A Homebuyer Case Study: Emily And Tyler

Are you thinking about buying a home but aren't sure if it's a good investment right now? In this video, we're going to review a real-life case study of a husband and wife that sold their home in Iowa and moved here to the Denver Metro area. We'll find out how our Competition Crusher loan approval program helped Emily and Tyler to get under contract against three other bids.

Is It The Right Time To Buy?

If you're wondering whether or not a home is a good investment, you probably have a lot of questions on your mind. Is buying a home way too crazy because of high inflation and skyrocketing interest rates? Should you even consider buying a house right now?

These are all valid questions. Every single client that we talk to asks those same exact things. When they ask for my personal advice, this is how I answer: do you plan on being around or alive in the next 10 years? I know it sounds silly, but it’s simple. If you plan on being alive, please do not get caught up in the high-frequency, emotional ups and downs of the clickbaity information that we get on the news.

If you live in the present, you can see a bigger and better future. Do you think now is a good time to invest in yourself and your family's future well-being? When I look in the mirror every morning while brushing my teeth, I tell myself, "your future is bigger than the present." And yours can be too.

Meet Emily And Tyler

My clients Emily and Tyler had all the same questions and concerns that you have. In our very first meeting, I asked a very simple question: how would your life change if you could get closer to family here in Colorado, sell your home, and have enough profit to pay off all of your student loans and credit cards, have your downpayment covered, and start that new career?

Our Competition Crusher loan approval program helped these two and their realtor get under contract against three other bids - with the first home that they placed an offer on. We were also able to protect Emily and Tyler with our Rate Protect program. If you haven’t heard already, since the start of the year, rates have been skyrocketing. We have a program that lives on top of our Competition Crusher where you can lock in an interest rate today.

This program allows you to be protected from rising interest rates in the future. If rates get better, you can actually float down to the market rate.

Our Prequalification Tool

One of the questions and concerns that Emily and Tyler had during our initial discovery call was if they should put 10% down or 5% down. We used a total cost analysis that pairs any loan product against one another. This way, you as a consumer can figure out the exact loan program that best fits your needs now or 15 years from now.

This apples-to-apples comparison allows you to know exactly what each loan will cost you - including the interest rate cost, the long-term carrying cost, and any closing costs variances between them. Our prequalification tool allows us to get a preliminary understanding of what a consumer or a borrower like you might potentially qualify for. This will help us figure out the best approach to get you into the field.

There are three basic methods that banks or realtors use to help a client get ready to see houses and prepare to place offers. The prequalification - which is a very generic way to prep somebody for a home purchase - does not include a lot of data and information. The information that is included is mostly surface-level. Some banks still use this to put clients out in the field, without even analyzing any of their documents.

The Preapproval

What my team and I typically do, however, is a full pre-approval - and there’s a whole lot more that is involved with it. First and foremost, we want to know what your credit score looks like and how much income you make. We’re going to validate your income data with pay stubs, W-2s, or tax returns if you’re self-employed.

We’re also going to look at your assets statements, which is where the downpayment and money for closing costs are coming from. We’re also going to take your loan application and send it through a computer underwriting system to make sure that we have approvable funding.

Our Competition Crusher

The next thing we do is use our Competition Crusher. We can take your loan file and submit that to our team of underwriters to get a true loan commitment. This means that every single document we would need to close your loan can be analyzed and reviewed upfront.

Getting you that loan commitment makes the whole shopping process way less stressful, as you'll know you've been validated by a human being that would approve your loan. If you were selling a home, what type of buyer would you accept? A prequalified, preapproved, or Competition Crusher buyer?

I’ve been using our Competition Crusher for the last seven years. It's by far the best, simplest, and most time-effective way to prepare you for the field.

Lock And Shop

One of the cool things that worked with Emily and Tyler is adding our Lock And Shop program on top of the Competition Crusher. At the start of the year, rates were in the 2's. They then crept into the 4s, 5s, and even 6s for a short period of time, though they're starting to pull back slightly.

With the Lock and Shop program, we were able to save these two a lot of money. When we did our Competition Crusher pre-commitment loan before they went shopping, it put them in an upper echelon over other buyers. We were able to lock in their interest rate well before they actually closed on the home loan. This saves them money every month and will continue in the long term.

Paying Off Debt

Remember the question I asked Emily and Tyler earlier? How would their life change if they were able to move across state lines here to beautiful Colorado, sell their home, have enough profit to pay off all their student loans and credit cards, and afford a downpayment and start a new career? It was simple. The pair wanted to be near family and live in the beautiful state of Colorado.

By paying Tyler's student loans off, we were able to bump his credit score to nearly 800. He didn’t realize that having student loans in a deferred payment status with a balance was hitting him negatively on his credit score - by 75 points. This is another reason that we analyze every aspect of your finances when we do our Competition Crusher full preapproval. We want to make sure we find anything that would boost you as a homebuyer in the eyes of a bank.

This is exactly what we did when we audited Emily and Tyler's credit reports. By paying a little bit of student loan debt - less than $12,000 - along with one credit card, we were able to get from a good credit score of 725 to the "excellent" range of 800.

A Total Cost Analysis

The best part of our home buying process and Friel Good Mortgage experience is our total cost analysis. This is where we put together the analytics of what loan is best. Emily and Tyler were considering putting 5% or 10% down.

The biggest variances between the two were the cash out of pocket and the loan variance. If you’re putting 5% more down, your loan value is going to be lower. For Emily and Tyler, the difference in payment was about $180 a month. However, the good thing is they could afford either downpayment for what they wanted their monthly payment to be.

We decided to put 5% down so that they could have that extra money left over for incidental moving costs, paint for the new property, and a little bit of landscaping. Having a little bit of cash left over from their home sale benefited them.

Locking In Their Rate

As I mentioned earlier, we used our Lock and Shop program on top of our Competition Crusher for Emily and Tyler. Because we decided to put 5% down, we wanted to lock their rate and protect them from rising interest rates. At the time, interest rates were still increasing.

When we locked their loan before they even got under contract, their rate was 5.375%. If they would have waited until they got under contract, their rate would have been 5.75%. Because they did their preapproval a couple of months in advance of actually coming out to shop and look for properties, we were able to lock that in.

The difference between the higher rate and the lower rate is about $109. If they hadn't utilized our Lock and Shop program and rates rose, I’m sure they could find $100 worth of balance somewhere in their spending habits. But why would you want to do that if you could have already protected yourself? It will mean one less stressful thing to worry about.

Saving Money

While the $109 difference might not seem like a lot, having the lower rate with our Lock and Shop program - along with our loan committed Competition Crusher - brings a savings of $8,744. This is just in interest expense over the first five years. Why wouldn’t you want to do that?

When you can get your loan parameters fixed and done before you even go under contract, you'll know exactly what you can afford. In the next 15 years on their loan, the total outflow of interest in mortgage insurance with the loan that we chose was $335,992. If they would have waited to do that rate lock, their total outflow would have been $361,753.

Because Emily and Tyler plan on living in this property for at least the next 10 to 20 years, we made an awesome decision in locking their loan in advance of getting under contract.

The Friel Good Mortgage Experience

Now that you know about Emily and Tyler's story, you might be asking yourself how you can advantage of the Friel Good Mortgage experience. The good news is we have all the analytical tools that you need to make proper decisions. We have a mortgage calculator that you can download for free, enabling you to tinker with our affordability calculations. We also have a home purchase calculator as well as a refinance calculator.

While these calculators will give you some quick information, there are ways for you to get all of my home course material. I have homebuyer ebooks and downloadable spreadsheets for net worth and budgeting, which will get you prepared for the field. Ultimately, the easiest way to get started would be to request a prequal certificate.

You'll answer a couple of simple questions, and the software will give you a certificate and start to validate how much you can afford based on your inputs in your answers. My onboarding team will reach out to evaluate some data and get you onto my calendar for a discovery call. We're going to begin to mold together your home buying journey and your mortgage journey, preparing you for the field. This will allow you to beat out other buyers and protect you from higher interest rates.

We're Here To Help

Ultimately, we'd be happy to guide you on your home buying journey. No two buyers are the same and no two borrowers are the same. You have a very unique financial situation with unique goals that you’re looking to achieve in the future. We would love to be a part of that process with you.

Make sure you reach out to us today and we'd be happy to help you get started. You can also subscribe to my channel for more information on mortgages, real estate, and living in the beautiful state of Colorado. Stay tuned to see what I feature next!