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 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”
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
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