Jason Evans, a senior loan officer at Mortgage Master.

Every week, we ask a real estate professional for their Short List, a collection of tips and recommendations on an essential topic in real estate. This week, we talked with Jason Evans, a senior loan officer at Mortgage Master in Walpole, MA, about his advice for first-time homebuyers.  

How would you describe the Boston area residential real estate market?
Right now the Boston market is an extremely competitive market for buyers. The biggest challenge for buyers is getting their offer accepted. There are really not a lot of homes listed for sale and the market is so hot that sellers are getting multiple offers on pretty much every property.

The Mortgage Pre-Approval Process

What can prospective buyers do to give themselves a better chance of landing the house that they want?

In this type of market you really have to make your offer stand out above the competition. To better position my clients, I focus on educating and coaching them on the mortgage process. We get as much paperwork and financial documentation done upfront so when an offer is made they are able to deliver on a quick closing time. While other banks might require 30 days for a mortgage commitment, and 45-plus days for a closing, we are able to deliver a commitment letter in two weeks and a closing in three or four weeks. But if a borrower really needs to close quickly to land a home we can or even close in 2 1/2 weeks. That really helps to set a buyer apart from the competition and get their offer accepted. By getting all the documents finished upfront, their mortgage application stands a much better chance of getting approved and they have more flexibility when making an offer.

Is a mortgage pre-approval the same thing as a prequalification?

Not at all. Pretty much every prospective buyer has a prequalification letter these days. But a prequalification doesn’t carry as much weight as a preapproval, which is the more solid way to go and makes your offer more serious. Anybody who wants their offer to be taken seriously needs to have a pre-approval letter.

How fast can a prospective buyer get a pre-approval?

I can turn around a pre-approval the same day that we get the information from a client. I can do it within an hour, even while the borrower is house shopping on a Sunday afternoon. Many times I’ve seen a potential homebuyer wait until Monday morning, and it is too late. That is why it’s so important to have all your financial documentation ready up front.

What’s the next step in the process?

Once an offer is accepted, a homebuyer should be ready to schedule their home inspection. The buyer should have a home inspector lined up in advance so when an offer is accepted they can have the inspector in there the next day or very soon after. The goal needs to be keeping the home buying process moving along and a tight timeframe on the closing.

First-Time Homebuyers: Options and Restrictions

Are there any new borrowing options for first-time homebuyers who can’t afford a big down payment?

Yes. Today, you can get a conforming non-FHA mortgage with as little as 3 percentdown, and with no private mortgage insurance. With FHA a 3.5 percent down payment is required. The FHA is probably the better option if you have had credit problems in the past or if you lost a home in the past.

Are there restrictions on what exactly is a first-time homebuyer?

By definition a first-time home buyer for mortgage underwriting purposes is someone who hasn’t owned any real estate in the previous three years. However, if two people are on the loan application only one of them needs to be a first-time homebuyer.

Does that mean someone who lost a home through a foreclosure a few years ago could qualify as a first-time homebuyer?

Yes. The FHA requires only a three-year waiting period after the foreclosure. But the key factor is that the three-year waiting period doesn’t start until the bank records a new deed, not when the foreclosure started. Many foreclosures that happened several years ago still have not been finalized. That’s a critical factor to understand and be aware of as you begin the process.

Mortgages Officers, Underwriting and Interest Rates

Are mortgage underwriting guidelines still very strict?

Yes and no. It depends on which lender you work with to get a mortgage. For example, at Mortgage Master we sell our loans directly to the federal agencies, Fannie Mae and Freddie Mac. What that means is we do not have any overlays on our underwriting guidelines. Many mortgage companies sell to an investor first, who then sells to Fannie and Freddie. Those investors have overlays on top of what the normal guidelines are making it harder for borrowers to qualify. Mortgage Master does not have any overlays so we are able to offer more loans with less restrictive guidelines.

Once a buyer and seller have reached a deal, when should the buyer look to lock in their mortgage interest rate?

As soon as possible. Many economists and Wall Street analysts believe the Federal Reserve will be looking to raise interest rates, possibly as early as this summer or fall. Many mortgage lenders prefer that borrowers wait to lock in a rate until the purchase and sale agreement is signed. We recommend, especially now, that buyers lock in the rate sooner. I usually get the paperwork started once the offer is accepted and the inspection is completed, as soon as the buyer is sure they are going forward with the deal.

What should prospective first-time homebuyers look for in a mortgage officer?

It’s definitely important for the first-time home buyer to have a local mortgage officer who is going to be there every step of the way, hold their hand through the process and take the time to explain all their options. First-time homebuyers have more questions. It’s important to work with someone who’s going to take the time to work with them and make sure all their questions are answered. That makes for a less stressful and more enjoyable experience.

Jason Evans is a senior loan officer at Mortgage Master in Walpole, MA. He works with first-time homebuyers as well borrowers moving up or buying a second home. He talked with Boston Agent about the current real estate market and what prospective buyers need to do to be successful.