Guest Author: Keegan Pafford

They say there’s a first time for everything. And if obtaining a mortgage is the next first on your list, you’ve come to the right place.

To ensure your first-time is the best time, we compiled a list of five easy-to-follow tips that help ease the burden of applying for a home loan.

Your elegant new address is perfect in every way, shouldn’t the financing process be too?

Know Your Credit Score

Because lenders don’t know you personally, your credit score is used to gauge your creditworthiness.

According to the Federal Reserve Bank of New York’s Household Debt and Credit Report (Q3:2020), nearly 96% of mortgages originated in the third-quarter had an Equifax credit score of 660 or more. In contrast, just over 4% of mortgages originated had a credit score of 659 or less. Furthermore, the median credit score was 786, while the bottom 10% of credit scores began at 683.

If your credit score is below the figures above, you should think about a Federal Housing Administration (FHA) loan. Commonly used by first-time homebuyers, FHA loans are available to individuals with less-than-stellar credit.

To qualify, you must adhere to the following rules:

  1. FICO score of at least 580 = 3.5% down payment
  2. FICO score between 500 and 579 = 10% down payment
  3. MIP (Mortgage Insurance Premium) is required
  4. Debt-to-income ratio < 43%
  5. The home must be your primary residence
  6. You must have steady income and proof of employment

Do You Need Private Mortgage Insurance (PMI)?

Depending on your down payment, you may need to obtain private mortgage insurance (PMI). For loans greater than 80% of the home’s value, lenders require you to obtain PMI.

As an expense that’s added to your monthly (or bi-weekly) mortgage payment, PMI protects the lender in case you default on the loan. However, once your debt balance is equal to or less than 78% of the home’s value, PMI is automatically eliminated.

As a general rule, to avoid PMI, you should opt for a higher down payment. However, the National Association of REALTORS’ (NAR) Home Buyers and Sellers Generational Trends Report shows that most first-time buyers don’t heed this advice.

Consult With a Mortgage Broker

As intermediaries between you and the lender, mortgage brokers are the home-buying equivalent of financial advisors. Rather than swimming with the sharks on your own, a mortgage broker can help prepare your loan application, offer quality advice and ensure you receive a fair deal.

Best of all, their services are pro bono.

Because mortgage brokers are compensated by the lender, you don’t incur any advisory fees.

Furthermore, because mortgage brokers have relationships with many potential lenders, they can leverage competing offers and help secure the best terms. In contrast, when you work directly with a lender, it’s his or her job to sell the product with the highest fees.

Choose the Right Loan

At the outset, your broker (or the lender) will present you with a myriad of loan options.

The most common are:

  1. Fixed-rate mortgages
  2. Adjustable-rate mortgages
  3. Interest-only mortgages

To explain the first, a fixed-rate mortgage offers simplicity and predictability. By locking in the specific terms, your interest rate and mortgage payment remains constant throughout the entire term. And while 15 and 30-year terms are most common, fixed-rate mortgages are also available in 10, 20, and 40-year terms.

In contrast, an adjustable-rate loan’s interest rate fluctuates throughout the loan’s life. Often indexed to the U.S. Federal Reserves’ overnight lending rate, rising interest rates will cause your mortgage rate and payment to increase (vice versa).

However, both options are structured as ‘amortizing’ loans. An eloquent word ingrained within traditional finance-speak, the term amortizing means that both principal and interest are included within your mortgage payment. The dynamic allows you to gradually reduce the debt balance and pay off your mortgage over say, 20, 25, or 30 years.

As for the third option, an interest-only mortgage is just that – interest-only. Instead of repaying the principal during the loan term, you pay interest periodically and repay the full balance at the end of the term.

So which one should you choose?

Well, it really comes down to your personal preference. However, with interest rates near historic lows, a fixed-rate mortgage has never been more affordable.

Get Preapproved

If you breezed through the requirements above, don’t sprint to the open house just yet. After consulting with your broker and negotiating acceptable terms, obtain a preapproval letter from your lender. Within it, the lender will outline how much it’s willing to offer and when the offer expires (usually 90 days).

By obtaining the document, it shows real estate agents and sellers that you mean business. More importantly, though, it gives you an edge over other applicants that can’t demonstrate the same level of financial health.


While obtaining a mortgage may seem intimidating, it doesn’t have to be.

By creating a detailed roadmap and planning ahead for all of the procedural, and often boring, aspects of the process, you can spend less time worrying and more time enjoying your home search. Furthermore, if you follow the tips above, you’re prepared for anything the process may throw your way.


About the Author

Keegan Pafford is a loan officer with Gold Star Lending, LLC, an independent wholesale mortgage brokerage in Portsmouth New Hampshire. He is a Seacoast NH native with a passion for business and real estate investing. Contact him via Facebook or if you’d like to discuss purchases, refinancing, or anything in between.

2021 is officially upon us. But how, exactly, is the new year shaping up through the lens of real estate?

HomeLight’s Top Agent Insights Q4 2020 Report surveyed over 1,000 real estate agents for their insights into the 2021 housing market, including:

  • Lack of inventory will continue to pose challenges in 2021. A lack of homes for sale presented one of the biggest challenges for buyers in 2020—and at 20.5 percent, a continued lack of inventory is the factor most agents cited as their pick for the biggest influence on the 2021 housing market.
  • Remote work will continue to influence the real estate market. Low inventory will have a big impact on the market—but so will remote work. 14.5 percent of agents surveyed said the shift to remote work will have the biggest influence on the housing market in the upcoming year.
  • Low mortgage rates will continue to drive demand. A whopping 94 percent of agents surveyed said that low interest rates were boosting buyer demand in Q4 2020—and with most experts expecting mortgage rates to stay low through the end of the year (according to the report, Fannie Mae is expecting interest rates to stay around 2.8 percent while the Mortgage Bankers Association is forecasting a slight increase in rates to 3.3 percent), that demand should continue through 2021.

The Takeaway:

So, what does this mean for you? Real estate agents have their finger on the pulse of what’s happening in the market—so understanding their insights and predictions can help you better prepare to navigate the market in 2021, whether you’re planning to buy or sell.

For years, we’ve all heard about the most desirable home features buyers are looking for, from upgraded kitchens to remodeled bathrooms, master suites, and more. The latest on the hotlist, however, might surprise you: home offices.

In a recent article by George Ratiu, Senior Economist with, he notes how listings with an office are selling quickly:

“As more companies have been embracing remote work, buyers are driving demand for houses with home offices higher. Homes featuring the term ‘office’ are selling 9 days faster than the overall housing inventory.”

Today, more and more people are working remotely, and that’s not just because the current pandemic is prompting businesses to operate virtually. According to the same piece and the most recent data available, the number of employees working at home was fairly steady from 1997 – 2004 but has been climbing ever since (see graph below):Why Home Office Space Is More Desirable Than Ever | Keeping Current MattersClearly, the work-from-home population is growing, and technology is making it possible. Just last month, according to an article on Think Google, searches for telecommuting hit an all-time high, and that’s certainly no surprise given our current situation.

People all over the U.S. are looking for answers on how to be most effective at home, and it’s making the ideal workspace more and more desirable. In fact, best practices from seasoned work-from-home professionals, like Chris Anderson, Senior Account Executive at HousingWire, tout that having a dedicated space is a must for productivity.

With today’s increasing demand for home offices, it’s a great feature to highlight within your listing if you’re selling a house that may meet this growing need. From bright natural light with large windows to built-in bookshelves or a quiet and secluded atmosphere, whatever makes your office space shine is worth mentioning to buyers when you’re ready to list your house.

Ratiu concludes:

“For housing, the continued increase in the share of remote workers implies that demand for homes with offices or dedicated work spaces will continue to increase. The current coronavirus pandemic offers a dramatic indication of the fact that companies and employees will have to develop plans and clearer policies for remote work beyond the current crisis.”

Bottom Line

Remote work may become more widely accepted as this current crisis teaches businesses throughout the country what it takes to function virtually. So, what seems like a business challenge today may be more of the norm tomorrow. With that in mind, if you have a home office, your house may be more desirable to buyers than you think.

Today’s everyday reality is pretty different than it looked just a few weeks ago. We’re learning how to do a lot of things in new ways, from how we work remotely to how we engage with our friends and neighbors. Almost everything right now is shifting to a virtual format. One of the big changes we’re adapting to is the revisions to the common real estate transaction, which all vary by state and locality. Technology, however, is making it possible for many of us to continue on the quest for homeownership, an essential need for all.

Here’s a look at some of the elements of the process that are changing (at least in the near-term), due to stay-at-home orders and social distancing, and what you may need to know about each one if you’re thinking of buying or selling a home sooner rather than later.

1. Virtual Consultations – Instead of heading into an office, you can meet with real estate and lending professionals through video chat. Whether it’s your first initial needs analysis as a buyer or your listing appointment as a seller, you can still get the process started remotely and create a plan together. Your trusted advisor is still on your side.

2. Home Searches & Virtual Showings – According to theNational Association of Realtors (NAR), the Internet is one of the three most popular information sources buyers use when searching for homes. Your real estate agent can send you listing information and help you request a virtual showing when you’re ready to start looking. This means you can virtually walk through the homes on your wish list while keeping your family safe. As a seller, you can still have virtual open houses and virtual tours too, so as not to miss those buyers looking to find a home right now.

3. Document Signing – Although this is another area that varies by state, today more portions of the transaction are being done digitally. In many areas, your agent or loan officer can set up an account where you can upload all of the required documents and sign electronically right from your computer.

4. Sending Money – Whether you need to pay for an appraisal or submit closing costs, there are options available. Depending on the transaction and local regulations, you may be able to pay by credit card, and most banks will also allow you to wire funds from your account. Sometimes you can send a check by mail, and in some states, a mobile escrow agent will pick up a check from your home.

5. Closing Process – Again, depending on your area, a mobile notary may be able to bring the required documents to your home before the closing. If your state requires an attorney to be present, check with your legal counsel to see what options are available. Also, depending on the title company, some are allowing drive-thru closings, which is similar to doing a transaction at a bank window.

Although these virtual processes are starting to become more widely accepted, it does not mean that this is the way things are going to get done from now on. Under the current circumstances, however, technology is making it possible to continue much of the real estate transaction today.

Bottom Line

If you need to move today, technology can help make it happen; there are options available. To learn about the specific regulations in your area, contact a local real estate professional to discuss your situation, so you don’t have to put your real estate plans on hold.

It’s a difficult time for everybody, especially those whose health has been affected by the pandemic. It’s difficult for the brave healthcare workers putting their lives at risk trying to heal the sick, and it’s difficult for the men and women spending their days and nights keeping people fed, keeping shelves stocked, making sure supplies are delivered, floors are cleaned, and everything in between.

And, it’s probably a difficult time for you too.

Modern life is stressful, even without a pandemic. The boss wants you to do more, the kids need to be fed, the bills have to get paid, and the house needs to be maintained. But now, those stresses have all been magnified and laid bare.

So what do real estate agents want you to know during this complicated, stressful, and difficult time? And why should you even care? We are, after all, here to serve you.

Well, the answer is… that’s exactly what we want you to know: we’re here to help you!

And not just that, but we’re in this with you. Uncertainty, doubt, stress, and everything in between affects us just as it does you, and we have the same fears as you do about where the future is headed.

That said, it’s not all gloom and doom. There are solid reasons to be optimistic, especially when it comes to housing.

First, this is not a housing recession like the crash of 2008, where the collapse of the economy was tied directly to mortgage-backed securities and skyrocketing default rates.

In fact, of the last five recessions, only 2008 saw home values drop precipitously, while they continued increasing in three other instances, and only decreased by -1.9% in (1991).

That’s not to say we’re even going into a recession, especially since forecasts from some of the brightest minds in finance predict positive GDP growth of 12% starting in June (Q3).

Second, this crisis has the attention of the world, and there’s an aggressive push to put an end to it sooner than later. Of course, when we’re in the thick of it, it can be difficult to see the light at the end of the tunnel. But social distancing seems to be working, and nearly every country in the world is dumping massive resources in search of a treatment, and a cure. Almost everyone is doing what they can (or at least have to) in order to give this crisis an end date so everyone can get back to business as usual.

So, while we all struggle to adjust to this strange moment of time we’re living in, it’s also good to keep things in perspective.

Even though the process has been interrupted or paused in some ways and areas, homes are still selling, people are still buying, and the value that you’ve accumulated, by all accounts, is likely to remain.

In short, people still want to buy and sell houses. And while there are certainly many people who will be affected financially due to the pandemic, many others will not. They may not be going into the office, but they’re still employed and doing their jobs—just from home.

So, if you want or need to buy or sell right now, reach out, and we’ll work together to get it done in a safe and socially-distanced manner.

And if you’ve been considering buying or selling your home, and this current environment has made you rethink things, that’s perfectly okay too! We’re here to guide you and answer your questions at any time, not just when you’re ready to list or buy.

We, like you, can’t wait until things get back to normal, and for many of us, simply talking to you about real estate helps things feel normal, so please don’t hesitate to call!

And remember, you’re not alone in this.

What are Your Options?

The coronavirus pandemic is causing uncertainty across the nation—and for many, that includes financial uncertainty.

Luckily, there are options for homeowners impacted by the coronavirus. In a recent statement, Mark Calabria, Director of the Federal Housing Finance Agency (which regulates Fannie Mae, Freddie Mac, and the 11 Federal Home Loan Banks) called attention to options homeowners may have if they struggle to pay their mortgage during this time of crisis.

“To meet the needs of borrowers who may be impacted by the coronavirus, last week Fannie Mae and Freddie Mac (‘The Enterprises’) reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment,” Calabria said in the statement. “For borrowers that may be experiencing a hardship, I encourage you to reach out to your servicer.”

Check Out Some Important Links

The Federal Housing Administration also chimed in to remind homeowners of their options in a written statement last week: “The Federal Housing Administration (FHA) is reminding mortgagees of FHA’s loss mitigation program options, particularly in light of the recent reports on the Coronavirus (COVID-19). As with any other event that negatively impacts a borrower’s ability to pay their monthly mortgage payment, FHA’s suite of loss mitigation options provides solutions that mortgagees should offer to distressed borrowers – including those that could be impacted by the Coronavirus – to help prevent them from going into foreclosure. These home retention options are located in FHA’s Single Family Housing Policy Handbook 4000.1 Section III.A.2.”

Are you interested in buying a short sale?

Even if you aren’t, and you’re in the market to buy a house, you should know about “short sales”. There’s always a chance that a house you fall in love with will be subject to a short sale.

So, do you avoid a short sale like the plague? Or do you roll up your sleeves and make an offer?

You Probably Know This, But Just In Case

A short sale is when a homeowner sells their property for less than the amount they owe.

Not that the homeowner can just agree to a price and sell you the house for any old amount. They will need approval from their lender.

Not too many years ago, short sales weren’t really something you’d see on the market. Then the market tanked, and it became a solution for many people who owed more than they could sell their house for. It was a better alternative than foreclosure, for homeowners and for lenders.

At this point, short sales have been around for a quite while. And they keep on showing up. Maybe not as much as they have in recent years, but there doesn’t seem to be an end in sight. Unless the market goes back to the heydays of the early 2000s.

Which means you need to at least be aware of them, and know whether or not you want to deal with trying to buy one.

So, let’s get into some seven things you should know in case the house you want to buy is a short sale.

1. Not Every Short Sale Is A “Deal”

A lot of buyers say that they want to go after short sales, because they want to get a good deal.

Just because a house is being sold “short” (for less than the owner owes), does not mean it’s a good deal.

If there are equal options for you to choose from on the market that are not short sales, it may not make any sense at all to go after a short sale.

You really should only go after a short sale if you are getting a good deal. Or, if there are no other options, that are as good or even better, for about the same price. It isn’t worth the hassle.

2. Even If It Is A Deal, You’re Going To Pay For It

You’re going to pay for it in patience. Lots and lots of patience. Which boils down to time. And time is money.

The time you’re waiting for a short sale to be approved could cost you in many ways. Just to name a few:

  • You might miss other opportunities you would have liked to go after.
  • You might incur costs because you need to line up temporary housing while you’re waiting for the deal to close.
  • You could spend money on due diligence (inspections, mortgage process, etc.) all for nothing, if the sale never goes through.
  • Your mortgage rate could go up during the process of waiting.

Lenders have gotten a bit better and quicker about the process at this point. When this trend first started, they were swamped, and it was all kind of new for everybody. So it took time. Now that the kinks have been worked out, it can happen more quickly. But not necessarily. There is no way to know how long it will take. Err on the side of caution, and plan on it taking anywhere from six months to a year. But it’ll probably be more like between three to six months.

Regardless, it will almost always take longer than a straight up sale between you and a homeowner who does not need to sell their house short.

So, again, the deal better be worth your time and patience.

3. Expect To Buy It “As-Is”

Almost every seller in the world wants to sell their home “as-is”. Meaning they want to negotiate that the buyer won’t further negotiate any issues that are found in a home inspection during the process.

But the reality is, it’s pretty rare for a homeowner to sell their home truly “as-is”. There’s almost always some sort of concession or repair made, once a buyer does their home inspection. No matter how firm the seller wants to be, or how good of a price they gave the buyer, it happens. And sellers will typically agree to some, or even all of the requests made by a buyer. It’s just easier than losing the deal.

But it isn’t always just home inspection issues. It could be something related to permits, or certificates the town requires, for instance.

In a short sale, the lender isn’t going to step and fix anything, or consider a credit for repairs usually. And they aren’t going to get any permit or certificate issues resolved. It’s hard enough getting them to agree to the lower-than-owed price they accept. So don’t expect it. Don’t even hope for it.

And the owner probably isn’t in any financial position to do any repairs, given their situation. And frankly, they probably are pretty much checked out at that point anyway. They want nothing to do with what you want. They get nothing out of it. Unless they are that desperate to just get this chapter of their life over with, and somehow figure out a way to make some repairs.

Point is, expect to take on whatever problems the house comes with…

Which means, again, it better be a pretty good deal.

4. Don’t Be Surprised If The Lender Counteroffers

Unfortunately, not all real estate agents or homeowners even get the lender on board with the fact that they’re trying to sell the house short.

So, you could negotiate what seems to be a great deal with the owner, only to have their lender come back and counter your offer for way more than the house was even listed for.

So, let’s say the house is listed for $250,000. You negotiate it down to $225,000. But then the offer is submitted to the lender for approval, and they counter at $325,000…probably because they are owed that much.

This strikes a lot of buyers as crazy. How can a lender do that!? The house was listed for less! Well, they weren’t in on the process when the owner and agent made those decisions. Now they are.

It might take some time for them to come around.

Many buyers get so frustrated that they back out of the deal because of the lender not coming to agreement on the price. Only to see the lender eventually lower their expectations and accept an offer for the price the buyer had offered… or even less!

So, it might make sense to just hang in there and wait the bank out. Stand your ground. Be patient. Wait.

Or, let another buyer or two loosen the jar lid, and throw offers at the property. Let them get frustrated and get the lender to see the light. Then step in with your offer after one or two other buyers failed to get from offer to a closed deal.

But that does take patience. And some amount of strategy.

And there is no guarantee…

5. The Deal May Never Be Approved

Whether or not a short sale is approved is out of your control.

There are a lot of factors.

One of the most frustrating things is that a lot of owners who are trying to sell short do not put in the effort they need to. There’s a lot they need to supply in terms of information. And their motivation is minimal. Beyond that, they are stressed out and probably depressed. So there are times that the homeowner delays the process, if not kills the process altogether.

It can get to a point where they progress too far, and fall into foreclosure. And that process can drag on for quite some time. Sometimes, owners feel it would be even better to just get foreclosed. It buys them more time. And a short sale, while better for them than a foreclosure, is no bed of roses. It is still going to negatively affect them.

And a lender could simply not agree to a short sale. Maybe the owner is in better financial shape than they feel is necessary to approve a short sale. Or perhaps they just decide it makes more sense to foreclose.

It can be frustrating. Your hands are tied. There’s a lot of hurry up and wait. And very little you can do to get anyone to move faster. Even constant follow-up, complaining, or threatening to kill the deal will not make the process move faster.

So, just be prepared that you could waste your time, all for nothing. And you will spend money on your end of the process that will never be returned.

6. Be Prepared To Move Fast

When and if a short sale is approved, the chances are that the lender will give you a short time to actually close the deal.

So, while they could take months and months just to say yes…they might give you two weeks to close the approved deal. And if you don’t, it could throw the process back into review.

The biggest hassle here is with your mortgage (if you are borrowing money to purchase). Your lender needs some time to get your loan approved and “clear to close”.

You could be super diligent and get as much of your mortgage process done months ahead of the short sale being approved, but there is still a lot that needs to be done in the final stages. So make sure you’re working closely with your lender, and be good about getting them everything they need ahead of time.

7. Hire A Real Estate Agent Who Is Okay Working With Short Sales

It’s so important to work with a real estate agent who is willing to be in it for the long and hard haul…

Not every agent wants to deal with short sales. This is understandable. Agents don’t get paid more for dealing with this type of sale. In fact, they often get paid less. And they are more work. And they are less of a guarantee. And agents work with very little guarantee that their efforts will result in compensation as it is.

So, do be aware of this, and thoughtful about it.

So, when you hire a buyer’s agent to work with you on a short sale, you need to also be in it with them for the long and hard haul! It is the right thing to do.

And it will pay off…

Because so many buyers give up on getting a great deal on a short sale because an agent will persuade them to avoid going after one altogether, or encourage a buyer to move on if the process is taking too long. Again, not judging…they have valid reasons for being that way. But it is important for you to know.

One thing your buyer’s agent should do before you make an offer on a short sale is to assess whether the listing agent on the property knows what they are doing. Many do not. And in those cases, you might as well not even waste your time.

As scary as this all may sound, short sales aren’t something you need to avoid. Just know what you’re getting into beforehand.

And be patient. You will pay for the deal in patience, but knowing what you know now, it should be worth every penny of patience you pay.

Many people continue to rent because they think that it’s the more affordable option—and that owning a home is out of their reach. But, as it turns out, rents have seen sharp increases across the country—while the average mortgage payment has actually fallen.

According to a report from CoreLogic, the “typical mortgage payment” (a monthly mortgage payment based on the US median home sale price that incorporates both principal and interest) has decreased four percent since 2005—while the monthly cost to rent a single-family home has increased by 36 percent. Renters are also more cost-burdened than homeowners, with nearly half (46 percent) spending more than 30 percent of their total income on rent (compared to just 27 percent of homeowners).

The Takeaway:

If you’ve been renting as a way to save money, it might be time to rethink your strategy. Rent has been steadily increasing across the US in recent years, and in many cases it’s now less affordable than owning a home. So if you’ve been thinking about purchasing your own home, now is a great time to make a move.

When you list your home, you want to do everything possible to make it appealing to buyers. And while you might think only big projects will make an impact, the truth is, simple home decor can make a big impact on potential buyers—and help your home sell.

recent video from outlined three simple home decor touches that can up your property’s appeal and help it sell faster, including:

  • Fresh flowers. Fresh flowers create a warm, inviting vibe in your home—and because a warm, inviting atmosphere is what most buyers are looking for, fresh flowers are a great way to make a big impact with minimal cost.
  • Proper lighting. Buyers tend to gravitate towards light-filled spaces. If your home doesn’t have a lot of natural light, make sure to install good lighting throughout your home to give the appearance of a more light space.
  • Blue. Color psychology shows that the color blue makes people feel calm and relaxed—which is exactly what people want to feel in their home. Try painting the walls a soothing shade of blue or incorporating the color into your decor (for example, by incorporating a piece of art, a rug, or throw pillows).

Sometimes, the smallest things can have the biggest impact. And if you want to make a real impact on your buyers (and sell your home), you should definitely consider adding these home decor touches before you list your property.