A Letter From A Young Loan Officer…To A Young Home Buyer

From the Desk of Josh Arras

Miller Mortgage Team


Feb. 2017

Dear Young Home Buyer,

I was promoting a home loan program for First Time Home Buyers on Facebook last week, and I saw a number of comments on the post that read like this:

“My husband and I would love to stop renting, but we thought home ownership was so far away given the amount we would have to put down. I’ll have to look into this!”

That was almost a direct quote from a young home buyer, who believes she has to put 10% — 20% down to buy a house.

Let’s think about that for a second…

If you are reading this, and you’re in your 20’s or early 30’s, the chances of you having $15,000 to $30,000 (10% — 20% down on a $150,000 house) to put down on a house , is slim to none.

Now you may have that money sitting in the bank, but do you really want to put your entire life’s savings to this point, down on your very first home?

Maybe you do, and maybe you don’t, but that’s not the purpose of this post.

What I want you to understand is…

You do have options as a young home buyer, and you don’t have to put the traditional 10% — 20% down.

Let me tell you a little about my experience buying my first house, and it may shed a little light on the options you have…

As I sit here writing this, I am 28 years old.

I bought my first house a couple years back, on April 15, 2015. I still remember how I felt at closing, after receiving my keys. It was a “Holy (Insert Poop Emoji), these are MY house keys!” kind of moment.

But let’s not get ahead of ourselves here.

Just a few short months before this, I had no idea what I was going to do.

I found myself asking…

Should I continue renting, or should I just buy?

I was sitting at my parent house on a cold February day, trying to figure out what I was going to do next. The only reason buying a house even entered mind, was that my dad is a loan officer, and I knew he would shoot me straight.

A couple days later, I drove up to my dad’s office, and we sat down to run though my options. Since I had only a few thousand bucks in the bank, my options were slim. BUT…I had options none the less!

He asked me a few simple questions:

1. What is your credit score? (We ran it later to confirm)

  • My Answer: About 720

2. Where are you looking to buy? (For tax purposes)

  • My Answer: South City

3. How much are you comfortable paying each month? (To help estimate a purchase price)

  • My Answer: About $950

4. How much can you bring to closing? (To help estimate total out of pocked expenses to buy the house)

  • My Answer: No more than $1500

Based off of this information, he created a loan scenario, and began to explain it to me.

He showed me, that if I bought a house for $150,000, my monthly payment (including taxes and insurance) would be roughly $1,060 and I would only have to put 3.5% down.

Not the 10–20% most people think.

What’s even better, since I was a first time home buyer, the MHDC (Missouri Housing Development Commission) would pay that 3.5%, on my behalf. That is money that never has to be repaid.

The final step was to get pre-approved, and I would officially know if I could buy a house, and how much house I would qualify to buy.

NOTE: I did not say how much house I could afford. More on that in a moment.

Less than 24 hours later, I got a call from my dad, who was excited to tell me that I was pre-approved to buy a house for $150,000! Needless to say, I was a little shocked, excited, and overwhelmed all at the same time.

$150,000 sounded like a lot of money to me, and someone was willing to just hand it over to me?

I immediately hit the internet, and started looking for houses. I found a great realtor who was also young, and super willing to help.

Even though I was pre-approved for $150k, I felt that it was going to be a stretch, so I ultimately found a property that I loved in South City, and my agent made an offer.

After a little back and forth, we agreed on $132,500, and our final offer was approved!

All that was left was a couple inspections, appraisals, and a final walk through, and the house would be all mine.

Everything checked out, a few minor repairs were made, and on April 15, 2015 I closed on my very first house! It was a pretty incredible feeling to own my very own home.

So…let’s get back to the numbers. While I could have bought a house for $150,000 on paper, I would have been stretching myself super thin.

Like I said, I did not have a ton of money in the bank, and did not want to put myself in an uncomfortable situation.

Just because you have the money to spend, doesn’t mean you have to. That is important to understand.

With that said, the $132,500 purchase price brought my monthly payment down to $970, and I only had to bring $1,000 to the table to cover a small portion of the closing costs, and that was it!

The house was mine for $1,000 out of pocket, and $970 a month!

I thought that was pretty crazy…

Considering, just 2 months prior, I was looking at renting an apartment in the city for about $900 per month. I was also going to have to pay my first and last month’s rent, plus a $500 security deposit ($2,300) just to move in to that apartment. That is money I would most likely never see again!

I felt extremely lucky to have my dad as my loan officer. I knew he wouldn’t steer me in the wrong direction, and I could use him as a guide through the complex process of buying my first home.

I obviously never felt pressured to make a decision, and he laid everything out to me in plain English. So I felt comfortable with MY decision, at the end of the day.

Even though I had a ton of help from him, it was still a nerve racking process. I knew that I qualified on paper, but…

I also knew that “$hit happens”, and boy did it!

Within 6 weeks of moving in, I found bats in my attic ($800 to get them removed) and my basement sewer line backed up ($300 plus the cost to refinish my basement over the next 12 months). I can’t tell you how many people said the exact same thing.

“Welcome to home ownership” or “Oh, the joys of owning your own home”

Ha! And it is so true.

I don’t tell you this to scare you away from buying your first house. After all, I don’t get paid to convince people not to buy houses.

I tell you this because you need to go into home ownership with your eyes wide open.

I am dedicating myself to providing young home buyers (and all home buyers for that matter) with the same level of service my dad provided me.

You deserve, just as I did, to feel comfortable with your decision to buy a home, and the process leading up to it.

Like I said at the beginning of this post, I hear all to often that people felt like they were in the dark with their lender while buying their first house.

They felt like they didn’t know if they were getting a good deal, and where to turn for real advice.

If this sounds like you…

And you have any questions about buying your first house, please give me a call at 314–518–4323, or shoot me an email at josh.arras@nafinc.com

I would love to help you through the process of buying your first house. It’s an exciting, and often overwhelming experience without the proper guidance.

Thanks for sticking with me, and reading to this point. If this post helped you in any way, please share it with a friend or family who could also benefit.

Thanks again, and I hope we get a chance to talk soon…

Josh Arras

Loan Officer

Miller Mortgage Team

NMLS# 935870