Home mortgage process & qualification

Presented by David Zhang

Quick Survey

How many of you have experience about home mortgage?

Purpose of Today’s Topic 1. Understand the process of home

mortgage as a Borrower

2. Understand the qualification for home mortgage

3. Be able to get married? (For someone?)

How much would you pay ?

I am mean, so let’s offer: $250,000

What the…… I have no MONEY!

Find a Bank, Credit Union, etc.

How do you qualify for a loan?

1. Payment plan 2. Appraisal 3. Credit report 4. Title/ Insurance 5. Closing process(transfer/Taxes) 6. Payment to income

Time-consuming, about 60-90 days

Payment plan 1. What is your payment plan?

Using fixed 30-year payment as example?

What rate will be applied? (60-90days)

“Lock the rate”: your choice

Payment plan 2. How much can you get from a

loan?Loan to Value(LTV): Usually 90% to 95% of the house value.

What is the value of the house: $250,000?

No! Have to appraise property($300-$500)

Appraisal 3. What if the appraised value is

lower than your offer($200,000 instead of $250,000)?

Renegotiate

Inspected: $300-$1,000 make sure “it is up to code”

Credit report Credit report

$25- $50 for a credit report

Title/ Insurance 1. Is the title clean?Is it stolen?Someone died there?Anything illegal in it? On average, cost 0.4%-0.7% of the

valueThis could be shared with seller

Closing process 1. Private mortgage insurance(PMI) When borrowing over 80% of the value

$10 per month

2. Insurance on house($300/month) for my fancy house?

3. Property taxesCould be shared with seller depending on the

selling date.

Payment to incomeAccount Amount

Total $250,000

First payment(10%) $25,000

Borrowing (LTV) (90%) $225,000

Monthly PMT fix 30yr (5% APR*) $1,208

Minimum required income (PMT*3)

$3,625

Optional Escrow for Insurance $340

Income certificate will be required

How much should I have on hand before offer $250,000?

Account Amount

First payment (10%) $25,000

Prepaid insurance $300

Loan application fee (1%) $2,250

Other insurance Unknown

Property taxes shared Unknown

Total $35,000

$35,000, well I will have this much money very soon if I don’t have to eat anything to be alive.………..

8 Key points 1. Payment plan 2. Appraisal for the house 3. Title & Insurance 4. Payment to Income 5. Money 6. Money 7. Money 8………………..still money

Thank you!