qualifying for a san mateo mortgage
DESCRIPTION
Chris Williamson, Mortgage Advisor with Mortgage California explains what a lender looks for in a loan application including credit requirements, income requirements, assets, down payment, closing costs and the Good Faith Estimate.TRANSCRIPT
Qualifying for a Mortgage
Thanks for joining tonight’s webinar. We will begin shortly. To download the slides, please visit
http://budurl.com/WebinarSlides
Tonight’s Speaker
Chris WilliamsonMortgage Advisor - Mortgage California
Phone: (650) 520-0915
www. SanMateoMortgageBlog.com
Questions During the Webinar
• Financing experts are available to answer questions throughout the presentation
• This is an interactive learning environment. You will
Chris Williamson [email protected] Phone: (650) 520-0915
• This is an interactive learning environment. You will get the most value from this program by having your specific questions answered.
• The only dumb question is the one you don’t ask
Questions During the Webinar
You may type questions in at any time during the presentation –Question box on your screen
Chris Williamson [email protected] Phone: (650) 520-0915
Qualifying for a Mortgage
Chris E. Williamson
Mortgage Advisor
Phone: (650) 520-0915
Email: [email protected]
Blog: www.SanMateoMortgageBlog.com
Purpose & Goals of the Webinar
Purpose
• Empower and Educate Home Buyers
Goals
Chris Williamson [email protected] Phone: (650) 520-0915
Goals
• Share with you the things we’ve learned about qualifying for a mortgage loan
• Leave you more aware and informed about financing
Overview• Poison Pill of Home Buying
• What is a Pre-Approval
• The CIA of Lending
Chris Williamson [email protected] Phone: (650) 520-0915
• The CIA of Lending
• Down Payment
• Gift Funds
• Closing Costs
• Good Faith Estimate
• Loan Application
Poison Pill of Home Buying
• Financial Unpreparedness
• Not Putting Your Financial House in Order is Setting Yourself Up for Failure
Chris Williamson [email protected] Phone: (650) 520-0915
Yourself Up for Failure
Key: Find a Loan First, then Find a Home
Pre-Approval vs. Pre-Qualification
Get Pre-Approved, Not Pre-Qualified
• Pre-Qualification
▫ An informal estimate of what you can afford
Chris Williamson [email protected] Phone: (650) 520-0915
▫ An informal estimate of what you can afford
• Pre-Approval
▫ A loan commitment from a reputable lender
What is a Pre-Approval
A Pre-Approval is Verifying your….• Credit Score and Continuing Liabilities
• Income
Chris Williamson [email protected] Phone: (650) 520-0915
• Income
• Asset
A Pre-Approval Gives You...• Purchasing Power▫ A Pre-Approved Buyer is a CASH Buyer
• The Upper Limit of What You Can Afford
The CIA of Lending
•The 3 Most Important Components of Your Pre-Approval
Chris Williamson [email protected] Phone: (650) 520-0915
▫ Credit
▫ Income
▫ Assets
What is Credit?
• Snapshot of How You Handle Debt
• Risk Assessment for the Lender
• Look at Previous 2 Years of Debt Management
Chris Williamson [email protected] Phone: (650) 520-0915
• Look at Previous 2 Years of Debt Management
• Project 3 Years of Your Ability to Repay Mortgage
What Makes Up Your Credit?
Chris Williamson [email protected] Phone: (650) 520-0915
How is Credit Measured?
• Three Credit Bureaus
▫ Experian
▫ Equifax
Chris Williamson [email protected] Phone: (650) 520-0915
▫ Equifax
▫ TransUnion
• Median Score
Credit
• What is Good Credit?
▫ Above 680
• What is Bad Credit?
Chris Williamson [email protected] Phone: (650) 520-0915
• What is Bad Credit?
▫ Below 620
• Credit Score Above 580 to Qualify for a Mortgage
Income – W-2 Employees
Documentation Needed
• 2 Paystubs (Covering 1 Month) and YTD Income
• 2007-2008 Tax Returns and W-2s
Chris Williamson [email protected] Phone: (650) 520-0915
• 2007-2008 Tax Returns and W-2s
• 2 Year Work History
• To Count Overtime and Bonuses in Your Income
▫ 2 year work history with same employer and same position
▫ Letter from employer to show likelihood of continuation
Income – Self-Employed
Documentation Needed
• 2009 Profit and Loss Statement
• 2007-2008 Tax Returns
Chris Williamson [email protected] Phone: (650) 520-0915
• 2007-2008 Tax Returns
• 2 Year Work History as Self-Employed
Debt to Income Ratios
• Housing Expense = Principal+Interest+Taxes+Insurance
• Front End Ratio
▫ Housing Expense Only / Gross Monthly Income
Chris Williamson [email protected] Phone: (650) 520-0915
▫ Housing Expense Only / Gross Monthly Income
▫ Ideally Should Be Less than 38%
• Back End Ratio
▫ (Housing Expense + Continuing Liabilities) / Gross Monthly Income
▫ Ideally Should be Less than 45%
▫ Can Be as High as 55% with Compensating Factors
Assets
• Your Assets Determine
▫ Down Payment
▫ Closing Costs
Chris Williamson [email protected] Phone: (650) 520-0915
▫ Closing Costs
▫ 2-6 Months Reserves (depending on loan program)
� Reserves = Principal, Interest, Taxes and Insurance
• Show 2 Months Bank, Investment and Retirement Account Statements
• Large Deposits Need to be Sourced and Documented
Gift Funds
• Money from Family to Go Towards Down Payment
• Speak with Your Mortgage Advisor Before You Accept or Deposit Any Money
Chris Williamson [email protected] Phone: (650) 520-0915
or Deposit Any Money
• Gift Letter
▫ States money is a true gift & doesn’t have to be repaid
• Show Cancelled Check or Wire from Donor
• Show Receipt of Money Into Your Account
▫ Deposit Slip and Bank Statement
Down Payment
• Loan Programs with Less than 20% Down Payment
▫ 3.5% Down = FHA
▫ 5%-15% Down = Conventional
Chris Williamson [email protected] Phone: (650) 520-0915
▫ 5%-15% Down = Conventional
▫ Require Mortgage Insurance
▫ Impounds Required for Less than 15%
• 20% Down is Ideal
▫ Best Interest Rates and Terms
▫ No Impounds
▫ No Mortgage Insurance Req’d
Closing Costs
What Can I Expect to Pay to Close the Loan?
• Closing Costs are Like Thumbprints
• Vary from City to City, Program to Program and
Chris Williamson [email protected] Phone: (650) 520-0915
• Vary from City to City, Program to Program and Borrower to Borrower
• Impossible to Pinpoint Exact Numbers Before You Find a Home
Closing Costs
• Items Payable in Connection with the Loan
▫ Appraisal
▫ Loan Points
Chris Williamson [email protected] Phone: (650) 520-0915
▫ Loan Points
▫ Processing Fee
▫ Underwriting Fee
▫ Application Fee
▫ Document Preparation Fee
Closing Costs
• Escrow and Title Charges
▫ Owner’s Title Policy
▫ Lender’s Title Policy
Chris Williamson [email protected] Phone: (650) 520-0915
▫ Lender’s Title Policy
▫ Courier Fee
▫ Recording Fee
▫ Wire Fee
Closing Costs
• City Transfer Tax
▫ San Mateo only City in San Mateo County
� Ex: $5/$1,000 purchase price
Chris Williamson [email protected] Phone: (650) 520-0915
� Ex: $5/$1,000 purchase price
� $500,000 = $2,500
▫ Customarily Split 50% Buyer/50% Seller
• County Transfer Tax
▫ Customarily Paid by Seller
Reserves and Prepaid Costs
• In Addition to Closing Costs and Down Payment
• Prepaid Interest
• Mortgage Paid in Arrears
Chris Williamson [email protected] Phone: (650) 520-0915
• Mortgage Paid in Arrears
▫ Opposite of Rent
• Prepay One Year Homeowner’s Insurance
Loan Application• Resume to the Lender
• What’s Required?
▫ Name/Date of Birth
Chris Williamson [email protected] Phone: (650) 520-0915
Name/Date of Birth
▫ Social Security Number
▫ Income
▫ Assets
▫ Address(es) for Last 2 Years
▫ 2 Year Employment History
▫ Continuing Liabilities
▫ All Real Estate Owned
Resources You Can Use at Home
Chris Williamson [email protected] Phone: (650) 520-0915
SanMateoMortgageBlog.com
Chris Williamson [email protected] Phone: (650) 520-0915
Financing Questions?http://sanmateomortgageblog.com/mortgage-financing-question/
Chris Williamson [email protected] Phone: (650) 520-0915
Upcoming Classes and Webinars
Chris Williamson [email protected] Phone: (650) 520-0915
Home Buyer 2.0
First Time Home Buyer Class 2.0
Chris Williamson [email protected] Phone: (650) 520-0915
Tuesday, January 19th at 7pm
Sign up at
www.budurl.com/BuyerClass
Condo Buying Class
Guide to Buying a Condo – Including New Financing Regulations
Chris Williamson [email protected] Phone: (650) 520-0915
Thursday, January 21st at 7pm
Sign up at
www.budurl.com/CondoWorkshop
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Chris Williamson [email protected] Phone: (650) 520-0915
Apply Online
Chris Williamson [email protected] Phone: (650) 520-0915
Free Consultation
Chris Williamson
Chris Williamson [email protected] Phone: (650) 520-0915
Chris Williamson
Phone: (650) 520-0915
Email: [email protected]
www.SanMateoMortgageBlog.com