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HOME LOAN RESOURCES
Detailed information on the residential mortgage process, required documents, popular home loan programs, Government financing objectives, etc.
HOME FINANCING PRE-LENDING PACKAGE
Detailed list of common home buyer oversights that could lead to potential delays in the real estate transaction. Try to avoid these and contact us any time if any give you concern.
THINGS NOT TO DO
Purchasing a home and have one to sell? We suggest multiple scenarios listed in the Buy/Sell vs. Sell/Buy to achieve the best financial outcome in two real estate transactions.
BUY/SELL vs. SELL/BUY[/fusion_button]
Knowing what to expect during a real estate transaction only helps to get to the closing table sooner. Listed here are best practices when beginning your real estate transaction.
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“HOME FINANCING CHECKLIST”
Don’t know where to start in the Home Buying Process? How about getting Organized? Take a look at our checklist below to help your prepare for your purchase!
HOME LOAN DOC CHECKLIST
Copy of signed sales contract including all riders
Verification of the deposit you placed on the home
Names, addresses and telephone numbers of all realtors, builders, insurance agents and attorneys involved
Copy of Listing Sheet and legal description if available (if the property is a condominium please provide condominium declaration, by laws and most recent budget)
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Copies of your pay stubs for the most recent 30-day period as well as year to date
Copies of your W-2 forms for the previous two years names and addresses of all employers during the previous two years
Letter explaining any employment gaps during the previous 2 years work visa or green card (copy front & back)
If self-employed or receive commission or bonus, interest/dividends, or rental income:
Provide full tax returns for the last two years PLUS year to date Profit and Loss statement.
K-1’s for all partnerships and S Corporations for the last two years.
Completed and signed Federal Partnership (1065) and/or Corporate Income Tax Returns (1120) including all schedules, statements and addenda for the last two years. (Required only if your ownership position is 25% or greater.)
Alimony or Child Support
Provide divorce decree/court order stating amount, as well as, proof of receipt of funds for last year If you receive Social Security income, Disability or VA benefits
Provide an award letter from agency or organization
DOWN PAYMENT FUNDS
Sale of your existing home – provide a copy of the signed sales contract on your current residence and statement or listing agreement if unsold (at closing, you must also provide a settlement/Closing Statement.
Savings, checking or money market funds – provide copies of bank statements for the last 3 months
Stocks and bonds – provide copies of your statement from your broker or copies of certificates
Gifts – If part of your cash to close, provide Gift Affidavit and proof of receipt of funds
Based on information appearing on your application and/or your credit report, you may be required to submit additional documentation
PERSONAL DEBT / OBLIGATIONS
Prepare a list of all names, addresses, account numbers, balances, and monthly payments for all current debts with copies of the last three monthly statements
Include all names, addresses, account numbers, balances, and monthly payments for mortgage holders and/or landlords for the last two years
If you are paying alimony or child support, include marital settlement/court order stating the terms of the obligation
Check to cover Application Fee(s)
Don’t be afraid to ask. They’re Frequently Asked Questions for a reason!
- Copy of signed sales contract including all riders
- Verification of the deposit you placed on the home
- Names, addresses and telephone numbers of all realtors, builders, insurance agents and attorneys involved
- Copy of Listing Sheet and legal description if available (if the property is a condominium please provide condominium declaration, by-laws, and most recent budget)
- Copies of your pay-stubs for the most recent 30-day period and year-to-date
- Copies of your W-2 forms for the past two years
- Names and addresses of all employers for the last two years
- Letter explaining any gaps in employment in the past 2 years
- Work visa or green card (copy front & back)
If self-employed or receive commission or bonus, interest/dividends, or rental income:
- Provide full tax returns for the last two years PLUS year-to-date Profit and Loss statement (please provide complete tax return including attached schedules and statements. If you have filed an extension, please supply a copy of the extension.)
- K-1’s for all partnerships and S-Corporations for the last two years (please double-check your return. Most K-1’s are not attached to the 1040.)
- Completed and signed Federal Partnership (1065) and/or Corporate Income Tax Returns (1120) including all schedules, statements, and addenda for the last two years. (Required only if your ownership position is 25% or greater.)
If you will use Alimony or Child Support to qualify:
- Provide divorce decree/court order stating amount, as well as, proof of receipt of funds for last year
If you receive Social Security income, Disability or VA benefits:
- Provide award letter from agency or organization
Source of Funds and Down Payment
- Sale of your existing home – provide a copy of the signed sales contract on your current residence and statement or listing agreement if unsold (at closing, you must also provide a settlement/Closing Statement)
- Savings, checking or money market funds – provide copies of bank statements for the last 3 months
- Stocks and bonds – provide copies of your statement from your broker or copies of certificates
- Gifts – If part of your cash to close, provide Gift Affidavit and proof of receipt of funds
- Based on information appearing on your application and/or your credit report, you may be required to submit additional documentation
Debt or Obligations
- Prepare a list of all names, addresses, account numbers, balances, and monthly payments for all current debts with copies of the last three monthly statements
- Include all names, addresses, account numbers, balances, and monthly payments for mortgage holders and/or landlords for the last two years
- If you are paying alimony or child support, include marital settlement/court order stating the terms of the obligation
- Check to cover Application Fee(s)
“How is my credit judged by lenders?” open=”no”]
Credit scoring is a system creditor use to help determine whether to give you credit. Information about you and your credit experiences, such as your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts, is collected from your credit application and your credit report. Using a statistical program, creditors compare this information to the credit performance of consumers with similar profiles. A credit scoring system awards points for each factor that helps predict who is most likely to repay a debt. A total number of points — a credit score — helps predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due.
The most widely used credit scores are FICO scores, which were developed by Fair Isaac Company, Inc. Your score will fall between 350 (high risk) and 850 (low risk).
Because your credit report is an important part of many credit scoring systems, it is very important to make sure it’s accurate before you submit a credit application. To get copies of your report, contact the three major credit reporting agencies:
Equifax: (800) 685-1111
Trans Union: (800) 916-8800
What is PMI (Private Mortgage Insurance)?” open=”no”]
On a conventional mortgage, when your down payment is less than 20% of the purchase price of the home mortgage lenders usually require you get Private Mortgage Insurance (PMI) to protect them in case you default on your mortgage. Sometimes you may need to pay up to 1-year’s worth of PMI premiums at closing which can cost several hundred dollars. The best way to avoid this extra expense is to make a 20% down payment or ask about other loan program options.
What is an APR?” open=”no”]
The annual percentage rate (APR) is an interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage because it takes into account points and other credit costs. The APR allows home-buyers to compare different types of mortgages based on the annual cost of each loan. The APR is designed to measure the “true cost of a loan.” It creates a level playing field for lenders. It prevents lenders from advertising a low rate and hiding fees.
The following fees are generally included in the APR:
- Points – both discount points and origination points
- Pre-paid interest. The interest paid from the date the loan closes to the end of the month.
- Loan-processing fee
- Underwriting fee
- Document-preparation fee
- Private mortgage insurance
- Escrow fee
The following fees are normally not included in the APR:
- Title or abstract fee
- Borrower Attorney fee
- Home-inspection fees
- Recording fee
- Transfer taxes
- Credit report
- Appraisal fee
What is locking the interest rate?” open=”no”]
Mortgage rates can change from the day you apply for a loan to the day you close the transaction. If interest rates rise sharply during the application process it can increase the borrower’s mortgage payment unexpectedly. Therefore, a lender can allow the borrower to “lock-in” the loan’s interest rate guaranteeing that rate for a specified time period, often 30-60 days, sometimes for a fee.
A point is a percentage of the loan amount, or 1-point = 1% of the loan, so one point on a $100,000 loan is $1,000. Points are costs that need to be paid to a lender to get mortgage financing under specified terms. Discount points are fees used to lower the interest rate on a mortgage loan by paying some of this interest up-front. Lenders may refer to costs in terms of basic points in hundredths of a percent, 100 basis points = 1 point, or 1% of the loan amount.
When should I refinance?” open=”no”]
It’s generally a good time to refinance when mortgage rates are 2% lower than the current rate on your loan. It may be a viable option even if the interest rate difference is only 1% or less. Any reduction can trim your monthly mortgage payments. Example: Your payment, excluding taxes and insurance, would be about $770 on a $100,000 loan at 8.5%; if the rate were lowered to 7.5%, your payment would then be $700, now you’re saving $70 per month. Your savings depend on your income, budget, loan amount, and interest rate changes. Your trusted lender can help you calculate your options.
What can I do to improve my credit score?” open=”no”]
Scoring models generally evaluate the following types of information in your credit report:
- Have you paid your bills on time? Payment history typically is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report.
- What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score.
- How long is your credit history? Generally, models consider the length of your credit track record. Insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances.
- Have you applied for new credit recently? Many scoring models consider whether you have applied for credit recently by looking at “inquiries” on your credit report when you apply for credit. If you have applied for too many new accounts recently, that may negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not counted.
- How many and what types of credit accounts do you have? Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many models consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may negatively affect your credit score.
What happens at closing?” open=”no”]
The property is officially transferred from the seller to you at “Closing” or “Funding”.
At closing, the ownership of the property is officially transferred from the seller to you. This may involve you, the seller, real estate agents, your attorney, the lender’s attorney, title or escrow firm representatives, clerks, secretaries, and other staff. You can have an attorney represent you if you can’t attend the closing meeting, i.e., if you’re out-of-state. Closing can take anywhere from 1-hour to several depending on contingency clauses in the purchase offer, or any escrow accounts needing to be set up.
Most paperwork in closing or settlement is done by attorneys and real estate professionals. You may or may not be involved in some of the closing activities; it depends on who you are working with.
Prior to closing, you should have a final inspection, or “walk-through” to insure requested repairs were performed, and items agreed to remain with the house are there such as drapes, lighting fixtures, etc.
In most states, the settlement is completed by a title or escrow firm in which you forward all materials and information plus the appropriate cashier’s checks so the firm can make the necessary disbursement. Your representative will deliver the check to the seller, and then give the keys to you.
Where can I apply?” open=”no”]
Apply here for your same day pre-approval! Experience the difference with Local Lending and Victor Bals!
HOME LOAN PROCESS
Take home loan application, run credit, explore financial goals, we will now determine the amount you are pre-approved for.
PURCHASE OFFER” backgroundcolor=
An executed purchase agreement is received on a home and the loan disclosure package is prepared.
Once loan disclosures are reviewed and signed the appraisal will be ordered.
The loan will be prepared for underwriting while appraisal comes back.
Underwriting will review your loan and will require conditions in order to proceed. We will assist you in collecting what is needed.
CLEAR TO CLOSE”
Conditions met and closing is being scheduled. We will contact all parties for the best date, time, and location to sign.
PRELIMINARY CLOSING DISCLOSURE”
Provides a closer idea of the required cash-to-close. Law requires this doc to be signed no less than 3 business days to closing.
Exact cash-to-close (updated 1-2 days priort to closing) The title company may require funds in a wire or cashier’s check.
The title company, loan officer, buyers, sellers, and REALTORS® will meet to sign the closing documents and keys will be exchanged. The first mortgage payment will be due the first full month after closing.
Note: Buyers will have a final walk-through prior to closing to ensure the state of the property.
State of the art Mobile Mortgage Calculator designed by mortgage professionals for mortgage professionals, Realtors® and clients alike.
Crunch your numbers on your time!
Calculate rates for FHA, Conventional, USDA, and VA loans—including down payments, MI rates, and APR quotes.
Get an idea of the monthly payments and affordability to take your next step on your financial path!
MOBILE ORGANIZATION” icon=””]
Securely take loan applications, have credit reports and receive pre-qualification letters from anywhere. So, when you find the home, you’ll make an offer with confidence.
LOAN STATUS UPDATES” icon=””]
Information is power, but for borrowers, it’s also peace of mind.
- Customize borrower alerts, so you know when the loan hits certain milestones
- Deadlines for returning forms or information to help keep organized.
- Improve the borrower experience with continuous communication.
- Setup customized alerts for a seamless loan process
You will also receive these loan status updates and much more part of our world-class communication series ensuring no one is left out of the loop!
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Send the home loan documents from your location. Clients can send 1003’s, Bank Statements, Taxes, W2’s and more. At any time, from anywhere.
- With a tap-to-scan-and-send option, encrypted documents get into the right hands.
- Built-in enhancement tools for brightness, contrast, cropping, and edge detection make for superior document quality.
- Realtors can easily scan addendums or changes at any time. Which means fewer closing delays—and a lot less of the traditional paper shuffle.