didn't have the traditional 20% down payment which they used to be the requirement, and now, through the years, they've developed this insurance with private insurance companies who sell this insurance on a monthly basis as part of your monthly payment.

Mario Giamei:

So, while it is a bigger expense, it also helps people who don't have as much money be able to get into a home without that 20% down payment. So what we've done here is take that idea and say look, we feel that we can make good loans to people with as little as 11% down as first-time homebuyers. Give them an opportunity to buy that first home, or maybe their forever home, and not have to worry about that PMI being part of the payment, which one helps them buy more house. It actually helps real estate agents sell more house. It allows everyone to get into the opportunity of homeownership at a younger age potentially and quite frankly, it's still a good. It's a good risk because today these homes aren't 60 or 70 or $100,000 homes. So for someone to have 11%, they're really still putting a lot of money into a home.

Jeff D'Alessandro:

Oh, absolutely. And in cases where you know we use the 11% you know kind of benchmark, but there are, you know, opportunities where maybe a customer has saved more than 11% and has enough. You know something beyond it and you know they with us, they're allowed to kind of make a choice. You know you may not be going into a house having it as perfect as you'd like and you have you know need for furnishing, updates, paint, anything like that, and you can. You know, if you have some of those safe funds, they don't all need to go into the transaction and for us, you know we find that you know that extra monthly payment. So PMI, private mortgage insurance is really you know it's a payment that you know you're going to have over and above the principal interest, taxes and homeowners insurance that is commonly involved with the monthly housing payment. So not having that payment and then also the flexibility of the customer to whether or not they have 11 or more, can almost tailor their down payment and avoid that PMI.

Mario Giamei:

on top of it.

Mario Giamei:

Yeah, and if I can add, they can still use the first timetime homebuyer product with PMI if they don't have 5% down or 11% down, if they're doing 5% or something in that range, but at the same time let's say they don't have 5% down the down payment can be gifted to them from a family member.

Mario Giamei:

Or if it's a domestic partnership, if the two people live together, they can gift one or the other. If they're not going to both be on the loan, they can gift the money. In fact, all of the down payment and the closing costs can come in the form of a gift. They don't even have to actually have any money out of pocket if they have the wherewithal from a family member or something similar, as I just mentioned. So it allows a lot of flexibility. Traditionally in a lot of the conforming lending there's always been this thing where certain amount of money in different programs have certain amount of money has to come from the borrower saved funds. So we've really made it feasible for folks to get into home buying and not paying rent at this point.

Jeff D'Alessandro:

Yeah, and that's really unique to us. I think typically, as Mario mentioned, you do have to have some. You know some of your own funds in the game, regardless of how much gift that you know. You're have to have some of your own funds in the game, regardless of how much gift that you're able to put into a transaction. Most lenders want to see a portion of your own funds, whereas with us, as long as it's truly verifiable and from a proper source, we're able to help those clients along without an abundance of saved funds.

Mario Giamei:

Right and there's more to the product than that. We're not just doing the reduced down payment with no PMI. We're offering reduced closing costs. We're paying real costs like an appraisal fee and a credit report fee, things that actually cost a lot. We're paying that for the first-time homebuyers. We're waiving our processing fee. We have reduced attorney fees.

Mario Giamei:

So there's a couple of different things there. There is, you know, we do. You know want to make sure that they have an opportunity again to save as much money as possible, and sometimes you're right. Fix up the home or maybe just have that nest egg, because we don't want them putting every last penny into buying the house and now being cash poor Because, invariably, unless they're buying a brand new home, there's an you know, there's a chance that there might be a roof leak, there might be a pipe burst, there might be a driveway situation that has to be taken care of, and to be able to allow them to keep some money. That way, it's just helping them all the way around, and that's really what this is about. It's as much about helping them as it is about the bank. We're not just a bank trying to make loans. We're trying to help people buy homes.

Jeff D'Alessandro:

And the other point, mario, in what you just mentioned in terms of you know having those extra funds, you know, many times, depending on how competitive a situation is, to make an offer, what you've seen over the last handful of years is there's many opportunities where you know a customer feels they don't have a proper shot at, you know, getting an accepted offer unless they waive certain things, one of those being a home inspection. While it's never advisable to do that, it's unfortunately in our area. You've seen that happen a lot. So if you're able to keep a few extra dollars that you may have saved and not put it all into the down payment you may have need for that because you didn't have the time or the ability to get that inspection done ahead of time and dovetailing onto that, as you just made me think about this even more.

Mario Giamei:

It's not just that in this competitive environment where someone may want to put 20% down and now this 20% number keeps escalating they can be potentially able to offer more to buy a house in a competitive market because now they don't need 20%. We have a lot of customers that come to us, started out with I have 20% to put down by the time they're done, navigating through a very, very difficult market to buy homes in the last several years and it's not very recent, it's been happening for a while it gets to the point where they say hey, you know what? I do need the 11% idea because I thought I was going to pay X for a house, but that X just became $50,000, $70,000, $100,000 more than I thought. So now I do want to put the 11% down and have that opportunity.

Jeff D'Alessandro:

So that flexibility gives you a huge competitive advantage in a very difficult market for sure.

Mario Giamei:

So back to what we were originally saying. It's the reduced closing costs, it's the low down payment, and we have two programs. We have a fixed rate program and an adjustable rate program, and while adjustable rates can be scary, we have what I think is, frankly, we've been doing this for I'm not going to say the years, a lot of years, right, more than 20. The adjustable rate program that we have is actually a really really good, solid, stable program. That I don't think is very dangerous compared to what people have been led to believe over the years with the traditional conventional adjustable rate products that are very volatile. We've made a product here and it's also available for a non-first-time homebuyers, by the way but we have a really good rate product under the adjustable rate program that we have that kind of has a safety net for people.

Jeff D'Alessandro:

Oh, absolutely. I think the ARM product is certainly a really viable option, especially in a rising rate environment. The fact that a customer can choose between whatever they feel works best and that our adjustable rate products don't don't have a uh, you know the, the, the caps are so user-friendly that it puts people in a great position for a long time.

Mario Giamei:

So back to some of my notes, too, what we talked about, some other items that we we bring up at the bank all the time, jeff, is we have servicing retained. As you mentioned, we're a portfolio lender portfolio lender.

Jeff D'Alessandro:

Yeah, let's explain. Yeah, I can speak English too.

Mario Giamei:

So portfolio lender means, while we have the ability to go out and lend the conventional products the Fannie Mae, the Freddie Mac, those types of things right now we're not doing that because our rates are better than the market rates at the moment and they do ebb and flow but it also we have the ability and the financial stability as an institution that's rock solid to be able to lend based on our own programs and our own, basically lending our own money, for lack of a better term. And it's created a stable market for us. Because one of the things that always comes up is the first thing folks will tell me is well, my credit score is X or Y and for us it doesn't really matter what your credit score is. You have to have good credit. But our pricing, our rate, is our rate. And I always tell people it's the pass-fail system you qualify or you don't, and the rate is what we post on our website and there's no difference.

Mario Giamei:

Now you have a lower credit score, so your rate just went up. You have a two-family house, so your rate just went up. You're buying a condominium, so your rate just went up. We don't have that here. It's one rate for all Single family condominium two-family, three-family, four-family. 780 credit score. 680 credit score.

Jeff D'Alessandro:

It's the same rate. We're not subject to the risk-based pricing you see out in the marketplace. And many times we're customers, especially first-timers, who are new to all of this. And it's a lot. You're looking for a home in a very difficult environment, You're dealing with realtors, You're going to showings, Then you start getting into the lending piece and you have the alphabet soup of PMI and LTV and it gets very overwhelming. But the fact with us is there's no risk-based pricing, so you don't have to worry about. Okay, if I buy a two-family versus single, or if I buy a condominium versus single-family, how does it affect my pricing? Because many times when people look at someone's rates, they're just simply looking at a rate or APR. They're not looking at those add-ons which we, you know, fortunately don't pass along to a customer as we're a portfolio lender, a true portfolio lender, yeah, yeah, and that's.

Mario Giamei:

And we also underwrite the loans to our own guidelines. We have, you know, we have in a lot of ways, being able to run, underwrite loans, kind of the old fashioned way, as people would say, because we look at it and we have a series of guidelines, versus you put it through a computer and the computer might spit out an approval today and a month from now something happens and you put it back at the computer and your score went down two points and suddenly the approval changes. That's not going to happen here. We underwrite the loans in-house. We have a lot of versatility.

Mario Giamei:

We are able to do some things for folks that maybe don't have as much credit, that we can help get through with alternative credit and different options. And it's certainly something not to go into in detail here, because every customer is specific and that's why we have these individual discussions. The nice thing is that you can get on the phone with us, by the way, and have a conversation. You're not just getting a telemarketer who's in you know Midwest Ohio or something, and answering the phone saying, well, here's what's on my script and these are the numbers, and oh, tell me what you think your income is, and suddenly there's a false pre-approval, there's a false answer.

Jeff D'Alessandro:

Yeah, and we'll get into pre-approvals in a moment, because I do think that's a key piece for a first time home buyer or, quite frankly, any borrower in the market is to have that pre-approval at the ready in your back pocket before you shop. But I think you hit upon a great point where we're not reliant upon automated underwriting making those decisions, and it's not just a matter of whether or not the loan will work or not, but in many cases your example where the credit score changed a few points over time while the customer is still looking, you know, with the risk-based pricing model that we don't use, which is great, risk-based pricing that rate or cost of that loan can simply change over. You know a point or two, and to not have to be reliant upon that I think is a huge service to our clients. And you know the rate is the rate, as you mentioned. I think that that's big. So if this is again a product that we've used, there's no agency fees and it's again, the reductions are real reductions.

Jeff D'Alessandro:

As Mario mentioned, we do really pay for things like appraisals and credit reports and things that have, you know, pretty high costs and we're often asked you know where's the catch? There's got to be something else to it and there simply isn't. You know our goal is to put people in homes in our community and to build a working relationship with local clients and you know that's the true you know mark of a community bank and this product, I think, is really reflective of that.

Mario Giamei:

Yeah, I tell people all the time I say, look, if you know mark of a community bank and this, this product, I think, is really reflective of that. Yeah, I tell people all the time I say, look, if you're looking for a salesperson, I'm really not a salesperson. It's not for me to tell you, you know, this is the product for you. It's for me to explain to you what we have and hopefully, you see the value of the product. And if you see the value of the product, you understand what's important there, that that it really is putting people in a good situation. They understand.

Mario Giamei:

And if it's you know I hate to say it it's not the product for them. I don't know that. There's too many people I've run across where it's not the product for them. They look at it and you're right, jeff. They say what's the catch? Well, what am I missing? Or you know where's the fine print on this? What's this going to cost? You know? So it's just a great product, I think, and frankly, it's what attracted me to the bank originally when I came here originally back in 2015. I saw this as an opportunity to do something the right way and a good opportunity to be at a good institution. It's a great institution.

Mario Giamei:

I don't expect you know, that there's ever going to be anybody better in my eyes. I think the Savings Bank is a fantastic place to be and I think our customers know that, and that's why the other piece to it is we do have a lot of customers that come back to us and then their children come back to us and their nephews and nieces come back to us and their sisters and brothers come back to us because we just offer. I hope that we're just always making sure we put our best foot forward, and that's what I'm getting started with this product certainly helps that to start that relationship, and you know so.

Jeff D'Alessandro:

One of the pieces that we mentioned through the course of this conversation is the term pre-approval and what you'll find. You know, as you're in the marketplace and many people within the industry do this as well Realtors, bankers they'll use the terms pre-approval and pre-qualification almost interchangeably and to us there is a major distinction. What we do here at the savings bank is a full pre-approval, meaning we look at your income, your credit, your assets and we underwrite it just like a real loan. The only thing missing in this equation is the property address. That's what we do, and when you go out to make an offer or to look and you hand that realtor a copy of our pre-approval along with your offer, they're going to know that we've done all the diligence behind the scenes.

Jeff D'Alessandro:

But you'll also hear the term pre-qualification, and pre-qualification typically does not involve the diligence I mentioned, meaning often there's no verification of documents. You haven't shown a lender your pay stubs or W-2s. Many times a credit report has not been run. It's more conversational. So if someone may say I make X, what do you think I qualify for? And that's such an open-ended question and many times and you can see this in the automated world as well, where you get these, you know you put in a few key pieces of information, the computer spits back out a nice you know, hey, you're pre-qualified, but with enough disclaimers to say that this, you know, this doesn't really, you know, hold much weight, whereas with our full pre-approval you're getting the diligence that an underwriter, same underwrite that they would do if it was a real transaction we're doing the same work, the same review, the same diligence, and it gives you something that when you have a pre-approval from the savings bank, that you know that when you ultimately do find the home, we're going to be able to lend you what we initially promised.

Mario Giamei:

Yeah, I'd like to flip that over on the other side of that.

Mario Giamei:

The other side to this is a lot of folks will try to figure out for themselves what they qualify for, and there is the fear that they're going to overqualify themselves and they don't really get what they should, or they're thinking they can get more than they can. But equally, I see people who end up knocking themselves out because they think that they should be adding in things to their debt ratio, for example, because they read online about debt ratio and they're trying to figure it out, because they're trying to understand the pieces. And you know, the internet is a powerful thing and we all probably read too much for our own good when it comes to our personal lives. But they end up disqualifying themselves, oftentimes on things that they shouldn't be disqualifying themselves for, and I tell folks that all the time. Look, please give me the opportunity to do this for you, because it's what I do every day and I promise you we're going to put our best foot forward, and I can't tell you how many times.

Mario Giamei:

Somebody told me well, I added in my cell phone bill and the utilities and all that stuff, and that's not part of what we're looking at and I don't want to get into the weeds on what we're looking at. And I don't want to get into the weeds on what we're looking at, but I think it behooves anybody. Information is free, at least at the savings bank. That never hurts to call and talk to one of us and I'd be glad to talk to you and go over everything with you, if it takes one phone call or five phone calls, if it takes five minutes or five hours, whatever we need to do so that you feel comfortable with the process. But also allow us to make sure we give you the optimal number that you can go out and shop with in a pre-approval process.

Jeff D'Alessandro:

It's very important because obviously the offers are competitive and we also want to make sure we're qualifying you for something that you feel comfortable with, because we know you have costs other than just your housing costs. You know, in order to, you know, get by, and so we're factoring in there. There are qualifying ratios that help us get to these numbers, but our ideal is to put you in a comfortable situation and, and more importantly, to be prepared. You know, one of the things we always talk about too with our first time clients is there are no bad questions, because many times it's. You know, it can be overwhelming with all the other pieces. You know, the, just the, the search of the home, and, and so we're happy to. We have great experience doing this and we're happy to go over those things. If it's more than once, it's certainly okay. And you know, mario, I know you see that a lot but in terms of you know, one of the things we really want to stress today is that having that preapproval done in advance and having that ready has been critical, and you never know when you're going to find that property and say I need to put an offer in, and it's a lot easier if you're ready to go, as opposed to saying, okay, I need to put an offer in on this situation. This property is just what I want and you've done none of this ahead of time, and obviously you're competing against others who have something.

Jeff D'Alessandro:

So our ideal is to get that done and in terms of that process, it's very straightforward.

Jeff D'Alessandro:

It involves pulling a few pieces of information together and it also involves just a simple application. It's about a five minute process to complete an application and by signing that, it gives the bank permission to go ahead and do what we do, which is look at your credit and as far as documentation, it's very straightforward. If you're a salary w-2 employee, you're looking at your most recent two pay stubs, your most recent two years w-2s and your most recent two months bank statements. If you do, um, either have you know self-employed or you you you obtain income in different way. We may ask you for your most recent two years tax returns, but beyond that, it's a relatively straightforward list and you know we turn those around very quickly and we try to show each customer what their max capacity is. It doesn't mean they need to borrow as much as we show them, but sometimes they'd like to know what type of latitude they have, and so we typically start that way and then we tailor those as they see properties along the way.

Mario Giamei:

Yeah, I mean, ultimately down the road, we need the tax returns because that's kind of the way we verify whether they're a homeowner or not. It's a very honor system-based process. Let's define that.

Jeff D'Alessandro:

We often get asked okay, what is truly a first-time homebuyer? And the obvious is well, you've never owned a home before. But there's a little bit more to this than the obvious. You can technically be a first-time homebuyer more than once If you have not owned a property in the last three years and, as Mario mentioned, how do we verify that? By looking at your tax returns. And if you haven't owned a property within the last three years, yes, you can certainly be a first-time home buyer again.

Mario Giamei:

More than once. Right On top of that, if you're in a situation where maybe you got married and your spouse owns property maybe like it's a condominium and you decide this is now, we're married, we need a house, but the other the one spouse is a homeowner, the other one isn't, we will still entertain that for both as a first-time home buyer and allow them to buy a home for a first-time home buyer again.

Jeff D'Alessandro:

Yeah, so we're very flexible with that. We understand that. You know, there may be cases, as Mario mentioned, where a couple's coming together and one party may have owned in the past and the other one hasn't, and in which case we'll take that as a collective and offer the first-time product to them. So we've done first-time products for not just young people, but people that have maybe owned in the past and maybe have moved for their career and moved back to the area, or have simply just got out of the market and rented for a period of time and are looking to get back in, in which case we can offer this to them as well, and so it's a real flexible product. It allows them to, you know, gain the benefits whether you've owned before or not, which is great.

Mario Giamei:

I think the first step at this point really is look, folks are either going to come to us or go to a realtor first. But if they go to the realtor first, and that's fine, they go to the realtor. The first thing the realtor is going to say to them is well, do you have a pre-approval from a bank? And if they don't, they're going to need to get one. So really, we're kind of the first step in the process Get their pre-approval from us. Now your realtor will take you out to go look at properties, because you have something concrete and if you see something you like, which invariably is the case, you're going to be able to make an offer.

Mario Giamei:

It's a lot worse to go see something you like not have a pre-approval letter, and now you're scrambling to get a pre-approval letter done and there is a process. Look, I try to and we try to bring them. You know, pull them all together in 24 hours, someday, sometimes same day, but if the borrower needs to find a tax return because maybe they and these are things that really happen I'm not making these up. Oh, we just moved six months ago. I've never unpacked. They're in a box. I don't know where they are. Oh, you know I. Just there's a particular reason I can't get on my system and the computer's down. It's going to take two days. So having the pre-approval, first going out and shop with the realtor and then getting a hold of us as soon as you get an accepted offer is the typical way that this works, nice and smoothly. Pre-approval shopping come back to us, we've got a signed offer and now we can start the process of helping you buy that home.

Jeff D'Alessandro:

Yeah, and there is. You know we have done this for so long. You know we do have, you know, means to help clients. So, for example, in those examples where you say, mario, I don't know what blocks my W-2s, I'm going to need a week to find them, we'll give them hints Like well, why don't you go to your employer, talk to your HR department. I'm sure they can reprint or repurpose a version of your W-2 so we can help you along. But many times if they are not prepared to pull this documentation together again, it's relatively easy, but again, not always available. Sometimes an extra day or two in a competitive situation is the biggest difference. That's all the difference in getting that offer or not and offer accepted.

Mario Giamei:

So it's critical. There is one nice thing I do like about the industry that has changed. That I'd like to point out too, and it's important for first-time homebuyers or any buyer, because this is also people who may not be first-time homebuyers sold their house but haven't been in the process in 25 years. The industry used to be really a catch-as-catch-can kind of thing. I remember walking out of a home when I bought my home and looking at a property, running out to the car and writing up an offer on the back of my realtor's trunk and running back in the house to try to give it to the sellers and say here we are, we're first, can we get this? The industry has changed in such a way that now, typically speaking, you can go look at a house and you may make an early offer, but the sellers are going to want to have a timeline so that everybody has a chance to put an offer in on a property. Meaning on the bad side, you've got to put your best foot forward, obviously, because you may not want to quibble but at the same time you're not going to get shut out because you didn't get there in time. It's usually Monday by 5 pm or Tuesday by noon, right, all offers are accepted. And then they're going to go through the process of looking at everybody and deciding who they like. So it is important. There's certainly a time limit and it helps out more now If someone calls me on a Monday morning. Typically I can get a pre-approval done by Monday at noon, provided we can put everything together.

Mario Giamei:

And there's oftentimes where I got to be frank with you. Jeff will say to me you know what, we've got enough. Maybe we didn't get one document we need, but we've got enough still to make a good decision. Let's go and get it done, help them get the house and that's an important piece to this too being flexible where flexibility is logical and intelligent, versus just saying nope. This piece of paper I'm reading off of says I need X, y and Z and you didn't give me Z. Sometimes we don't necessarily need Z. We're going to make it work because we want them to go out there and get something they want and maybe the home of their dreams.

Jeff D'Alessandro:

Yeah, and that speaks back to the portfolio nature, the community nature of what we do is that we can be flexible and if a scenario makes sense and we can understand it, we don't have to be reliant on whether or not an automated system said yes or no.

Mario Giamei:

The other piece, for me, too, is the fact that I'm able to talk to my manager, my senior vice president, every day if I need to talk to him about anything. I'm able to communicate with the underwriter whenever I need to to discuss something, because, typically speaking, most folks are straightforward and it's easy. But if there's a problem, it's not like working with like a national online company who says submit it and we'll get back to you. I'll go to our underwriter and say what do you think? And she'll say to me this works or that works or that, and can we get this, can we do that? And now you've got a clear cut answer.

Mario Giamei:

It's not a guess and a maybe, and 30 days from now we'll tell you if it works. We figure this stuff out in advance and I always tell folks, if you get a pre-approval from us, it should be 99.9% spot on. The only downfalls are if something's wrong with the property, like the appraiser goes in there and says it's about to collapse to the ground, or the you know we've had borrowers lose jobs. I mean things like that. Beyond that, our pre-approvals are pretty ironclad in my opinion, I have confidence.

Jeff D'Alessandro:

Seismic change, it's, it's the pre-approval, and you know and I I think you know, I I do. What I I like about that piece is it's you may come in with a certain idea or maybe something, initially, as proposed, may not work. The fact that we're able to work with it and say, okay, maybe scenario A doesn't work, but here's what we can do and here's what might work for you. And ultimately, you know, give the bar an opportunity, as opposed to saying you know this doesn't quite work yet or you're not ready yet. There's some other opportunities here, and you know, having the ability to underwrite those up front through the pre-approval process again quite different than that pre. You know, qualification, where all this diligence is not done With us. We are doing that and I think it makes a huge difference in many cases. And also, again, having that available, knowing what your max capacity is before you start getting into a situation where you're making offers and maybe not sure. Here you have the confidence to do that Right.

Mario Giamei:

I know we were probably going along here, but can I point out the fact that we were talking about this, some of the stuff earlier, about the fact that it's a tougher rate environment today. Everybody looks at the news and, first and foremost, you should never listen to the news about interest rates, because when they talk about the Fed raising or lowering rates, it may not have a direct impact on what we're doing or what the mortgage rates are. There's just too much to get into the weeds about that.

Jeff D'Alessandro:

Many times it's built in ahead, but nonetheless it's a very challenging environment.

Mario Giamei:

But the fact of the matter is there's no prepayment penalties on these, but they're first mortgage products. Borrowers have the ability to pay us off whenever they want with the principal balance and whatever accrued interest, which it's very straightforward, like any other loan. So maybe today it's not as attractive. But we know one thing folks still want to own homes because it's not attractive to pay rent. So you're not necessarily getting into a rate today that you have to keep for the next 30 years. You have the ability down the road at any time to refinance back with us. Call us again.

Mario Giamei:

Rates go down and we'll help you figure that out and we'll explain it to you today to explain what the process will be down the road. So you have an idea of a plan when you come back to us, what it's going to look like, what we need to do. But we can get you down the road into that better product as it becomes available. You're not stuck with anything that you have today. If you're concerned about rates and frankly, for me, being an old timer, I remember rates when they were 10s and 12s, so you know even the rates today are not bad and I think ours are better than most at the moment and I do truly believe that it's a great product.

Jeff D'Alessandro:

But I think a lot of the national correspondence has been you know, if you are ready, don't let necessarily a rate environment be the difference between you obtaining a home or not. And if you're qualified for it, pre-qualified for it, you know it's a matter of seizing the opportunity. And then you know again, having you know and that's also the other pieces too If that's where product selection and working with your loan originator really helps, maybe an adjustable rate is, you know, a good way to get into that home. And then you know, with a very safe scenario where you get five to 10 years of a stable rate environment with this adjustable product, it gives you the opportunity to get into the home. And so I think having that variety of product on top of not letting the rate environment dissuade you if you're ready, yeah, and it's a great investment.

Mario Giamei:

By the way, owning your home, I mean, I'm often stunned that folks will come in to see me and tell me what their houses are worth today. And we look it up and it sure is, and what they paid for that 20 years ago. It dawned on me several years ago that well, I always said, well, yeah, it's a good investment. It really is a tremendous investment over time to own your own home and down the road, seeing what you have for available equity and the increases. It ebbs and flows. House values will go down and up and down and up, but it's always going down and up and down and up on an incline, so the ebbs and the flows just keep rising over time and you find if you stay in a home, if it's a forever or a 20-year or even a 10-year home, you've got a lot of built-in equity for the next home. Come see us again. But you have that available equity there because it's a really good investment.

Jeff D'Alessandro:

You never really lose in the long run, and we've been very fortunate in our area, regardless of what the national outlook is. We've always done a little bit better than that here. Values have always held up and in this case they've surged, and, as Mario mentioned, it is a good long-term investment over time, and so if there is availability to take advantage of an opportunity now, regardless of environment, rate, environment it's a great thing, and so we're certainly glad to help, and a product like this is a great way to enter into the arena.

Mario Giamei:

Okay, I've rambled long enough now.

Ally Houghton:

Well, that's some great information for first-time homebuyers looking to find a program that's going to work for them really well. So thank you both for joining us today.

Mario Giamei:

Our pleasure. Yeah, thank you.

Ally Houghton:

And thank you everybody for listening and we'll be back soon with another episode of Money Matters by the Savings Bank. The Savings Bank is a member of FDIC, member DIF and Equal Houser Lending.

First Time Homebuyers Program Overview
Discussing Mortgage Rates and Community Banking
Understanding Home Loan Pre-Approval Process
Importance of Pre-Approval in Homebuying