Mortgage Survival Guide The perfect resource for First-Time Homebuyers W R I T T E N B Y: BRYAN KURZMAN BRANCH MANAGER / SR. MORTGAGE LOAN ORIGINATOR NMLS# 613453
TABLE OF CONTENTS: Step 1: Pre-Underwriting Approval or Preapproval... Page 1 Step 2: Offer Letter and Inspection... Page 3 Step 3: Signing the Purchase and Sale Agreement... Page 4 Step 4: The Mortgage Process... Page 5 Step 5: Required Documentation... Page 7 Step 6: Mortgage Approval... Page 9 Step 7: Closing Disclosure... Page 10 Step 8: Closing Welcome Home!... Page 11 Notes... Page 12 Welcome! The purpose of this booklet is to help you understand the mortgage process so you can be a well-prepared applicant. By understanding the loan timeline and the documents you ll need to provide (including how to present them), you will be ready to participate in a smooth home loan process. Bryan Kurzman, 2018. All Rights Reserved. No part of this booklet or any of its contents may be reproduced, copied, modified or adapted, without the prior written consent of the author, unless otherwise indicated for stand-alone materials. For any other mode of sharing, please contact the author at bryan.kurzman@fcloans.com Disclaimer: The information in this publication is solely the opinion of the author and does not necessarily represent the opinions of First Choice Loan Services Inc., Berkshire Bank, or their officers, directors or shareholders. This publication is provided as general information only and should not be taken as legal, investment or other professional advice. Let s get started! After all, your closing is right around the corner
STEP 1: Pre-Underwriting Approval or Preapproval: The Priority Buyer Letter Your offer to buy a home will be stronger when you can show the seller and Realtor that you have consulted a mortgage loan originator and have the financial ability to buy. First Choice Loan Services Inc. issues qualified buyers our Priority Buyer Letter based on either a pre-underwriting approval at the branch level, or a full preapproval following a credit decision from underwriting, subject to standard limited conditions like appraisal and clear title. Both processes require a credit report and may be submitted to an Automated Underwriting System. What do you need to apply for a pre-underwriting approval or full preapproval? Full legal name as it appears on legal documents Date of Birth Social Security Number Current address (and previous address if you have lived at your current address for less than 2 years) Current employment information (we will need to document the most recent 24 months of employment information, if any) Annual income (if applicable) Total amount of assets Desired purchase price Total amount of intended down payment Once you are ready to make an offer on a property, I will be able to generate your Priority Buyer Letter in a matter of minutes. Your offer will be stronger when you have your financing organized in advance. 1 2
STEP 2: Offer Letter & Inspection You found a house! What s next? You, your Realtor, or your attorney will prepare an offer letter outlining the specifics of your offer to buy the property. The offer letter along with your Good Faith deposit check of $1,000.00 will then be presented to the seller s side. STEP 3: Signing the Purchase & Sale Agreement What is a Purchase & Sale Agreement? The Purchase & Sale Agreement (P&S) is an important document in this process. It will include all relevant details, expectations, and deadlines of the purchase transaction. When you sign this document, you may be asked to make an additional deposit to bind the agreement. Here is the general timeline of events that typically occur after you submit an offer letter to the seller: Written acceptance of your offer by the seller. Congrats! You now have a property under agreement! Hire a residential home inspector to inspect the property. If you have a Realtor, he or she may have a trusted referral to offer you for this service. Usually highlighted in the P&S Agreement: Purchase price Amount of home loan applied for Any post-offer adjustments or credits, such as credits or considerations negotiated after home inspection Contingency Date (date by which you must have a mortgage loan approval) Call me! We will discuss your home loan options and the interest rate lock, as well as a general outline of the home loan process. Review the results of your home inspection with a trusted advisor such as a Realtor, attorney, or other professional. You may be able to address or negotiate any issues discovered during the inspection process. You may want an attorney to review the P&S Agreement, and make modifications to it, prior to your signing. Please contact me if you are having difficulty finding a real estate attorney to assist you. 3 4
STEP 4: The Mortgage Process Below is a general idea of what happens and what steps you can expect to take during the mortgage application process: Mortgage application & request for documents I will send you your loan application and disclosures to be signed, along with a Request for Documents letter highlighting what additional documents you may need to provide with your signed application. (See Page 7 for a list of typical documents required.) If you would like to meet at my branch, your office, or your home to review and sign the application together, just let me know! Appraisal An acceptable appraisal is needed for loan approval. Once you review your Loan Estimate and decide to move forward, we will order an appraisal on the property. For purposes of underwriting, we will use the appraised value or purchase price whichever is lower for property valuation. We will supply you with a copy of your appraisal. Once we receive your signed application, appraisal, and any other required supporting documents, in most cases your file is ready to be underwritten for a decision on your application prior to the financing contingency date outlined in your P&S Agreement. Loan Estimate Along with your loan application, First Choice will provide a Loan Estimate highlighting all terms, costs and settlement charges estimated to be associated with your closing. I will review this document with you in detail. We will also provide other disclosures regarding your requested mortgage together with your application. Returning the signed application and requested documents as soon as possible is critical for a successful and timely loan process. 5 6
STEP 5: Required Documentation Below is a list of the most commonly requested documents we may need for loan approval. You do not necessarily need to provide all of these documents to be approved, and First Choice may require additional documents. The mortgage underwriting process calls for documents to be provided in a very specific manner; please review the notes below to understand some of these specifics: Most recent 2 years W2s (if any). Most recent 2 years Federal Tax Returns, including all schedules and K1s. This is especially critical for selfemployed borrowers so we can calculate qualifying income accurately. ALL PAGES of the most recent 2 months liquid asset account statements such as checking, savings, or CDs (if any). IMPORTANT NOTE: Please provide all pages, even the blank or seemingly irrelevant ones. Large non-pay-related deposits may have to be sourced with supporting documentation to prove the origin of funds. Updated banking statements showing funds deposited subsequent to the Purchase & Sale Agreement deposit will be required when available. If you are receiving gift funds, please discuss this with me so we may document properly. ALL PAGES of the most recent 2 months non-liquid asset account statements such as 401k or IRA/investments (if any). Most recent 2 consecutive paystubs (if any, to show 30 days of earnings). Additional documents may be required depending on a specific scenario, applicant status or circumstance. I will discuss these details as they relate to you. Please Note: We may request these or other documents prior to issuing your loan disclosures. You are not required to provide any documentation in order to receive your Loan Estimate, but providing them promptly when requested may help us provide you a more accurate estimate of your closing costs. Do not redact any data or information on the documentation you submit with your loan application. 7 8
STEP 6: Mortgage Approval Once your signed application, supporting documentation, and appraisal are all back in our hands, we will submit the file to underwriting. When your loan receives conditional approval, we will generate a Mortgage Loan Commitment Letter, which should satisfy any mortgage contingency requirement in your P&S Agreement. Here is a general idea of what occurs after we issue the Mortgage Loan Commitment Letter: You should review any conditions of approval in the Letter. Please satisfy those conditions as quickly as possible with additional documents or actions as needed. Once all conditions are satisfied, we will clear your loan to close. We will refresh your credit report to ensure there have not been any new inquiries and we are required to verbally verify your employment prior to closing. STEP 7: Closing Disclosure The Closing Disclosure (CD) is a document prepared by the lender that provides the final accounting of the loan and sale of the property for time of closing. Some important information in the CD: Total closing costs (includes all mandatory fees, attorney fees, title insurance fees, recording fees, appraisal fee, etc.). Total settlement charges, including tax and insurance escrows set up at time of closing. Escrows are funds established to pay your homeowners tax and insurance premiums. Total elective fees (such as owner s title insurance, which is insurance a homeowner may elect at time of closing to ensure a clean and clear title to the property). Per diem interest (the amount of interest owed on your new mortgage loan from the date of closing through the end of the month in which you close). Down payments you made at time of offer and time of Purchase & Sale Agreement, and any seller or lender credits. DO NOT take on any new debt or allow any party to run or check your credit between the time you receive your pre-underwriting approval or preapproval and the closing. This could potentially have a negative impact on your loan approval. You will receive a copy of the CD at least 3 business days before your closing date. You must acknowledge receipt as soon as notified we cannot go to settlement until 3 business days after you receive the Closing Disclosure (a business day is any day except Sunday or Federal holidays). 9 10
STEP 8: Closing Welcome Home. Welcome home! The closing attorney will communicate with you regarding the time and place for the closing. What to expect on closing day and what is required: Present a certified check (bank check, NOT a personal check) at time of closing, or arrange in advance for funds to be wired, for the total amount shown on the final CD. Bring a personal check for any minor final adjustments not included on the CD (such as seller oil adjustments). Have 2 forms of valid identification available (the closing attorney will advise you regarding acceptable forms of ID). Once all documents have been signed by you as the buyer, and by the seller, the closing attorney will record your transaction at the registry of deeds (called going to record) at which time you become the official owner of your new home. Receive the keys to your new home. Congratulations! NOTES Ask the closing attorney to whom your certified funds should be made payable. 11 12
BRYAN KURZMAN BRANCH MANAGER / SR. MORTGAGE LOAN ORIGINATOR NMLS# 613453 O: 617.306.9966 F: 508.562.3808 bryan.kurzman@fcloans.com www.fcloans.com/bryankurzman 303 Turnpike Rd., Westborough, MA 01581 First Choice Loan Services Inc. (NMLS# 210764), a Berkshire Bank Company (NMLS# 506896). One Tower Center, Floor #18, East Brunswick, NJ 08816. First Choice Loan Services Inc. is licensed, registered or exempt from state licensing in the states it originates mortgage loans. AZ BK#0918586. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. Licensed by the NJ Department of Banking and Insurance. Mortgage loans not offered in NY. To check license status, go to: www.nmlsconsumeraccess.org. First Choice Loan Services is not an agency of the federal government. All loans are subject to credit approval. Programs, rates, terms and conditions are current, but are subject to change or expire. Other restrictions may apply. All applications must be submitted in writing. This advertisement is not a loan disclosure or commitment to provide a loan approval or a specific interest rate. 09.27.2018