Issue #5: Everything You Want to Know About Financing a Home Purchase
My Q&A with a "go-to" mortgage banker, five newly listed homes I toured, and my visit to the historical Filoli estate.
The Silvert Lining is a place where I talk about real estate, cool homes for sale, things I’m looking forward to, and how I’ve been spending my time. In addition to this newsletter, I also post regularly on Instagram. You can follow me at Dan Silvert Homes.
Today is election day in the United States. I already submitted my ballot, and hope that everyone reading today’s issue is also voting.
When working with clients who are buying a new home, one of the first steps I suggest is that they get preapproved for a mortgage. This is a key part of the home buying process, as knowing what you afford puts you in a position to succeed. One of my “go-to” mortgage bankers is Mike Belfor. While Mike and I both practice Brazilian jiu jitsu as a hobby, it’s Mike’s nearly two decades of experience in the lending industry working in Northern California, Southern California, and Hawaii that makes him someone I regularly refer my clients to. I’m not the only one singing Mike’s praises as he ranks within the Top 1% of Mortgage Originators in the nation by both Scotsman Guide and Mortgage Executive Magazine year over year.
You and I have worked together for years and done many deals together, please tell us a bit about your role in the home buying process.
My job is to secure financing for potential buyers by starting the process and going over their financing options. This generally begins with a quick application, which is free of cost or obligation, and a soft credit check. Once completed, we create a detailed presentation and proposal that outlines their objectives, focusing not on how much they can spend, but on honing in on their budget and what they’re comfortable with. We work to educate buyers from the start and throughout the process so they can make informed decisions.
When in the home buying process should people consult with you?
As soon as possible. Buyers often consult a real estate agent first to view properties, which makes sense at face value. However, financing is the vehicle that will ultimately get the buyer to their new home. Understanding affordability and what the numbers look like is paramount to the home buying process. It also helps real estate agents show the right properties that align with the buyer's financial situation and goals.
What is your number one piece of advice for someone starting the homebuying process?
Understand your finances. This is the foundation of everything. I always emphasize the importance of having a budget in place. I generally work with buyers to discuss their budget and comfort level, as this is the most important part of the education process.
What do you tell people who have a solid income but limited liquidity for a down payment? Do you need a 20% down payment?
This is a common question, especially in today's market. There are programs available that allow for higher loan limits in Alameda/Contra Costa County, up to approximately $1,149,000, set by the FHFA for conventional loans. Additionally, FHA programs offer nearly 100% financing with down payment assistance. Qualifying for these programs is relatively simple, typically requiring a 660 FICO score (sometimes lower) and that the buyer be a first-time homebuyer, meaning they haven’t owned and lived in a primary home within the last three years. This option is a great opportunity for those looking to purchase without a large down payment.
What are the options for someone who has 20% for a down payment and a solid income, but a lower credit score due to past events?
There are many options. FHA home loans allow for credit scores as low as 580, though they require mortgage insurance. Conventional mortgages allow for a 620 credit score, and there are also non-qualified mortgage programs. Additionally, I’ve helped clients improve their credit through coaching. For example, I recently helped a client raise their credit score from 678 to 770 within a week using rapid rescore methods. Helping clients improve their financial situations is something I truly enjoy.
If someone buys a new home now when interest rates are higher, how would they approach refinancing if rates drop?
My focus is always on taking care of my clients. We have a “strike rate” system, which alerts us when a client’s mortgage hits their goal rate for refinancing. We inform clients of this from the start and offer a program called BuyFi, which covers lender costs/fees for a refinance after six months of payments. Our success comes from maintaining long-term relationships with our clients, continuing to serve as their mortgage advisor even after the close of escrow.
Many people tell me that buying a home, especially securing financing, can be overwhelming. What is one thing that people can do to less the overwhelm and stress during the homebuying process?
This is a great point, and there’s no easy answer. Even after 20 years of buying and investing in real estate, I can say that stress is a part of the process. However, slowing down and taking things one step at a time can make it more manageable. Having a team, like ours (including you, Dan), means having strong advocates on your side. We work with a fiduciary duty to help you achieve your goal of homeownership. Breaking things down and communicating clearly, as we do, helps alleviate a lot of the stress.
What is one common – and easily fixable – mistake you see people making when buying a home?
There are a few, but the most common one is not being fully aware of their financial situation. It's crucial to avoid changing jobs, opening new credit accounts, or charging large amounts on credit cards during the process. These actions can affect qualifying ratios. Even when people make these mistakes, we can typically help by advising them to pay down their credit cards and then request a rescore.
If someone is not planning to buy a house for 12 to 36 months, what should they start doing today to set themselves up for success?
I would recommend starting the application process early. Even if you're 6-12 or up to 36 months out, understanding the process and what things look like financially is incredibly useful. Our job is to educate buyers early on, so they have a solid understanding of their options, whether they’re looking to buy in a month or in three years.
If people want to work with you, what are their next steps?
I can be found on my website or you can call me directly at 415-233-4235.
This week I wanted to feature homes that are new to the market. After researching homes that had been listed in the last week, I picked my five favorites and toured each home. Here’s what I saw and what I liked:
Let me know if you are looking for a new home, and I can create a customized search based on your wants and needs that will email you homes that meet your search criteria. You can schedule time with me to discuss your search for a new home or selling your current home by emailing me at DanSilvertHomes@gmail.com. DRE #01963734
The historic Filoli estate is located on 650+ acres in Woodside, California. This 54,000+ square-foot Georgian revival-style mansion was built in 1917 as a private residence and was opened to the public in 1975. The estate was in the news in November 2023 when President Biden and President Xi Jinping of China met there as part of the Asia-Pacific Economic Cooperation (APEC) diplomatic summit.
I had never visited Filoli before attending the final weekend of Nightfall at Filoli. During this annual event, the mansion and part of the grounds are decorated for Halloween. I had fun exploring the estate and appreciated the spooky vibes. There were carved pumpkins, skeletons, and candles at every turn. The event made me want to visit Filoli during daylight to explore more!
Please check my Instagram to see where I’ll be hosting an open house this weekend.
This is great stuff!
A fun real estate newsletter? I never thought I'd see the day.