HHoommee BBuuyyeerr PPrrooggrraamm Review your credit Financing Your New Home

Costs and Affordability Product Options Documentation Requirements The Process

Finding a Real Estate Agent The Appraisal Insurance Title and Closing, “The Big Day”

HHooww DDoo II CChheecckk MMyy CCrreeddiitt??

Three Main Credit Repositories Experian 888-397-3742

www.experian.com

Trans Union 800-916-8800 www.transunion.com

Equifax 800-685-1111 www.equifax.com Free Annual Credit Report www.annualcreditreport.com

WWhhaatt AArree TThhee CCoossttss ooff PPuurrcchhaassiinngg aa HHoommee??

Down Payment - Most lenders will now lend up to 100% of the value of a home. However, the buyers are expected to put a minimum contribution of $500 into the transaction and maintain sufficient money in reserve. Closing Costs - Expenses charged by your lender, generally these costs range from 3% to 6% of the mortgage amount. Settling-in Costs - You may need to assess your money needs for immediate repairs to the home, moving expenses, and utilities etc. Ongoing Costs - Housing costs will include your monthly payment, property taxes, homeowner’s insurance, mortgage insurance, utilities and maintenance.

WWhhaatt’’ss OOnn aa GGoooodd FFaaiitthh EEssttiimmaattee??

CLOSING COSTS PREPAID CHARGES Points Prepaid Interest Appraisal Mortgage Insurance (PMI) Credit Report Hazard Insurance Tax Service Flood Insurance Flood Certification Underwriting ESCROW/RESERVES Processing Real Estate Taxes Attorney Fees Hazard Insurance Title Insurance Mortgage Insurance Recording Plot Plan/Survey Pest Inspection Courier Wire Transfer

HHooww DDoo II CChhoooossee aa MMoorrttggaaggee CCoommppaannyy??

SSaammppllee QQuueessttiioonnss ttoo AAsskk

How long have you been in business?

What types of mortgage products or programs are offered?

What is the average number of days it takes for you to issue a loan approval?

What kind of fees do I need to pay upfront?

Is there a cost to lock into a rate and how long can I lock?

What are the total fees associated with our loan?

If we are locked-in and rates go up, what is your policy if our rate lock expires?

Can I be pre-approved prior to purchasing the property?

Who else will I interact with during the process?

WWhhaatt’’ss aa PPrree--QQuuaalliiffiiccaattiioonn vvss.. aa PPrree--AApppprroovvaall??

Pre-Qualification

An informal determination of how large a mortgage a buyer can afford. This determination is based on numbers only.

Pre-Approval

A formal commitment of how large a mortgage a buyer can afford. A complete application is necessary including a credit report and an automated underwriting determination

PPrree--QQuuaalliiffiiccaattiioonn WWoorrkksshheeeett

• Monthly Income o Calculate your total GROSS income on a monthly basis.

If self employed, paid commission or bonus income average the last 24 months.

• Monthly Debt

o Calculate your total debt on a monthly basis. Auto loans and leases, personal loans, student loans, 401K

loans, credit cards and any other monthly obligations. (Excluding Utilities)

• Ratio Calculations

o Multiply your monthly gross income by 28% This is a typical monthly mortgage payment

o Multiply your monthly gross income by 36% This is typically your total monthly debt

WWhhaatt AArree tthhee TTyyppeess ooff LLooaannss??

• Fixed Rate Mortgages

o Payments remain constant o The interest rate remains the same for the life of the loan.

• Adjustable Rate Mortgages

o Payments may change periodically o The interest rate may vary over life of the loan o Should have rate and change caps o ARMs usually start at a rate lower than fixed and adjust as the

market changes o Interest Only and Option Arms

WWhheenn DDoo II MMeeeett WWiitthh TThhee MMoorrttggaaggee CCoonnssuullttaanntt??

When you have decided to purchase a home within the next 3 months When you have put in an offer to purchase. Once you have signed a Purchase and Sales Agreement

WWhhaatt DDooccuummeennttaattiioonn iiss RReeqquuiirreedd??

Pay stubs for previous 30 days

W-2’s for past two years

Two months consecutive bank statements

401(k) statements, if liquidating or using as reserves

List of all debts

Divorce Decree, if paying alimony or child support, or if claiming same and using as qualifying income

WWhhaatt TTaakkeess PPllaaccee DDuurriinngg TThhee AApppprroovvaall

PPrroocceessss??

• Processing o Credit Report, Title and Appraisal Report are ordered. o Loan reviewed for necessary paperwork. o “Needs letter” is mailed. o Employment is verified. o Loan is submitted to underwriting for a decision.

• Underwriting

o Underwriter will approve a loan with “conditions” o Conditions are documents still needed prior to closing to complete

the file. o A formal commitment or approval letter will be forwarded to you.

WWhhaatt AAbboouutt EEqquuiittyy LLiinneess//LLooaannss??

• Can help to avoid Private Mortgage Insurance (PMI)

• Can help to avoid maximum loan limit (currently $417,000 on a one-family)

• Lines Provides flexibility

WWhhoo WWiillll NNoottiiffyy MMee ooff MMyy AApppprroovvaall??

Your Processor or Mortgage Consultant will notify you of your approval, and any conditions. Once the approval conditions are satisfied your closing will be scheduled.

RReesseeaarrcchh aanndd CCoommppaarree

What Should I Look for In An Agent?

Knows the Community Reliable and Trustworthy Has Professional Designations and Affiliations Can Provide All the Services You Need Will Provide References Someone you feel comfortable with and can answer your questions

WWhhaatt AArree MMyy NNeeeeddss && GGooaallss??

Location: Consider proximity to schools, shopping, recreation, public transportation and other amenities. Budget: Once you have been pre-approved, ask your real estate agent to show you neighborhoods in your price range. Personal Interests: Do I want a new or older home? Large or small? One floor or two? Do I need a garage?

HHoommee bbuuyyiinngg WWiisshh LLiisstt

Style Family Room Kitchen Bedrooms Bathrooms Garages Fireplace Central Air Oil/Gas Heat

TThhiinnggss ttoo RReemmeemmbbeerr WWhheenn HHoouussee HHuunnttiinngg

Bring along a notebook and pen for note-taking.

Bring a tape measure to check room sizes.

Is there enough room for you now and in the future?

Is the home’s floor plan right for your family?

Will you have to replace the appliances?

How have the home and grounds been maintained?

HHoouussee HHuunnttiinngg TTiippss

How much are the monthly utilities?

How old is the roof?

Has there been any water or dampness in the basement?

Is the street a shortcut for the neighborhood?

Are you at a busy corner?

Have you visited at different times of day/night or weekends?

MMaakkiinngg aann OOffffeerr oonn

YYoouurr ““DDrreeaamm HHoommee”” Consider what you can afford and make an offer that you consider to be fair. A written “offer to purchase” is signed by you and presented to the seller. Earnest money shows you are serious about wanting to buy and is returned if the offer is not accepted.

WWhhaatt AAbboouutt TThhee AApppprraaiissaall??

• Order will be sent to a licensed, approved appraiser

• The type of appraisal will depend on the lender/investor requirements. May be:

o Full appraisal with interior inspection and neighborhood comparables, photos, maps

o “Drive-by” without interior inspections, with neighborhood comparables, photos, maps

o Exterior only, photos, no value given

• The appraisal may vary depending on single or multi-family, condo, type of product, etc.

• You are entitled to a copy of appraisal

WWhhaatt AAbboouutt IInnssuurraannccee??

• Can be Hazard or Homeowners

• Must equal mortgage amount or have full replacement value

• May Need Flood Insurance if property in Flood Hazard Area

• Show Mortgagee’s Clause

“The Big Day”

WWhhaatt DDoo II DDoo BBeeffoorree MMyy CClloossiinngg DDaayy?? 2 weeks before…

Provide all “prior to closing” documents to your processor. Arrange and schedule a tentative moving date and time.

1 week before…

Obtain homeowners’ insurance and forward to the closing attorney and mortgage processor. Verify closing date, time and location with attorney.

3 days before…

Schedule your final “walk-through” inspection of the home.

The Day before… Call the attorney for final closing costs and inquire how it is to be paid.

The Closing Day…

Bring your checkbook, insurance binder, driver’s license and paid receipt, as well as a certified check, made payable to yourself for the remaining down payment and closing costs.

What Will Happen On The Closing Day?

The attorney will prepare the HUD-1 Settlement Statement which includes all adjustments. The mortgage deed, note and truth in lending will be signed along with other closing documents.

YYoouu AArree tthhee PPrroouudd OOwwnneerr ooff YYoouurr NNeeww HHoommee!!

Attorney collects the closing costs and the insurance binder from you. Your agent will hand you the keys! The deed and mortgage will be recorded in the city or town.

LLeett uuss hheellpp yyoouu wwiitthh bbuuyyiinngg aa NNeeww HHoommee

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““TTaakkee tthhee EEaassyy RRooaadd HHoommee””