You want to buy a home, but where to begin? The journey for first-time homebuyers can be fraught with challenges, but we’re here to make it easier. In this episode, host Scott Barboza is joined by Leader Bank Senior Vice President of Residential Landing Sean Valiton who outlines how homebuyers can avoid common pitfalls.

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Episode Transcript

Scott Barboza:
Welcome to the Building Interest Podcast, presented by Leader Bank, a series of free-flowing conversations on a wide range of banking and money-related subjects. We’re here to discuss all the issues that impact your financial future. Want to buy a home, start a small business, secure your financial future? Or maybe you want to maximize your savings ability or get your budget in order. We can help. Our talks with experts and influencers across the world of banking, we’ll set you in the right direction. I’m your host, Scott Barboza. Let’s get to it.

So I’m sitting here with Sean Valiton, the Senior Vice President of Residential Lending Sales at Leader Bank. Sean, thanks for being a part of this. You’re kind of the after Jay Tuli our first test subject, if you will, on this podcast experience. Thanks so much for doing this.

Sean Valiton:
Yeah, thank you, Scott. Thanks for having me. I’m excited about this.

Scott Barboza:
It’s really exciting. And part of what we want to do with this series is really get into the nitty gritty, up front of people who are entering the home buying process for the first time, because let’s be honest, clinical psychologists will actually tell you it’s one of the most stressful experiences of your life. But the good news is, we’re here to make it a little less stressful for everybody else.

Sean Valiton:
It’s what we try to do, yep.

Scott Barboza:
Sean, there’s a lot of moving parts to this. Obviously, you’re an expert in the team of loan officers at Leader Bank, are experts in their field and make this easier than pie for everybody to do. But I gotta say the first thing for me, as somebody that has bought a home once before in my life, I came into it completely overwhelmed, let’s call it for what it is. What’s the first thing that people really need to do to get themselves into the process? I think a lot of people might come into it and think, “Oh, I gotta get a real estate agent.” I got to do this. But it might actually start with the mortgage process, correct?

Sean Valiton:
Yeah, I think you’re right. I mean, like you said, it’s just a tremendously nerve-wracking experience, there’s so many moving parts. It’s your life, too. I mean, you’re, I mean, this is where you’re gonna live your home. So there’s a lot, a lot going on, and a lot to come to terms with. But I think financing, like you said, is the place to start. And the reason is, because before you start looking at homes, the last thing you want to do is find a place that you love, and then figure out that you know that you don’t qualify for it, or you can’t get it. So I think getting your finances in order is the number one priority. Meet with a loan officer talk to a loan officer, they’ll go through your income, your assets, your credit score, that’s an important piece to super important assets, especially if there’s something there that you don’t know could be a hiccup down the road, right? Identify that first, and really dig into it. So a loan officer will sit you down, they’ll they’ll talk you through the different options in different product sets. Pull your credit, look at your income, look at your assets, figure out what you can qualify for, and then talk you through your options. So you know what’s coming down the road.

Scott Barboza:
Now, Sean, I think a lot of people look at the market and where it is, and for, you know, reference for folks we’re recording this in the mid-to-late winter. But spring isn’t all that far away. And everybody talks about the spring homebuying season, it’s very amped up. We’ve seen, you know, record amount of sales and purchases over the last several years really, from a little bit of a trend perspective in the you know, your team of loan officers, you guys have been going. I know we’ve talked a little bit about this in our in our off-channel conversations, you guys have been running at a level that is almost unprecedented. Do you expect that to continue in that competitive market for people that are trying to get in and find a home? Because I know that inventory is really at an all time low as well?

Sean Valiton:
Yeah, it’s been unbelievable. I mean, think since the pandemic hit, interest rates dropped. It’s been incredible. I mean, the amount of buyer demand that’s out there, paired with the refinance volume that was going on to right. It’s just been incredible. And we do we do see it continuing rates have ticked up a little bit. So refinance volume is slowed down a little bit. But as far as for homebuyers, it’s incredibly competitive, and really nerve racking experience out there. Because it’s, there’s just so many people that want, you know, so few houses right now, because it is winter, inventory is a bit low, which it always is right around this time. But that’s it’s exponentially more scarce this year, than in previous years prior to the pandemic. So it’s competitive world out there. I think having a good strong preapproval letter from a good strong rep or a bank is very important.

I think there’s something really important to touch on there, too, when you bring up the preapproval idea. A lot of people think, well, what is actual pre approval? There’s kind of like different levels of that. And I think what we want to really, you know, impart to people here to take away from this that’s so important is really your journey does begin with that pre approval process. That’s very much the touch point. So I know we talked about a couple of the different factors that go into a preapproval but if you can go behind scenes a little bit from the functionality of that and what your team does. Well, what does that process actually look like? You know, from from the institutional perspective?

Yeah. And I think going back to your first question, too, is talking to that that loan officer up front. And getting your ducks in a row includes getting a pre approval letter, right. And the pre approval letter is a, it’s a letter from a lender that shows your qualifications to get a loan, you’re going to it will accompany the offer that you put on a house, once you find the house, and you submit it and it gives strength your offer, the seller needs to know that you’re qualified to get a mortgage, if they’re going to take the if they’re gonna accept your offer, they’re going to take the property off the market, the last thing they want to do is take it off the market, miss out on other potential buyers, and then figure out down the road that you’re not qualified for it. All right. So that’s really important. I think also, what brand is on the paper on the the pre approval letter is extremely does mean something means absolutely, especially in such a competitive market, where you have multiple offers on a property. There’s certain lenders that stand out. Leader’s done a really good job of kind of separating ourselves off right, as one of the main, the top purchase lenders in the state of Massachusetts, and building trust with real estate agents and sellers from a regional perspective, too. I mean, we’re the number No. 2 purchase lender in the state we did just under 6 billion last year, three over 3 billion of that was was purchased direct. So we’ve done a good job of building our brand delivering for customers, making sure especially on purchases that we’re hitting the right dates to the dates of a purchase are very important as well. Yeah, so making sure that the lender that you select is able to deliver at those specific times, because there’s a lot of money tied up. And there’s a lot of emotion. And there’s a lot of things tied up.

Scott Barboza:
I want to take a almost a little bit of a sidebar right there. Because you brought up something interesting when we were just sitting down before recording here, a little bit about your background, actually. You come into a situation with Leader with, again, an organization that is very well-known in local regional circles, but also moving into a national footprint here. And that credibility, you said, is such an important part of that process. When you’ve come into leader bank to coming into a team like this where you know, 50-plus loan officers strong, that is definitely a differentiator, too, because when you go to other institutions, you might come into a situation where there might only be one or two, you know, loan officers that are, you know, servicing those needs. And it really in those situations, time is such a critical aspect as well. So the breadth of the team and being able to, you know, approach that at scale is super important.

Sean Valiton:
Absolutely. And we pride ourselves on having a small, very powerful team of loan officers. And when we have 55 loan officers did $6 billion last year. So our average loan officer does, you know, more than $100 million a year. And they’re some of the best in the business. And it’s really important. And like you have mentioned my previous experience, I was on the the real estate side. I was real estate agent for a long time, we did business development for real estate companies and things like that. But I can empathize with the situation on the other side with with the buyers, what they’re going through. And having that especially with financing, because financing is is complicated. There’s there’s a lot of moving pieces, and having that trusted professional on the other side who you can, as you’re looking for your house, you can run ideas off of or call and what happens if I do this? What if I have to put down more money? Less money? That’s really important. So having a really good strong loan officers in your corner is is vital.

Scott Barboza:
Going back to the process, Sean, I think one of the great misconceptions or urban myths out there is how much am I actually supposed to have put down on the on the first installment, my down payment? Everybody you know and their mother has you know that 20% Obviously, that’s the benchmark that makes things so much easier. But also, we didn’t want to spend some time and I think this is super important is that that doesn’t necessarily disqualify all people from being able to get a mortgage, if we can spend a little bit of time getting into that. Because there are so many different you know, whether it’s a federal, state-run, sometimes local municipality, and we’re recording this here in Boston, there’s a lot of programs through the city of Boston, veteran status, those kinds of things. It’s a it’s a really big canopy of different mortgages that can be offered.

Sean Valiton:
100%. Yeah, it really is depends on the individual situation. Here in Boston, it is very competitive, like I mentioned. So 20% down is pretty much your standard. There’s the perceived strength of it of a preapproval letter or a buyer where the more money you’re putting down, it’s perceived to be stronger, right. But depending on the situation, how competitive the situation, how competitive the offer, how competitive your offer needs to be based on your area that you’re looking at the specific house and things but there is a huge, wide breadth of different types of mortgages. You can put down as little as 3% on some loans, there’s like you mentioned, there’s government-backed loans that allow you to put down less. There are second mortgages that you can pair with first mortgage to be able to put down less. So it’s really important to just go through all of those, those scenarios with your loan officer, and they have them break out, what are your different options and see, what’s the difference between my payment if I put down 10% versus 20%, and have those lined up ahead of time. So that, you know, depending if it’s not a competitive situation, and you don’t need to, maybe you can do 10% down right now.

Scott Barboza:
Sean, as we’re getting into that, I think another particularly important roadmap from that point is what kind of mortgage. People talk about fixed-rates, ARMs, which are adjustable rate mortgages. Obviously, I think as we look back in history 2008, thinking back to that there were a lot of things that were going on in the marketplace that have been reformed, both from a governmental, but also from, you know, an institutional perspective across the board, walk me through a traditional, standard fixed-rate mortgage versus an adjustable rate. Sometimes, I think, maybe coming out of 2008, when people hear Adjustable Rate Mortgages, they get a little bit of a knee-jerk reaction to that. But like, sometimes an adjustable rate mortgage might actually be the best thing for your situation to be sure.

Sean Valiton:
Yeah. And again, it’s up to the individual situation, your standard fixed-rate, 30-year fixed has been the most popular over the last couple of years, simply because interest rates have been so low, you know, a two-and-a-half percent, 30-year fixed makes all the sense in the world, because it’s fixed for 30 years, your principal and interest payment are going to be the same every month, and you pay that over time. And they’re designed to amortize over that 30 years, so that at the end of the 30 years that your mortgage is paid off. So it’s very fixed. It’s very set. You can do fixed mortgages, you can do a 10-year fixed, 15-year fixed, 30- year fixed, there’s lots of options, right? Just in the fixed round, right? There’s also when you are amortized over 30 years, the front, the beginning of the payments, mostly is loaded into interest. So then as you move along that amortization schedule, more and more starts to go into principal. So there’s things you can do like bi weekly payment, bi monthly payments, where you’re doing, you know, every other week, you’re making a payment, as opposed to once a month. And that adds an additional payment for the year and kind of speed you along that amortization schedule, kind of helps you speed up the payment paid off that house. And some of those situations that might work for people that are perhaps trying to get into their first starter home, and they’re trying to think about maybe being there for that amount of time, as opposed to this is going to be you know, where we raise a family, those kinds of things, correct? 100%? Yeah. And I think that that’s the conversation to have with your loan officer to how long do you plan on being, but also understanding all the different aspects. Because plans change? And I plan on being right, five years, life comes out, you’re pretty quick, you know, right? So not only is the timeframe, but what happens after that timeframe with the loan. So if you do a seven, like call it a 7-1 arm, that’s gonna adjust after the seven, the seventh year, what will the market look like? You don’t know at that point. So there’s, there’s a little bit of a risk there. Investors do a lot of ARMs, as well, because it is a lower interest rate, and you have flexibility to refinance or do something else down the road. But I think, again, talking to a good loan officer who’s qualified, who can walk you through your different options and see, I mean, if you’re saving significant on the interest rate, and you’re, you know, it works for you just understand all the different characteristics of it.

Scott Barboza:
Right, I think what we’re getting at here is really be prepared coming into it. I mean, it is a wild kind of process once you get into it. But once you go through these thresholds, and that first time, pretty much you’re off and running the bicycle and trying to then at that point, you know, work with a real estate agent to to meet the challenges of the market on a case by case definitely kind of circumstance.

Sean Valiton:
Yeah, and I think just just preparation is key. I think the team around you is key as well. Having a good good loan officer, a really good real estate agent, having people that you trust around you who are looking out for your best interest is key as you get into this because it is it is very competitive out there. It is. It is a wild ride of emotions. And you want to have, you know, a good solid foundation around you.

Scott Barboza:
Now, Sean, you know, one thing we’re really trying to do with this podcast series as we really get into the meat and potatoes here is to give people a fully all encompassing look at all the different aspects of home-owning, renovation … We were talking a little bit before, offline about, you know, HELOC [Home Equity Line of Credit] in being able to get into, you know, home improvement. But one thing I really want people to take away from this series as we talk about homeownership in particular, is I think there are a lot of questions that come up as we sit here in the beginning of 2022. Again, as we talked about off the jump. There’s a lot of momentum behind this market, we’ve, you know, year after year, nationally, locally, we’re smashing records across the board. The one thing that comes up, I gotta tell you, my friends, you know, I’m a 30-something, so my friends and I were all kind of, I like to say, you know, when you go online at night, and you start looking at properties, that’s almost like fantasy football as you’re getting into your 30s. And you’re starting to plan your future. The one thing that keeps coming up, and I gotta tell you, and also I want to just say this to our listenership, please, you know, send us questions as we’re going through this, or we’re really going to want this to be a participatory process. And we want to know what’s what’s interesting to you to be able to help you in the long run. But one of the questions that I just personally get from a lot of my friends when they’re like, “Oh, you work at Leader Bank,” and they’re like, “Interest rates, interest rates. Everybody’s talking about inflation, interest rates, Sean, I think we would be remiss if we didn’t at least spend two seconds on it. Interest rates going forward, probably going to go up. But also at the same point, still a good time to buy, right?

Sean Valiton:
Still a good time to buy. Yeah, I mean, interest rates will most likely be going up. Over time, the the big thing with the market right now is the inventory crunch. And it’s a good time to buy, it’s very hard to find a deal. And so that that’s been an issue for buyers, looking, and probably very frustrating. But if you can get if you find the right house, and you can get an offer accepted, it’s a great, great, great time to buy. Historically, interest rates are still, even if they go up, they’re still significantly lower than they have been in the past. And it’s still I mean, you know, 3.5, 4% is over time is historically a very low interest rate.

Scott Barboza:
Now, Sean, you oversee an exceptional team. As we wrap up this episode, I think I’d want to give you the opportunity to talk to your team. And I mean, really just a really tremendous … as I’ve come into the organization and got to meet a lot of folks, some really just exceptional, very interesting people that again, we’re talking off air, like how we all kind of come from different walks of life and different backgrounds, a little bit about your team and just what they bring to the table on a personal perspective. Because I gotta tell you, folks, I’m not just saying this as a member of the organization, but this is truly a community-, person-based enterprise and your team is really chief among that.

Sean Valiton:
Yeah, I appreciate that. Yeah, no, I couldn’t agree more. We have a fantastic team of not just loan officers, but the support staff behind them. It’s a really passionate, passion filled organization, very entrepreneurial. We’re out there working with homebuyers and sellers and in actually understanding and empathizing with what’s going on behind the scenes on their end, and then trying to deliver and make things easier for people. So our team is very hardworking, very professional, great, great group of people, and looking forward to just continuing to grow and roll out new things that did that help the consumer on the street level, when they’re out there, vying for houses, finding, you know, finding the right property, and making it easy for them. So, to our to my team, thank you very much for all your hard work. And then moving forward, you know, just continuing to keep our foot on the pedal of the metal and making purchase the purchase process especially easier for homebuyers.

Scott Barboza:
It really is a person-to-person business when you cut when you cut through all the numbers, all the crunching, all that good stuff. And it’s just personal things. Sean, I want to thank you for being our first official guest after Jay, and we’re going to be off and running from here.

Sean Valiton:
Thanks so much. I appreciate it.

Scott Barboza:
For additional information on the credit costs and terms of any of the loan types discussed during this episode, including current annual percentage rates, please contact leader bank at 1-855-294-4488 to speak to a loan officer. Adjustable rate loans, as discussed, have annual percentage rates that may increase after your loan closes. For more information on today’s subject, visit leader bank.com. In addition to past episodes, you can also find our corresponding blog entries there for more insights. This podcast is a production of Leader Bank, NA. Equal Housing Lender. Member FDIC. NMLS #449250.