Home Buying 101 Five steps to a smooth mortgage process

Transcription

1 Home Buying 101 Five steps to a smooth mortgage process

2 Q: Does buying a home have to be stressful? Absolutely NOT! :A Most people assume stress just comes with the territory when you buy a home, but the truth is it doesn t have to be an ordeal! If you follow the five easy steps we ve outlined in this guide, you ll be on the way to home ownership without tearing your hair out. Read on to learn more >> << 5 Steps to a smooth mortgage process << PAGE 1

3 5 Steps to a smooth mortgage process Be prepared Trust the Boy Scouts motto on this one: Get your tax, income and insurance documentation squared away now. Get pre-qualified Get pre-qualified for a mortgage to get real estate Agents to take you seriously Talk about your loan options Your Home Loan Consultant will help you choose the right options to help you achieve your goals Find your home! Introduce your agent and loan officer Your Real Estate Agent and Home Loan Consultant will work closely together to get the deal done << 5 Steps to a smooth mortgage process << PAGE 2

4 Be prepared 1 them now. Every lender requires the same basic documents from you. Use this checklist to know what they are and start gathering Documenting your income MOST RECENT 2 Years Federal Tax Returns complete with all schedules In business for yourself? We will need 2 most recent years of your Federal Returns, along with the K-1 statements. Two most recent years W-2 Statements Most recent month of Paystubs or LES for ALL borrowers Continue to keep all paystubs from now until your loan closes Receiving Social Security? You will need the most recent Award Letter you received from the SS Administration Documenting your assets If you have any money due at closing (down payment, closing cost, etc.) the Lender will want you to document the accounts you are drawing those funds from. Bank Statements or Investment Statements for down payment and closing costs Full Statements (all pages) covering past 60 days Continue to gather all statements until you close Document and retain paper trail on any transferred money or large deposits Getting a gift? Any gift funds need a Gift Letter contact your Home Loan Consultant Other stuff If you are a Veteran and doing a VA Loan, have your DD214 available If you have rental properties, keep a mortgage statement, homeowner s insurance bill and tax bill for all your properties Will your current home be sold by closing on new home? If not, you may need reserve assets! Start to think about your new homeowners policy. Your lender will need it prior to closing. << 5 Steps to a smooth mortgage process << PAGE 3

5 2 Get pre-qualified Most Real Estate Agents will not show you homes unless you re pre-qualified for a home loan. Shop your lender options first, then get your pre-qualification letter from the one you choose. Ready to get pre-qualified now? Complete this form and fax it back to us (877) Borrower Home ph._work ph._ Soc.Sec.#Fax# DOB: / / Cel.#_ Marital Status: Married Unmarried Separated Dependents: NumberAges Co-Borrower Home ph._work ph._ Soc.Sec.#Fax# DOB: / / Cel.#_ Marital Status: Married Unmarried Separated Dependents: NumberAges Years at Present Address*_ Own or Rent Years at Present Address*_ Own or Rent Home Address CitySt. Zip_ Present Employer Work Address CitySt. Zip_ JobTitle Date of Employment* (*) On a separate attachment, please list any additional residences or employers you have had during the previous two years. Annual Income Alimony, child support or separate maintainence income need not be revealed if you do not wish to have it considered as a basis for repaying this obligation. ` Base Income Overtime** Bonuses** Commissions** Other Real Estate Loans or Rent Alimony/Child Support Total: (**) Average for the previous two years. Are you (Pone): Selling_ Borrower $ Installment & Revolving Debts Borrower and Co-Borrower Combined Total: Mo. Payment $ $ $ Renting_ Co-Borrower Unpaid Balance _ Retaining_ Home Address CitySt. Zip_ Present Employer Work Address CitySt. Zip_ JobTitle Date of Employment* Bank Accounts & Investments Balance Checking _ Savings _ Stocks & Bonds _ Other Total: _ Other Information Borrower and Co-Borrower Combined (POne) YES NO Will any part of the down payment be borrowed? Are you a co-maker or endorser on a note? Are there any outstanding judgements or past foreclosures? Have you ever declared bankruptcy? Will the property be your primary residence? I acknowledge that: the information provided in this application is true and correct as of the date set forth opposite my signature and I understand that it is a federal crime, punishable by fine, imprisonment, or both, to knowingly make any false statements concerning any of the above facts, as applicable under the provisions of Title 18, United States Code, Section I verify that the information provided is correct to the best of my knowledge. I understand that First Federal Bank will verify the information and that final approval is subject to verfication of such information. I grant First Federal Bank permission to obtain a preliminary credit report. Borrower: Co-Borrower: Signature Date Signature Date << 5 Steps to a smooth mortgage process << PAGE 4

6 FHA Loans Pros: Low down-payment - Attractive interest rates - Cons: Mortgage Insurance - More paperwork - Tougher home inspections - Conventional Loans Pros: Reasonable down-payment - Attractive interest rates - Cons: Mortgage Insurance - Talk about your loan options 3 What is most important to you about your home loan? Whether it s minimizing the cash needed to close or getting a low monthly payment, let s identify your priorities. 3.5% of home purchase price (can be a gift from a family member) Since these loans come with a government guarantee, you can get some of the lowest mortgage rates available. Both an up-front premium due at closing and monthly mortgage insurance payments for the life of the loan. A good rule of thumb in mortgages is the less money you re putting down to buy a home, the more asset/income documents you ll need to provide. Be prepared for document requests above & beyond the list on page 3. The home you re buying must meet FHA/HUD requirements, which are more stringent than most lenders would require for a Conventional Loan. Can range from a low of 5%, up to a typical 20% down payment Rates are still attractive, but your FICO score is going to play a big role in your rate. The higher your score, the lower your rate. If you re putting down less than 20%, you will be required to pay mortgage insurance (PMI) You can ask to have it removed from your loan once the balance of your mortgage is less than 80% of the original value of your home. VA Loans (Must be Active-Duty Military or Veteran to qualify) Pros: Low / No down-payment - Attractive interest rates - No Mortgage Insurance - You may qualify to buy a home with 0% down. These loans carry a government guarantee, so rates are very attractive. Unlike most loans with down payments under 20%, there is no PMI. Cons: Funding Fee - A VA loan typically requires a funding fee, which can be added to the loan amount. However, this can be waived if you are more than 10% disabled, according to the Veterans Administration. << 5 Steps to a smooth mortgage process << PAGE 5

7 4 Find your home Once you find a home, you will negotiate the price, choose a closing date and sign a sales contract. Now you re on the clock! As soon as you sign, do the following: Get a copy of the sales contract to your home loan consultant immediately - We need this to lock the interest rate on your loan! Get the name and number of the Title Company that will be handling the purchase to your home loan consultant Get the documents you collected from page 3 to your Home Loan Consultant ASAP Sign and return your initial loan disclosures << 5 Steps to a smooth mortgage process << PAGE 6

8 5 Introduce your Agent and Home Loan Consultant If you haven t done so already, it s time to introduce your Home Loan Consultant to your Real Estate Agent. These two individuals need to communicate with each other during the process to get your home purchase completed as smoothly as possible. Just one more tip: Communicate with your Home Loan Consultant and make sure you respond to requests quickly. We know it s a pain to track down tax/income/asset documents, but the sooner we have them, the sooner we can get you into your new home. Thanks for taking the time to read this! We re looking forward to being a part of your home buying experience, and we ll see to it that everything goes as smoothly as possible at First Federal Bank! << 5 Steps to a smooth mortgage process << PAGE 7