This week, I’d like to introduce you to Nicholas Baratto, the loan officer I worked with for my mortgage. As you will see, Nick is very knowledgeable and he is a great teacher. He set my family up with an amazing mortgage. So, I invited him on to give us all some insight into the mortgage process from the lender’s perspective and to provide some tips for securing a great mortgage.
Without further adieu, Nick, please introduce yourself!
My name is Nick Baratto and I’m a Mortgage Originator with SEFCU Mortgage Services. I grew up in Latham, NY and I currently live in Saratoga Springs with my wife Chelsea and son Luca. I’ve earned a Bachelor’s and Master’s degree in Business Administration and have been employed by SEFCU for 13 years.
How has COVID affected your line of work?
The pandemic has impacted my line of work in two major ways.
First, there in incredible demand for mortgage loans due to record low interest rates. Refinances have dominated the last few months, bringing roughly a year’s worth of refi’s to fruition in about 2.5 months. Purchase volume dramatically dropped initially in March at the onset of the pandemic. Now in June, we’re seeing a major rebound in purchase volume as people evaluate their personal and financial situations after weathering the initial shock. Combining the refinance boom with a delayed spring market is resulting in a massive demand for mortgage loans in a unique environment.
Second, there have been many procedural hurdles to overcome as the entire mortgage application process took to working from home (other than closings of course). The efficiencies of having originators, processors and underwriters able to quickly connect in an office setting allowed for a predictable and timely flow of applications. With everyone needing to implement new procedures, familiarize themselves with their new home office settings and handle incredibly high volume, it was certainly a test for all!
What Not To Do
From a bank’s perspective, what are 3 most common mistakes you see made when people are shopping for a home and how can people avoid them?
Delaying getting pre-qualified because of the concern of the credit inquiry. All too often borrowers are extremely concerned regarding the impact of the credit inquiry to their score. The content of your credit report is far more impactful than an inquiry. Not to mention that as a borrower you should be armed with as much information before making what is perhaps the largest investment and/or purchase of your lifetime. One of the most unfortunate scenarios I see frequently is someone getting emotionally attached to a home, or scrambling to get pre-qualified, only to find the financing is something other than they were expecting. You don’t want to get emotionally invested before you’ve reviewed your qualifications and available loan options with your Loan Officer.
Assuming you need 20% as a down payment. This is the myth that never seems to disappear. I continue to hear people think they need to save up 20% before they can purchase. That’s years of renting and interest rate risk that’s completely unnecessary. With rates currently near all-time lows, waiting to buy a home until you have 20% down can actually result in a higher monthly payment than if you bought today with 10% down. Borrowers also want to wait until they have 20% to avoid PMI. This can be another costly mistake, as PMI can be bought out as a single premium, paid by the lender, offset by a change in interest rate or removed altogether dependent on the loan you chose with as little as 3-5% down in some scenarios.
Not knowing approximate payment and cash to close before making an offer. Sometimes a borrower may not find a house for months after their initial pre-qualification. It’s always a good idea to check in with your Loan Officer before making an offer to make sure you’re all on the same page. Interest rates may have changed, loan program availability could be different, taxes may play a larger role, etc. All of these items could make the home you’re about to make an offer on more or less desirable and potentially change your offer strategy as well.
Getting the Best Home Mortgage
How can people find the best loan terms- i.e. interest rates, etc?
I’m fortunate to work for a company that year after year offers some of, if not the lowest, interest rates and closing costs around. However, I will say that it should never come down to interest rate and closing costs alone. Does your lender intend to service your loan? Is your lender local? Does your lender have a physical office local to you (if you value this)? Will your Loan Officer be your primary contact during the process or do you need to call a 1-800 number? What are your Loan Officer’s hours and how can you reach them? Does your Loan Officer have a team and/or assistant to support them? These are some of the more important questions to help you find the best lender for you.
Fixed or variable rate: Which one would you choose?
This decision is primarily based on how long the borrower expects to be in the home, or how quickly they expect to pay off the loan. Assuming a relatively confident timeline, your loan officer should easily be able to recommend the appropriate product.
What You Can Do To Get The Best Mortgage Now
What are the 3 top things can people do to ensure fast approval from underwriting?
Prepare all documents your Loan Officer requests as early as possible
Get pre-qualified early and know the process
Don’t apply for or obtain any new credit just before, or during, the mortgage application process
Do you have any tips for us to minimize the closing costs of buying a home or refinancing?
Button-up your credit at least 45-60 days before applying for financing. Specifically payoff and/or consolidate credit cards as they play a major role in the algorithm that generates your FICO scores.
Know your timeline for the property you’re buying. If your timeline for the house or loan is 10 years or less make your Loan Officer aware as the costs may be lower for a different product.
Save as much money as possible before applying. This needs to be balanced with possible debt pay off, but having additional cash can open up opportunities otherwise unavailable.
What are 3 most common things that go wrong on closing day?
Don’t finance anything new just before, or during, the mortgage process
Don’t finance anything new just before, or during, the mortgage process
Don’t finance anything new just before, or during, the mortgage process
Investment Property Mortgages
Ha! OK got it. Switching gears a bit, how does the lending process differ for people shopping for their primary residence versus real estate investors borrowing for investment property?
No procedural differences here.
What are 3 common pitfalls when borrowers apply for loans on investment properties?
Same as applying for mortgage loan in general, other than needing more money to put down on investment property. Any misconceptions can easily be eliminated by talking to your Loan Officer early on.
If you’re in the market for a mortgage in New York, be sure to reach out to Nick. Here’s his contact info:
Contact Information:
Nicholas A. Baratto
Mortgage Loan Originator
NMLS #: 1392603
SEFCU Mortgage Services
NMLS #: 309847
700 Patroon Creek Blvd
Suite 301
Albany, NY 12206
Cell: 518.605.1176
Office: 518.783.1234 X8608
eFax: 888.239.1771
For pre-qualification visit Nick’s website!
Thanks for being here, Nick!
Stay frugal, y’all!
Disha
Standard Disclaimer: Not meant as individualized financial or medical advice.
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