Mortgage 101

What you need to know when writing an offer!The Loan Process from Qualification through Funding and

Loan Program Basics

The Loan Process

• Pre-qualification and Pre-Approval

• House hunting and offer made

• Formal Loan application and disclosures

• Borrower provides any missing documents

• signed

• Loan set up• Loan processing• Loan Underwriting• Conditional Approval / Final

Approval• Closing • Funding

The Loan Process

Items Needed for the Loan ProcessThe BASICS

•Most recent pay stubs covering a one month period•Most recent two years of W2 or 1099 forms and full tax returns

•Most recent two month’s bank statements•Most recent quarterly statement on any other liquid asset accounts such as 401k,

stocks, and mutual funds• Driver’s License

Items Needed for the Loan ProcessAdditional Items

•Information on any other properties owned•Business Tax returns covering two years

•Gift documentation•Explanations and paper trail for large bank deposits

•DD214 or statement of service on VA loans•Letters of Explanation on items such as job gaps, credit issues, joint bank accounts

Qualification Letter

Qua

lifica

tion

Lett

er

Fee Estimate

•

Fee Sheet

Items we Order

• Appraisal• Title Commitment• Verifications of Employment• Tax Certificates• Survey• Tax Transcripts• Mortgage Insurance

• Social Security Verification• Patriot Act Verification• CAIVRS on Government Loans• Flood Certificates• Homeowner’s Insurance• Certificate of Eligibility on VA

Loans

Items We Order

Conditional Approval and Final Approval

Conditional approval: loan is approved, but additonal items are needed before loan can close

Final Approval: All items needed to close are satisfied. Loan is issued CTC (clear to close)

Closing and Funding

Closing documents signed

• Note and Deed of Trust• Initial Loan App, GFE and TIL• HUD-1• First Payment Coupon• Lender Disclosures

Funding• Wire is ordered once HUD is

approved.• All documents the borrower

and seller sign are faxed to the lender for final approval

• Funding number is provided to the title company

FHA Loans•Owner Occupied Only

•Minimum Down Payment – 3.5%Must come from buyer’s own funds or gift

•Maximum Seller Concession – 6% + Normal Seller’s Costs (i.e. Title Policy)

FHA Maximum Loan Limitsfor San Antonio MSA*

1 Unit $316,2502 Unit $404,8503 Unit $489,3504 Unit $608,150

Loan limits for any county can be found at: https://entp.hud.gov/idapp/html/hicostlook.cfm

VA Loans•100% Financing Available (Up to $417,000)

•Max Seller Concessions - 4% + Non-Allowable Fees•Non-Allowable Fees – Aprox. $1700*+ HOA Transfer Fee + Real Estate Transaction Fee

*Fees may vary by Lender•VA does not have Mortgage Insurance, but has a Funding Fee

Conventional LoansMinimum 5% Down Payment

Maximum Seller Concessions• 3% with less than 10% Down Payment

• 6% with down payment = to or > than 10% and <25%• 9% with 25% or more Down Payment• 2% on all Investment Properties.

.

Conventional Maximum Loan LimitsOwner-Occupied, Second Home, Investment

1 unit $417,0002 unit $533,8503 unit $645,300

4 unit $801,950

Mortgage Insurance Premium

•Protects the Mortgage Company against default.•Will effect the borrower’s monthly payment and qualifying ratios

•There are different requirements and different premiums for VA, FHA and Conventional Loans.

FHA Mortgage Insurance Premium•Required on all FHA loans regardless of down payment

•FHA has an up front premium (which is typically added the loan amount) and a monthly premium.

•Up front premium is 1.75% •Monthly premium is 1.35%

•Required for the life of the loan

VA Funding Fee•VA does not charge a monthly premium for mortgage insurance

•Funding Fee is paid up front and typically added to the loan amount•2.15% for first time users•3.30% for subsequent users•1.5% with 10% down

•.50% for VA IRRRLs (VA refinances)•Funding Fee is waived if the borrower has a VA Disability Rating of 10% or more

Conventional Private Mortgage Insurance

•Required on all loans that have less than a 20% down payment•Can be a monthly premium, one time up front premium (which can be financed

into the loan or paid at closing), split premium•Rates are determined by down payment, credit score and debt to income ratios