Should first-time homebuyers spend more time shopping for a mortgage rate? Short answer: yes. Here's why, from a mortgage broker's point of view.

I'm a mortgage broker, and I think first-time buyers are the best clients. Not because first-time buyers are 'clueless' and 'ignorant,' but because they're likely the most simple transaction.

The 'Easy' Buyer Profile

If you fit in this box, first-time buyer, W2 income, DTI under 49%, higher credit (740+), assets with 2 months of statements, then you represent the easiest category for a lender.

  • First-time buyers don't own any other properties. You don't have to dig for mortgage statements. You don't have to coordinate the sale of a property. You don't have to prove you don't have an HOA on your other property. You don't need to show rental income for an investment property.
  • W2 income, especially salary, is very easy to verify and calculate.
  • DTI under 49% usually passes automated underwriting.
  • Higher credit means a couple of things: fewer hangups and explanations needed, and conventional loans (usually better for higher credit profiles) have a smoother process than FHA.
  • Assets (investment accounts, savings, checking) with 2 months of statements are simple to source.
  • The only way to make your profile even easier would be with the possibility of a waived appraisal (usually happens with 20%+ down payment, but sometimes happens with 10%+).

Why This Matters for Your Rate

This profile is the one where the process is the most simple. Lenders and loan officers will see it, and they're willing to operate on smaller margins for it, which turns into a lower interest rate for the buyer.

Right now loan volume is lower and lenders are already operating on smaller margins. But if you throw in the promise of an easy loan, they'll likely tighten the margin a bit more for you.

Don't Forget About First-Time Buyer Programs

Separately, first-time buyers get lower rates if their income is below a certain threshold (this varies by county). Inexperienced loan officers might not know how to take advantage of that. So you should shop just to make sure you're on the right program.

If you're not sure what you qualify for, it's worth checking out a down payment assistance guide to see what programs exist in your state, and running your numbers through an affordability calculator to see where you actually stand.

Even if your profile doesn't fit the 'easy' box, you should still shop.

Originally shared by u/SamTMortgageBroker in r/NewbHomebuyer — view the original thread.