CHOOSING THE RIGHT MORTGAGE PARTNER Your mortgage partner should play a vital role in both a seller listing situation and in the case of when working with a buyer. IN THE CASE OF A LISTING Provide seller with valuable mortgage market knowledge Are they buying a new home simultaneously or after selling? What are the seler s goals and their overall financial outlook IN THE CASE OF A BUYER Constant communication is the difference between getting a referral and not How strong is the buyer s pre-approval? Understanding timelines; credit rescores, initial disclosures, appraisal, loan commitment, and closing date
REALISTIC TIMELINES & EXPECTATIONS Contracts should be a minimum of 30 days and 60 days is ideal Loan Application and inspections 5 days Loan Commitment 30 days Once the loan commitment is received you are looking at 10-15 days to close Initial Disclosures, 5 10 days Appraisal 7-10 days
PROPER COMMUNICATION = POSITIVE EXPERIENCE Setting the proper timelines and expectations from the beginning of the process is the key to making the buying experience for your clients a positive one. Your mortgage partner should be one that updates you continuously throughout the process Issues often arise during and after the initial application process and everyone should be made aware of the issue in case it is going to cause any issues with the expected contractual obligations There are often situations that will delay the commitment but not the closing date Communication between all parties of the transaction, both side Realtor s, title and insurance companies will keep the process moving forward smoothly
For U.S. Buyers Buyer s should be prepared to provide the following 2 years tax returns and w2s and business tax returns when applicable One month of paystubs as applicable 2 months of asset statements for down payment and closing costs Permission to pull credit and supporting credit docs as needed Two year history for employment, housing, education, # of dependents The willingness to provide all documentation in a timely fashion and with a SMILE
For Foreign Buyers Foreign Buyer s should be prepared to provide the following Two Forms of ID Legible copy of valid passport from country of citizenship & legible copy of valid US Visa. Proof of address in home country A copy of any type of utility bill Income Verification (letters must be signed and dated by preparer) Self-employed borrower: CPA Letter describing the type of business owned, percentage of ownership, date when business started operating, last two years income and year-to-date income. Wage-earner borrower: Employment Letter indicating position, years on job, last two years income and year-to-date income. Two Bank Reference Letters - Foreign and US accepted Asset Verification 3 months bank statements (Foreign and US accepted)
LOAN TYPES FHA / FHA 203k VA Conventional/Conforming Conventional/Jumbo Portfolio Private Equity Commercial
FHA Myth 1 Myth 2 FHA is for first time buyers: FHA can be used for anyone financing a primary residence even if they currently have an FHA loan. The purchase of the new primary residence just needs to be justifiable; usually a larger property, better neighborhood (schools etc.), relocating for work are the most common justifications. It s harder to qualify for FHA financing: In many cases its actually much easier than going the conventional route, primarily because buyers have less restrictive guideline requirements. Credit Scores as low as 580 Down payment is only 3.5% Can qualify without having a credit score as long as the borrower ha non-traditional trade lines 12-month verifiable housing payment history Debt-to-Income (DTI) ratios as high as 56.9%,
FHA continued Max Loan is $345,000 in most counties in Florida Allows for non-occupying co-borrowers Allows 100% gift for down payment and closing costs FHA 203k is a purchase of refinance renovation loan Typically has a higher rate than the standard FHA (203b) Can be used for incomplete construction, updating kitchens and bathrooms, applicants, A/C units, Water heaters etc CANNOT be used for a new pool or adding a new room outside the current walls
VA LOAN VA (Department of Veteran Affairs) Loans Primary Residence Only Follws Conforming Loan Limits = $417,000 Up to 100% LTV financing both purchase and refinance 15 or 30 year fixed rates 1,3,5,7, and 10 year fixed period with 30 or 15 year amortization ARMs available depending on the lender. VA Funding Fee required; VA Funding Fee Table The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to 4 times a Veteran's available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price. For details visit: VA Benefits Website Financing approval and underwriting is based on income, credit, assets and the overall ability to repay. DTI allowances up to 60% with compensating factors.
Conventional (Non-Conforming) Jumbo JUMBO is any one loan above $417,000 LTV up to 90% Typically requires higher credit than loans $417k and less Increased Reserve requirements Available on Condo and Single Family Detached or Attached
Portfolio Loans Any loan not sold to Fannie or Freddie Foreign National Jumbo Corporate Title Anything outside the box Commercial
Private Equity or Hard $ Loans Typically individual investors Lower LTV, 70% SFR and 50% on Condo High costs and rate Second Home and Investor units only Typically Corporate Title Preferred Can close in 10 days or less Often used as bridge loans
Condo Limited review process avoids condo questionnaire and budget requirements Limited Review requires 25% down (owner occupied) and 30% down (second homes) No MI, no budget review, or occupancy requirements Close more condo using 2 loans up to 89.99% LTV Full Review process requires review of budget, reserves, insurances and unit occupancy percentages Investor units require full review regardless of LTV