As one of the largest investments many people make in their financial lifetime, purchasing a home can be equal parts exhilarating and daunting—especially now, as the average for a 30-year fixed-rate mortgage has returned to a level not seen since March 2020, when the pandemic began to throttle the economy. Fortunately, there are resources available to help first-time buyers navigate the process of securing a mortgage.
In fact, once you start looking for these resources, you’ll find that they are almost everywhere—offered by banks large and small, and financial firms far and wide. Choosing the right resources for your situation can make your homebuying experience smoother, and there are some inherent benefits to working with a small community bank, particularly for first-time homebuyers.
■ A holistic view. Most community banks can take an expanded look at a buyer’s qualifications beyond traditional credit history. Approximately 26 million Americans are living with non-traditional tradelines, meaning they lack a credit history with a nationwide credit reporting agency and prefer to operate on a cash basis.
At community banks, lenders look not just at credit history, but also consider other signs of financial responsibility and the ability to qualify for a mortgage, such as employment history, consistent payment of bills (both traditional and non-traditional), savings ability and residual income. Residual income is the amount of money left over after paying all monthly bills. By gathering more information, homeownership becomes a fairer and more inclusive proposition.
■ Personalized assistance. While most community banks use technology to their advantage, such as online mortgage application portals for the tech-savvy buyer who wants independence, smaller institutions can also walk a first-time homebuyer through the process with more direct contact and an individualized approach.
■ Long-term relationships. There’s a unique opportunity to build a lasting relationship when banking professionals live, work and play in the same community as their customers. Community banks see the mortgage process as just one step in a series of financial milestones an individual might encounter in their lifetime. Most community banking professionals want to be a resource to lean on for years to come and view a mortgage not just as a transaction, but as a chance to develop a long-term partnership.
■ Educational opportunities. Part of being well-prepared as a buyer is being well-informed. Community banks offer workshops to educate the public on available programs and services through all phases of homebuying. Information sessions provide buyers with invaluable tools and information for navigating the homeownership journey with confidence. Most seminars also allow for question-and-answer sessions and give buyers a chance to meet the professionals they’ll be working with early in the process, so there’s a relationship from the start.
■ Specialized programs. It can be difficult to save money today, but that doesn’t preclude an individual from being a responsible buyer. Programs such as Home One, USDA, FHA, VA and SONYMA, and other similar first-time homebuyer initiatives locally, allow for minimum percent down payment for eligible properties. The Community One Program at Tompkins, for instance, allows for a 3 percent down payment, no mortgage insurance, and non-traditional credit versus requiring tradelines. We also partner with local housing agencies and offer grant programs to leverage all available resources available to our borrowers.
Buying a home is more than just a financial venture—it’s also an investment in a community, which makes community banks exceptionally well-suited to guide the homebuying journey and ensure the process is accessible, secure, and achievable for all.
Sherri Catalano is a senior vice president and regional residential lending manager at Tompkins Community Bank. The Beacon welcomes comments from readers who adhere to our comment policy including use of their full, real name.