Tips for brokers for working with first-time buyers in high interest rate market
Affordability challenges are unlikely to improve quickly, with the Federal Reserve citing tariff uncertainty in its decision to hold rates last week. According to one expert, these challenges are amplified for first-time homebuyers, which is why this sector needs professional advice.
Michael Brennan, president of Nationwide Mortgage Bankers (NMB), believes the mortgage industry has transitioned from being all about the number of deals closed to being a trusted advisor to all borrowers, especially first-time buyers.
“I encourage everybody that our job is to be a trusted advisor,” Brennan told Mortgage Professional America. “And you look at it like this, if you're going to do a mortgage for your sister or your brother, your mother, what would be the advice that you would give them? Give them all options available and let them determine what's best for them.”
Brennan notes that the industry's shift to an advisory role has been positive for both brokers and customers. He also believes brokers now have more tools to give better advice to hesitant homebuyers.
“It was more transactional in the past,” Brennan said. “I believe right now it’s more relational. What is in the best interest of the client? Also, the tools and resources available today weren’t there 10 years ago. It’s a great resource. There’s not much information you can’t find out right now.”
Short-term and long-term goals
Brennan believes that when working with first-time homebuyers, really understanding the customer’s current and future needs allows the broker to give them a game plan for a new mortgage.
“It’s not just coming back to them and saying, ‘Here's your product, your rate, and your payment,’ but really finding out their short- and long-term goals,” he said. “That's most important, you know, because if somebody is only planning to be in this house for two to three years, versus being in the next 30 years, that might change some of the options you want to put in front of them.”
He also believes it is essential to give the homebuyer a wide range of options, educate them on the pros and cons of each one, and then let the customers choose which one works best for them.
“I'm a strong believer, give them as many options as available,” Brennan said. “If the payment is a little bit higher, there are options for buy-down. That will save you substantially. But if it's something that's going to be short-term, where you think it's only going to be two or three years, it most likely would not make sense to buy down that rate, because you're not going to recoup the money you paid upfront.”
Brokers can be important voices at the beginning of the loan process and in the days and weeks after the loan closes.
“Our job as a trusted advisor is not to be with them for the 30 days during the transaction, but to be with them for the next 30 years,” he said. “As we go through and look at options, whether it's debt consolidation, or opportunities to go for an FHA loan. The most important thing is to meet the client where they are. Find out their needs and what they're comfortable with on the payment side, and then back into it.”
“Know Before You Go”
Increases in home prices have made the market even more challenging for first-time homebuyers. This has forced some buyers to look at more affordable markets instead of their desired location.
“There’s been challenges when it comes to affordability for first-time homebuyers,” Brennan said. “People want to live in certain areas. Sometimes, that is a little challenging just based on how much the values have gone up. Young, first-time homebuyers going into certain markets might have to explore other areas around some of the big cities.”
Lawrence Yun, chief economist at National Association of Realtors (NAR), believes the Federal Reserve is too focused on tariffs and not enough on other disinflationary factors. He urges the Fed to widen its view for earlier rate cuts. https://t.co/IcIyoRhjqA
— Mortgage Professional America Magazine (@MPAMagazineUS) June 17, 2025
Brennan notes that the good news for first-time homebuyers is that brokers are armed with a wide range of educational tools and resources to assist them in their journey.
“There are some good resources,” he said. “The most important thing is education. Education around certain products that are good for first-time homebuyers. There are still a good number of people who believe that you have to put down 20%, and that's not necessarily the case. There are good first-time homebuyer programs.”
One piece of advice Brennan would have for first-time homebuyers is to speak to a mortgage broker before they begin searching for a house. This allows them to understand their financing situation before they fall in love with a home they can’t afford.
“The one thing that I would encourage people to do is to know before they go,” he said. “Before they start looking at houses or meeting with a realtor, they should meet with a mortgage professional upfront. They can do an assessment of where they want to be in their total housing payment. I've seen where they go out, start looking at a house, they fall in love with the house, but then they realize if they were to move forward on the house, there would be house poor.
“The most important thing is to be educated up front to know exactly what you're comfortable with on the payments, taking into consideration the rising cost of goods, and to put themselves in the right position.”
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