a guide for first time homebuyers

7/29/2019 A Guide for First Time Homebuyers

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Presented by:

Brian Salerno

radius financial group inc.

Brian SalernoLoan Ofcer / nmls # 17931Cell: [email protected]

304 Cambridge Road - Suite 320, Woburn, MA 01801 781.376.9195 radiusgrp.com

ma ml1846 me slm6596 nh 7986-mb ri 2003154411 fl070724 ct 17213 ct 17212 nmls#1846

EQUALHOUSING

LENDER


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The process of applying for a mortgage requires multiple steps, and every oshould be presented with a pre-approval letter from a reputable and reliable lender

Pre-approvals are the best way to shop for your new home it is as though you arehopping for your new home with your mortgage in your back pocket. A pre-approval

means that a lender has verified the purchaser the opportunity to actually apply for a

mortgage. (See the attached lists of documents required for application.) The pre-approv

will tell you how much you can spend on any property its what youre good for. We

would prefer keeping a copy of your paperworkin our files so that when the time comes

o make an offer, we will have the necessary paperwork already in hand.

t is important to note that pre-qualifications are nearly a worthless piece of paper. Pre-

qualifications do not require a thorough credit check and therefore do not mean that

you are a strong candidate to actually complete the sale. As sellers agents, we advise our

homeowners to opt for the strongest buyers.

The last step in this process is the actual mortgage application. This is formally complete

upon execution of the Purchase & Sale (P&S). The lender will require a copy of the P

and will then have the property appraised to be certain that it is worth that value, while

conducting a final credit check.

Mortgage Pre-Approvals,

Pre-Qualification, & Application

The pre-approval will tell

you how much you can

spend on any property

its what youre good for.


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Once you have an idea of the home you want and the area you would like to look in

you need to pre-apply with a lender. By doing this youll save yourself time,

energy and frustration because a pre-approval can:

Determine How Much You Can Afford - Pre-approval helps you avoidbuying less home than you can afford or being disappointed if you dont qualify for as

much as you had hoped.

Show What Your Total Investment Will Be - Youll know approximately how muyoull need for down payment and closing costs.

Let You Know What Your Monthly Payment Will Be - Youll have a closeestimate of what your monthly principal, interest, taxes, and insurance (PITI) will be.

Identify the Loan Program that Best Fits Your Needs -With the wide variety ofloan programs available, it is important to know which types you qualify for and suit you

needs.

Strengthen Your Offer - Sellers are more inclined to accept realistic offers when theknow that you have been interviewed by a lender and can probably qualify for the loan.

Getting The Pre-Approval

for Your Home Loan

Use our QR code to get pre-approved!


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Your Loan Officer will need the following information when you apply for your loanTo insure a smooth and efficient application session, be prepared with:

Your Residence History Yourpreviousaddressesforthepasttwoyears Thelengthoftimeyouvelivedineachplace Ifyoucurrentlyrent,yourlandlordsnameandaddress(forthelast12months)

Your Employment History

Thenamesandaddressesofallyouremployersforthelasttwoyears Thedatesyouworkedateachplaceofemployment Iftherehavebeenanygapsinyouremploymentandwhy

All Outstanding Loans and Credit Cards Thecreditorsnameandaddress Youraccountnumber Thecurrenttotalbalanceyouoweandmonthslefttopay Theamountofthemonthlypayment

Savings, Checking or Investment Accounts Thenamesandaddressesforeachfinancialinstitution Youraccountnumber Thecurrentbalanceorvalue

Real Estate You Currently Own (For each property): Thepropertyaddress Theestimatedmarketvalue

Theoutstandingloanbalance(s),thenameandaddressofthemortgagecompany(s)and your account numbers(s) Theamountofyourmonthlypayment(includingtaxes,insurance&HomeOwner

Association dues) Theamountofyourmonthlyrentalincome(ifapplicable)

Personal Property You Own Thenetcashvalueofyourlifeinsurance Themake,year,andvalueofyourautomobiles

Thevalueofyourfurniture,jewelry,orotherpersonalproperty

Getting Ready to Apply

for Your Mortgage


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Use the following checklist to be sure that you have everything you may need to helpmake your loan application an easy, hassle-free experience.

Purchase Contract (for the purchase of your new home)

Sales Contract (if you are selling your present home)

All original pay stubs for the last 30 days (showing year-to-date earnings, name and

Social Security Number) OriginalcopiesofyourpastW-2s.(pasttwoyears)

Ifyouhavearentalproperty,provideyourmostrecent2yearssignedanddatedtax

returns with all schedules and a current rental agreement

Ifyouareself-employedorreceiveda1099,provideyourmostrecent2yearssigned

and dated tax returns with all schedules and year-to-date profit and loss statement

and balance sheet Ifyouarecommissioned,provideyourmostrecent2yearssignedanddatedtax

returns with all schedules and year-to-date employee business expenses

Information on residence history (for the past two years)

Information on all outstanding loans and credit cards

Originalsofthelast2monthsbankstatementsforallaccounts

Information on real estate you currently ownCheck for appraisal and credit report fees

Certified copy of the closing statement (if you have already sold your home)

If divorced, all papers including marital termination agreement & final decree

(signed by the court)

Copy of the drivers license and social security card (FHA loans only)

OriginalcertificateofeligibilityandDD-214(VAloansonly)

What to Bring for

Your Loan Application


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OffersDecidingtheValueoftheProperty

Contact us as soon as possible when you decide to make an offer.

We already have your pre-approval, so you simply need your checkbook. Youll

needtomakeanearnestdepositof$1,000.00tobindtheoffer.Your check is not

deposited unless your offer is formally accepted by all parties.

You set the terms and conditions of your offer: price, expiration date, P&S date,

closing date, and contingencies (home inspection, pest inspection, and/or full mortgagapproval). We can help you strategize to make your offer more appealing to the seller.

Time Is Of The Essence!

While we are negotiating with a seller, other customers will still be viewing the

property and are able to submit offers to purchase. A seller can (and most will) negotia

with multiple customers at the same time. A seller is bound to no one until an offer isformally accepted in writing with the sellers signature.

Your check is not

deposited unless your offer

is formally accepted by all

parties.


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Your check will be deposited into an escrow account that is typically held by the

listing brokers office until the time of closing. Additionally, you should inform your

lender that you have an offer accepted on a property.

If a home inspection is a contingency of your offer, this is now the time to call the

homeinspector.Typically,youwillhave7-10daysfromthedateofsellersacceptance

oftheoffertocompleteyourinspection.Donotwaittoolongtoconductthehomeinspection,thatshouldbedonewithinthefirstfewdays.Ifamajorproblemis

discovered at home inspection, the remainder of the time will allow you to investigate

that problem. Any customer considering hiring a home inspector should call and

interview the inspector and/or company prior to scheduling the inspection. After

a satisfactory home inspection, the next step is to sign the P&S agreement. If you

are going to hire an attorney, which we highly recommend, let us know who will be

representing you.

Upon signing the P&S agreement, you must provide another earnest deposit

that will be deposited into the escrow account with other funds (to make up 5% of the

purchase price). We must then provide a copy of the P&S to the lender so that the

application process commences.

IfYourOfferisAccepted

Typically, you will have 7-10

days from the date of sellers

acceptance of the offer to

complete your inspection.


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OnceaFinalMortgageCommitment

is received, Start Packing!!

Within two days of the closing, you will have a final walk through of the property

to be sure the condition is the same as it was the day you made your offer. We

recommend doing your walk through right before the closing, because when you close

thereisnorecourseifsomethingiswrongaftertheclosing.Sojustincasesomething

odd happens, (a tree falls, or the water tank starts leaking) we want you to know the

conditionofthehousejustbeforeyourpurchase.

You will be informed by the closing attorney or your attorney of any funds that

you will need to bring to closing (closingcosts,etc.).YouwillreceiveaHUDSettlemen

Statementwiththeseitemizationsabout24hourspriortoclosing.[Remember the

bank gave you an estimate of closing costs, but this does not include your adjustments

with the seller for taxes and pre-paid costs for insurance and taxes, which can add

several thousand dollars to the amount you need to bring to closing.] (See the attache

lists for a review of typical closing costs.)

The closing is when the seller and buyer get together (with counsel present) and

sign the closing documents to complete the transaction. Within hours after the closing

(ifnotimmediately),theclosingattorneywillrecordthedeedattheRegistryofDeeds.

The seller receives their proceeds check and you receive the keys to your new home!

You have officially become the owner of your new home!


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Loan Discount Oftencalledpoints,aloandiscountisaone-timechargeusedtoadjusttheyieldontheloantowhatmarketconditionsdemand.Onepointisequalto1%oftheloanamount.Thisisoptional.

Appraisal Fee This is a one-time fee that pays for an appraisal, a statement ofproperty value required on most loans. The appraisal is made by anindependent fee appraiser.

Credit Report Fee This one-time fee covers the cost of the credit report, which is process

by an independent credit reporting agency.Title Insurance Fees There are two title policies that protect from loss due to a defect in th

title, an optional buyers title policy that protects the new homeownerand a required lenders title policy to protect the lender. These areboth one-time fees.

Miscellaneous Title Charges The title company may charge fees for a title search, title examinationdocument preparation, notary fees, recording fees and a settlement or

closing fee. These are all one-time charges.Document Preparation Fee There may be a separate, one-time fee that covers preparation of the

final legal papers, including the note and deed of trust.

Prepaid Interest Dependingonthedayofthemonthyourloancloses,thischargemayvaryfromafullmonthsinteresttojustafewdaysinterest.Ifyourloan closes at the beginning of the month, you could pay up to themaximum amount. If your loan closes near the end of the month, yo

will only have to pay a few days interest.

Private Mortgage Insurance (PMI) Dependingontheamountofyourdownpayment,youmayberequirto pay a monthly fee for mortgage insurance (which protects thelender against loss due to foreclosure). You may also be required toput a certain amount for PMI into a special reserve account (called animpound account) held by the lender.

Taxes & Hazard Insurance Dependingonthemonthyouclose,propertytaxeswillbeprorated

between you and the seller. You will also need to pay an entire yearshazard insurance premium upfront (homeowners insurance). Inaddition, you may be required to put a certain amount for taxes andinsurance into a special reserve account (escrow account) held by the

lender.

Closing Costs

Below is an overview of the types of closing costs you may incur on your loan.

Some are one-time fees while other recur over the life of the loan.


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Home Buyers

Timeline

MORTGAGE PREAPPROVAL

FIND THE HOUSE

MAKE THE OFFER

OFFER ACCEPTED

HOME INSPECTION

SIGN PURCHASE & S

ALE AGREEMENT

FORMAL MORTGAGE

APPLICATION

BANK APPRAISAL

BANK OKAYS MORTGAGE

(Mortgage Commitment)

PURCHASE HOMEOWNERSINSURANCE

(Insurance Binder

Bring to the Closing)

THE CLOSING

(Accept the Deed from

the Seller& Sign the Note

with the Bank)

24-48 HOURS

7 10 DAYS

1 - 2 DAYS

3 - WEEKS

4-6 weeks

a guide for first time homebuyers

Documents