Loan manager says ‘prepare yourself' to get a mortgage

By Belton White
Edited by Melanie Byer
Feb. 18, 2009

If you have good credit and a good job and are looking for a house in the Columbia area, it's a buyer's market.

Between 2007 and 2008, the area's median home price fell 1.7 percent to $143,000, and the average number of days a house is for sale has risen nearly 15 percent to 98 days, according to the South Carolina Association of Realtors.

The Carolina Reporter talked to Debbie Senn Shumpert, a mortgage loan manager, at the State Credit Union about selecting a mortgage. Her answers have been edited for space and clarity.

Q. What would you say to a couple who came in today to buy a house?

A. There are only two words that we tell them: Prepare yourself. 'Cause most people don't normally wake up and say "I'm going to buy a house today" and get approved for it with no preparation.

Q. What is the first step in preparing to apply for a mortgage?

A. One thing that we encourage our members to do is order a copy of your credit report. And the best one that we have found is www.annualcreditreport.com, and it will allow you to order a copy of your credit report free of charge annually. Now, if you want to get your score, there is a fee for the score, a small fee. We encourage our members to do that first.

Q. And then what?

A. Once they get those back, call us and schedule an appointment, and we'll do what we call a prequalification for them...we look at the credit they have provided us, make any suggestions that we feel like they may need to make. As far as if they have a collection bill out there, they need to go ahead and pay that and get it off your credit. Then we'll have them bring a copy of a pay stub, and we'll calculate their gross income, look at what other debts they're already obligated for.

Q. How much could they spend on a house?

A. One of our most important questions to a member is "What is your comfort level with a mortgage payment?" Because I maybe can get you qualified for a $2,000-a-month house payment, but you may say, "Look, I don't want to pay any more than $1,200 a month." So, you need to know what price range you need to look in for $1,200 a month. If you get out there and you start looking, and you're not finding what you want and what you feel comfortable with as far as a house, then you know you've got some more room as far as probably being qualified for a higher dollar amount. But you're going to have to come off your comfort level a little bit.

Q. What if they wanted an adjustable-rate mortgage?

A. I would probably ask them, "Why would you want to gamble on not knowing what your payment could be when rates are as low as they are now?"

Then my next question would probably be "How long are you going to be in this house?" If they say, "Well, my job is only going to keep me here two to three years," then there's probably not much chance of that adjustment being crucial to that buyer.

(Shumpert said at this point that she would ask the couple why they still want an adjustable-rate mortgage.)  

Those three things are the most important. And I guess the final question would be "Why would you want to consider that?" because the actual down payment on an adjustable rate is more.

Q. Anything else before they start looking for a house?

A. With that prequalification, we can look at your comfort level, what price-range house you need to be looking in, and we can tell you how much down payment you need to have.

There are some options. You can't borrow against a credit card for down payment because that's an unsecured debt, but if you had equity in a car, you could borrow against that equity in your car. Stocks, anything that is secure, collaterally secured, you can borrow against as a, what they call, a share-secured loan. Now, that is if that payment you have to make each month on that debt would not keep you from qualifying because of your ratios.