Video · Financing · Utah
What your mortgage lender wants you to know before you start looking.
I sat down with TJ Shelley, a loan officer with First Colony Mortgage, to talk about the financial side of buying a home — the conversation I'd rather have with buyers before they fall in love with a house.
Watch the full conversation — credit, down payments, loan programs, rates, builder incentives, and how to prepare.
The setup
You found the house. Then you call a lender.
It has the right number of bedrooms, a backyard for the kids, a garage that actually fits your vehicles, and a kitchen where you can picture your family spending time together. Then you call a lender — and suddenly you're having a very different conversation.
Maybe your credit score isn't quite where it needs to be. Maybe your car payment is affecting how much you qualify for. Or maybe you have enough for the down payment but didn't realize you'd need additional money for closing costs. These are conversations I'd much rather have with buyers before they fall in love with a house.
Whether you're buying your first home in Utah County, moving into a larger home in Spanish Fork, or looking for something more affordable in Juab County, understanding your financing options can change the way you approach your home search. And it all starts before we schedule the first showing.
The guest
Meet TJ Shelley of First Colony Mortgage.
TJ isn't someone who just happened to find his way into the mortgage industry. He grew up around First Colony Mortgage, spending summers and afternoons at the company with his family. He officially started working there in 2013 and became a licensed loan officer in 2017. Since then, he has helped hundreds of borrowers navigate home purchases, refinancing, and other mortgage transactions.
What I wanted to explore with TJ wasn't simply how to get someone approved for a mortgage. I wanted to understand what buyers should know before they even apply — because there's a big difference between qualifying for a home and being financially prepared to own one.
For loan-specific questions, contact TJ directly:
TJ Shelley · NMLS #1674331 · 130 W Center St, Orem, UT 84057. First Colony Mortgage Corporation · NMLS #3112. Licensed in Utah and Idaho.
First things first
Preapproval comes before shopping.
One of the most common mistakes I see buyers make is starting their home search before they understand their financing. I understand why — looking at homes is exciting, and gathering tax returns, pay stubs, and bank statements isn't nearly as fun.
But imagine spending three weekends touring homes between $450,000 and $500,000, only to discover that your comfortable monthly payment puts you closer to $400,000. Now everything you've been looking at feels like a compromise. A conversation with a lender establishes your starting point.
You'll hear two terms: a prequalification may rely on information you provide about your income, debts, and savings, while a preapproval generally involves a more detailed review of your finances and credit — the exact process varies by lender. Neither guarantees the loan will close; final approval depends on underwriting, the property, the appraisal, and your finances staying acceptable.
My advice: speak with a lender before you start seriously touring homes. You don't have to be ready to buy tomorrow — having that conversation six months or even a year out may give you more opportunities to prepare.
The budget talk
Qualifying for $500,000 doesn't mean spending $500,000.
Your lender might determine that you qualify for a certain purchase price. But your lender doesn't decide how much you should spend on groceries, vacations, homeschooling supplies, hobbies, or the other things that matter to your family. You do.
What matters is the total monthly cost of owning the property: principal and interest, property taxes, homeowners insurance, mortgage insurance if it applies, HOA dues if it applies, and maintenance and repairs. And there's another expense buyers sometimes overlook — the cost of actually living in the house. A larger home may mean higher utility bills. A longer commute may mean more spent on fuel. A property with an aging roof or HVAC system may require additional savings.
The goal isn't the most expensive house a lender will approve. It's a house that works for your life.
The credit question
Your credit score matters — but it isn't the entire story.
I hear this from potential buyers all the time: "My credit isn't good enough to buy a house." Sometimes that may be true for the loan they're hoping to obtain. Other times, they have more options than they realize.
Mortgage eligibility depends on the loan program, your income, existing debts, available assets, credit history, and the property itself. There isn't one universal credit score that guarantees approval across every program — and two people with the same score may qualify for very different loans.
If your credit needs work, start by having a lender review your situation. You may discover your biggest obstacle isn't what you thought it was. Reducing a credit-card balance could improve your profile — or preserving cash for closing might matter more. Don't assume you should pay off every debt before speaking with a lender, and don't assume that because you aren't ready today, you can't start preparing. Sometimes the most valuable thing a lender can give you is a plan.
The surprise
Your down payment is not your cash to close.
This is one of the biggest financial surprises for first-time buyers. Say you're purchasing a $450,000 home and planning to put 3.5% down. Your down payment would be $15,750 — but that doesn't mean you only need $15,750 to buy the house.
You may also have loan origination and underwriting fees, the appraisal, title and settlement charges, prepaid homeowners insurance, prepaid interest, initial escrow funding, and other transaction-specific expenses. The total depends on your financing, the property, the transaction, and any applicable credits or assistance.
That's why I encourage buyers to ask a specific question: "What is my estimated total cash to close?" Not just "How much do I need for a down payment?" Those are two different conversations. The Consumer Financial Protection Bureau's Loan Estimate guide explains these costs in detail, and my Utah closing costs breakdown walks through what to expect line by line.
The menu
You may have more loan options than you think.
Not every buyer should be looking at the same mortgage program. A first-time buyer with limited savings has very different financing needs from a homeowner selling a property with $200,000 in equity.
| Loan type | Why a buyer might explore it |
|---|---|
| Conventional | Different down-payment and mortgage-insurance options for qualifying borrowers |
| FHA | A potential option for buyers whose financial profile fits FHA guidelines |
| VA | Benefits for eligible military borrowers |
| USDA | Potential financing for qualifying borrowers purchasing eligible rural properties |
| Down-payment assistance | Programs that may help eligible buyers with upfront costs |
Each program has its own eligibility requirements, costs, property rules, and tradeoffs. For buyers looking in places like Nephi, Mona, Santaquin, Payson, and the surrounding communities, it's worth asking whether a property and borrower qualify for any location-specific or assistance programs. Don't assume a home qualifies simply because it's in a smaller town — and don't assume a loan program is right for you simply because it offers a smaller down payment. The question is which financing structure fits your complete financial situation.
The rate game
Don't choose a mortgage on the advertised rate alone.
You've probably seen advertisements offering an interest rate that looks significantly lower than everything else. Naturally, you want to know how to get that rate. But there's an important question to ask first: what does it cost to get that rate?
Some advertised rates require borrowers to pay discount points — an upfront charge that can reduce the interest rate. One point equals 1% of the loan amount, so on a $400,000 loan, one point costs $4,000. Whether paying that money makes sense depends on the rate reduction, how long you expect to keep the mortgage, and what else you could do with the money.
The interest rate tells you the annual cost of borrowing the principal. The annual percentage rate — APR — is a broader measure that incorporates the interest rate and certain loan costs. Neither number should be considered in isolation. When comparing lenders, ask for Loan Estimates based on comparable loan amounts, terms, and rate-lock assumptions, and look at the payment, lender fees, points, credits, cash to close, and overall borrowing costs. The Consumer Financial Protection Bureau recommends comparing multiple Loan Estimates rather than choosing a lender on an advertised rate alone.
The new-build angle
Builder incentives can be valuable — if you understand them.
This is especially important for buyers considering new construction. Builders sometimes advertise closing-cost contributions, interest-rate buydowns, or financing incentives through a preferred lender. These can affect how much money you need at closing or what your monthly payment looks like — but I want buyers to understand exactly what they're receiving.
There's a difference between a temporary interest-rate buydown and a permanent rate reduction. With a temporary buydown, you may receive a lower effective payment for an introductory period before payments increase to the amount required by the loan's note rate. With a permanent reduction, discount points can lower the contractual rate for the life of the loan, assuming the mortgage remains in place. Those are very different financial arrangements.
Before accepting a builder incentive, ask the lender to explain what happens to your payment after the introductory period, what the incentive costs, and how the complete offer compares with your alternatives. A good incentive should make sense when you understand the entire transaction — not just the headline. It's the same ground I covered with Travis from Edge Homes in our new-builds conversation and in the new construction vs. older homes breakdown.
The next house
Move-up buyers have their own financing challenges.
First-time buyers often focus on saving enough money to get into a home. Move-up buyers have a different set of questions. What happens if your current home hasn't sold? Can you qualify while carrying your existing mortgage? How much equity will you actually receive after selling? What if you need the proceeds from your sale to purchase your next home?
And perhaps the biggest question: should you sell first or buy first? There's no universal answer. For some families, selling first provides clarity about their available equity and budget. For others, purchasing first may be worth exploring if their financial position and financing options support it. The right approach depends on the numbers, timing, available housing, and your family's ability to handle uncertainty.
This is one of the reasons I believe your Realtor and lender should be communicating early. The home you sell and the home you purchase are two separate transactions — but financially, they're often connected.
The waiting game
Waiting for rates to drop is not a complete homebuying strategy.
I hear this frequently: "We're just going to wait until interest rates come down." I understand the thinking — a lower rate can reduce your monthly principal-and-interest payment when other loan factors remain the same. But interest rates aren't the only variable. Home prices, inventory, your savings, income, debt, and personal circumstances can all change while you're waiting.
That doesn't mean everyone should buy immediately. Some buyers genuinely need more time to improve their financial position. Others are ready now but are trying to predict exactly what the market will do next. I encourage buyers to replace the question "When will rates drop?" with "What would buying a home look like for us financially today, and what would need to change for us to feel comfortable moving forward?" That's a question you can actually work toward answering — and it's the same exercise I walk through in should you wait for rates to drop?
The first step
The most important thing you can do today is start the conversation.
You don't have to have everything figured out before speaking with a lender. You don't have to know exactly where you want to live. You don't even have to be ready to purchase this year. But you should understand where you stand.
If your goal is to purchase a home in the next 6–12 months, start asking questions now. Find out what you qualify for, what payment feels comfortable, how much cash you'll need, and whether there are financial changes worth making before you begin shopping. Then, when the right property becomes available, you're making decisions with information rather than guessing — and that can make the entire homebuying experience a lot less stressful.
Whether you're looking in Spanish Fork, Payson, Santaquin, Nephi, Mona, or the surrounding communities, I'd be happy to help you understand what your options look like. The buyer resources page is a good place to start, or reach out directly and we'll build a plan around where you want to go.
Quick answers
Mortgage questions, answered quickly.
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