Sample Mortgage Banker

Transcription

1 Sample Mortgage Banker

2 What s included in Five Steps to Your New Home iii A review of the five worksheets provided for you to estimate your mortgage and home purchase eligibility Step One Savings and funds available for a down payment and closing costs Step Two Itemization of income available for loan repayment Step Three Itemization of debts and long-term obligations Step Four A mathematical worksheet for mortgage qualification Step Five A mathematical worksheet to estimate your price range Home Financing Terminology Copyright 2014 All Rights Reserved BANKERS ADVISORY, INC. BELMONT, MA THE INFORMATION CONTAINED IN THIS BOOKLET IS FOR EDUCATIONAL PURPOSES. MORTGAGE LENDING TERMS, LOAN AFFORDABILITY TABLES AND PROCEDURES DESCRIBED HEREIN REPRESENT A RANGE OF PROGRAMS. ACTUAL TERMS AND QUALIFYING CRITERIA WILL VARY AMONG MORTGAGE LENDERS, AGENCIES AND INSURERS.

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4 Five Steps to Your New Home! STEP 1, Add up all your savings Your first step is look at how much money you ve saved so far, plus any funds which will be available to you at the time of closing. On realty purchases, most mortgage programs require a minimum down payment of 3 to 5% comprised of the borrowers own funds, verified by a 3 to 6 month account history. Sources may include verifiable gifts and contributions toward closing costs. STEP 2, Add up your household income This worksheet asks you to list the gross monthly income (before taxes and deductions) for each borrower. Income to repay your mortgage may include salaried wages, overtime, and other stable sources. Lenders ask for a two-year history of earnings and will request documents to verify all sources. STEP 3, Look ahead at your monthly debts A qualifying factor is how much you owe monthly payments due on your car loan, revolving credit cards, or other long-term obligations. All outstanding credit accounts and repayment histories are verified from the lender s review of your credit report. This guide explains how lenders factor debt payments. STEP 4, Assess your mortgage affordability A special formula is applied to your monthly income to estimate your maximum housing payment and this payment is converted to a loan amount at a specific rate of interest. After factoring in your monthly debts as well as allowances for property taxes and insurance, you ll estimate your maximum mortgage. STEP 5, Estimate the price range of your new home Once you ve determined your cash available and qualified mortgage, you ll know your price range and can begin shopping for your new home. This guide explains the cost of mortgage insurance and financing options if funds are limited. Ask your lender about higher qualifying ratios this will increase your price range iii

5 Checking Account $ Passbook Savings $ Certificate of Deposit $ Stocks, Mutual Funds $ Gifts $ Equity from Realty Sale $ 2 nd Mortgage $ Other $ TOTAL CASH AVAILABLE $ Enter this Amount in Step 5 Enter current balances or the amount you expect to have saved by the date of closing, including proceeds from assets to be liquidated or the sale of your present home. Include any deposits made on a realty purchase and the dollar amount of points or closing costs to be paid by the property seller or 3 rd party. Your lender will verify sources and funds available prior to closing and look for a 3 to 6 month history of your own savings. Most programs require 3 to 5% of the borrower s own funds (not a gift or contribution). This may be a loan against your 401K or other financial account which permits loans and any repayment is treated as a debt. What to bring to your lender Photocopies of past three months bank statements Proof of Earnest Money (canceled check or other receipt) Gift letter and funds verification from donor s account Transaction record of large deposits, account transfers, sale of stocks, bonds or other asset accounts Sales contract on pending sale of present home or other asset Page 1

6 BORROWER Gross Monthly Wages Overtime, Bonus, Commission $ CO-BORROWER Gross Monthly Wages Overtime, Bonus, Commission $ INTEREST, DIVIDENDS $ OTHER INCOME $ ADD L BORROWERS TOTAL $ TOTAL MONTHLY INCOME $ Enter this Amount in Step 4 Enter monthly income before taxes and other deductions. Overtime and non-salaried figures are listed separately on your mortgage application and generally require a 2 year history. Tax returns may be requested if bonus or commission income exceeds 25% of earnings. Self-employment income is net (after business expenses) and your lender will treat certain items such as depreciation as a non-cash expense. If you are financing a 2-4 family property and are planning to occupy one unit, include projected rents. By law, alimony, child support or separate maintenance do not have to be revealed to a lender unless considered for qualifying purposes. What to bring to your lender Past two years W-2 forms for each applicant Recent pay stubs for each applicant (including any overtime # hours) Verification that overtime or bonus is likely to continue Past two years signed federal tax returns (if self-employed) Other income documents (if needed to qualify) Page 2

7 Installment Loan Payment $ Installment Loan Payment $ Credit Cards Payments (5% of total balances owed) $ Alimony, Child Support $ Other Monthly Payment $ Other Monthly Payment $ TOTAL MONTHLY DEBTS $ Enter this Amount in Step 4 Do not enter balances owed-- only the monthly payment due. Most lenders impute revolving payments by multiplying balances X.05 ($50 per $1,000). On this worksheet, do not include debts with 10 or less remaining payments or accounts to be paid on or before your closing. When you apply for a mortgage, however, all outstanding obligations will be disclosed and your lender will review the status of each account and payment history, including mortgages being refinanced or paid upon sale of your present home. What to bring to your lender Current statements for each installment loan or mortgage Account name, number & current balance for all revolving accounts Payment Information for other long-term obligations Proof of paid bills or status of credit account* Written explanation for employment gap or adverse credit* *this information is generally requested after a lender reviews your credit report Page 3

8 Enter figures from previous steps and a total monthly estimate to cover property taxes, hazard insurance, condominium dues, plus any required premiums for mortgage insurance these are qualifying factors whether or not escrowed. Multiply monthly income by.04 if items are unknown. MONTHLY INCOME (from Step 2) TAX, INSURANCE, CONDO DUES $ A $ B MONTHLY DEBTS (from Step 3) $ C Enter A, B, & C below. Multiply monthly income by 30% and then by 40%. both subtraction items, compare which answer is lower. After completing YOUR INCOME A Multiply X.30 $ Multiply X.40 $ Subtract B Subtract C First Answer $ Second Answer $ Enter the lower answer in the Maximum Principal & Interest Payment box. Next, divide by the monthly payment factor selected from the table on page 5. The answer is your qualified mortgage (at this rate) expressed in thousands. Divide Maximum P&I Payment $ by Factor. for Mortgage $ Examples: 5.00% Interest, factor of 5.37 per thousand: $1, = is mortgage rounded to $186, % Interest, factor of 6.00 per thousand: $1, = is mortgage rounded to $166, % Interest, factor of 6.65 per thousand: $1, = is mortgage rounded to $150,400

9 Disclaimer: The qualifying ratios are based on industry standards for conventional and government loans. Page 4

10 Enter figures from previous steps. Your savings figure is the total of all funds, including any advance deposits on a realty purchase. As a preliminary estimate of closing costs, multiply your qualified mortgage X.03 ($3,000 per $100,000). Multiply mortgage X.05 if your down payment is small (explained in Step 6). SAVINGS (from Step 1) $ A CLOSING COST ESTIMATE $ B QUALIFIED MORTGAGE (from Step 4) $ C Enter A, B, & C below. If you are unsure about closing costs, or considering financing part of your closing costs with your mortgage, refer to Step 6. The answers below are a general guide to get started. You may want to revise this worksheet later after reviewing options explained further in this booklet. Enter A $ Total Cash Available Subtract B Your Costing Costs First Answer $ Your Down Payment Add C Qualified Mortgage Second Answer $ Your Purchase Price Monthly Payment Per $1,000 for 30-Year Amortization Rate Factor Rate Factor Rate Factor Rate Factor

11 MORTGAGE PAYMENT FACTOR TABLE Page 5

12 Home Financing Terminology A.P.R. (Annual Percentage Rate) The cost of your loan expressed as a yearly rate, factored by: the note rate, points, per-diem interest, mortgage insurance and certain fees charged by the lender. The APR does not affect the monthly payment and, even if the rate is unchanged, may increase or decrease slightly from the time of application until closing, when final figures are applied. Truth-in-Lending Disclosure: Amount Financed The components of the APR, each of which is enumerated in the section, Pre-Paid Finance Charges are subtracted from the principal amount, reflecting the loan as a lower number. This is a disclosure method and does not affect your actual mortgage at application or closing. Truth-in-Lending Disclosure: Finance Charges The total of pre-paid expenses and interest charged over the life of the loan. Truth-in-Lending Disclosure: Total of Payments The total of pre-paid expenses, life-of-loan interest charges and the amount financed. Truth-in-Lending Disclosure: Prepayment Penalty A fee that the lender may charge if you pay off your loan within a certain time period. Servicing Disclosure This document tells you whether or not your lender intends to service the loan (collect payments from you directly) or transfer the servicing rights (another company will collect payments). Transfers cannot change your mortgage payment; however, servicers may adjust escrow payments to cover any deficits. Sale of Loan Your loan may be held in portfolio by the lender. Most mortgages, however, are sold to a government-sponsored secondary market agency such as Fannie Mae or Freddie Mac. These are referred to as conforming and have maximum loan limits. Jumbo and non-conforming Loans are sold in the secondary market. Sale of a loan does not affect the transfer of servicing. Mortgage Insurance Your loan may be insured by the FHA (Federal Housing Administration) or the VA (Veterans Administration) each having set loan limits, or by a Private Mortgage Insurance company (PMI). Generally, insurance is required if the equity or down payment is less than 20%. Points Your lender may offer you a range of point options. The greater the number of points, the lower your rate of interest. Your interest rate will generally drop 1/4% for each point paid. Rate Lock Your lender will probably ask if you want to lock in your interest rate and will present a range of options. Rates can be set at time of application, during processing, at approval or float until the date of closing. A fee is generally charged to lock in a rate and credited at closing. If you apply for a zero point mortgage, the fee is subtracted from other closing costs. Page 6