TOP 25 Questions TOP 25 Questions about First Time Home about First Time Home

Buyer Buyer MortgagesMortgages

#1 WHAT IS A MORTGAGE?#1 WHAT IS A MORTGAGE?

A loan/lien on propertyA loan/lien on property The promise to payThe promise to pay

2. ARE THERE SPECIAL 2. ARE THERE SPECIAL MORTGAGES FOR FIRST-TIME MORTGAGES FOR FIRST-TIME

HOMEBUYERS?HOMEBUYERS?

YesYes Affordable First time home buyer Affordable First time home buyer

optionsoptions

3. WHAT STEPS NEED TO BE 3. WHAT STEPS NEED TO BE

TAKEN TO SECURE A LOAN?TAKEN TO SECURE A LOAN?

Complete a loan application Complete a loan application Provide the followingProvide the following YTD Pay stubs for the past 2-3 months YTD Pay stubs for the past 2-3 months W-2 forms for the past 2 years (Tax returns if self employed) W-2 forms for the past 2 years (Tax returns if self employed) Information on long-term debts  Information on long-term debts   Recent bank statements (Checking, savings, 401K’s, etc.)Recent bank statements (Checking, savings, 401K’s, etc.) tax returns for the past 2 years  tax returns for the past 2 years   Proof of any other income  Proof of any other income   Address and description of the property you wish to buy  Address and description of the property you wish to buy   Sales contract Sales contract 12 month rental history12 month rental history

4. HOW ARE PRE-QUALIFYING 4. HOW ARE PRE-QUALIFYING

AND PRE-APPROVAL DIFFERENT?AND PRE-APPROVAL DIFFERENT?

Pre-qualification is informal and can be done over the Pre-qualification is informal and can be done over the phonephone

No obligationNo obligation No paper workNo paper work Ball park figureBall park figure Pre-approval is lenders commitment to lend to youPre-approval is lenders commitment to lend to you Lender collects items listed in how to secure a loanLender collects items listed in how to secure a loan Definite idea of what you can affordDefinite idea of what you can afford

5. WHAT IS A CREDIT BUREAU 5. WHAT IS A CREDIT BUREAU SCORE AND HOW DO LENDERS SCORE AND HOW DO LENDERS

USE THEM?USE THEM? Scores Range from 300-850Scores Range from 300-850

6.6. HOW CAN I FIND OUT HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT INFORMATION ABOUT MY CREDIT

HISTORY?HISTORY?

EquifaxEquifax ExperianExperian TransunionTransunion Call me for a copy of your ReportCall me for a copy of your Report

7. HOW DO I CHOOSE THE BEST 7. HOW DO I CHOOSE THE BEST

LOAN - PROGRAM FOR ME?LOAN - PROGRAM FOR ME?

Ask Yourself these questionsAsk Yourself these questions Do you expect your finances to change over the next few Do you expect your finances to change over the next few

years?  years?   Are you planning to live in this home for a long period of Are you planning to live in this home for a long period of

time?  time?   Are you comfortable with the idea of a changing mortgage Are you comfortable with the idea of a changing mortgage

payment amount?  payment amount?   Do you wish to be free of mortgage debt as your children Do you wish to be free of mortgage debt as your children

approach college age or as you prepare for retirement?approach college age or as you prepare for retirement?

8. WHAT TYPES OF LOANS ARE 8. WHAT TYPES OF LOANS ARE AVAILABLE AND WHAT ARE THE AVAILABLE AND WHAT ARE THE

ADVANTAGES OF EACH?ADVANTAGES OF EACH? Fixed Rate MortgageFixed Rate Mortgage Predictable Predictable Rate and payment stay the same for term of loanRate and payment stay the same for term of loan Typically 15 or 30 yearTypically 15 or 30 year Adjustable Rate Mortgage (ARM)Adjustable Rate Mortgage (ARM) Payment increases or decreases on a regular schedule with interest Payment increases or decreases on a regular schedule with interest

rate changesrate changes Generally Lower rate than FixedGenerally Lower rate than Fixed Monthly payments lowerMonthly payments lower Two- step mortgageTwo- step mortgage. Interest rate adjusts only once. Interest rate adjusts only once Balloon MortgageBalloon Mortgage offers initial low rate (5,7or 10 year) when offers initial low rate (5,7or 10 year) when

time lapses balance is duetime lapses balance is due

9. WHEN DO ARMS MAKE SENSE?9. WHEN DO ARMS MAKE SENSE?

Increase in IncomeIncrease in Income Short term PurchaseShort term Purchase

10. WHAT ARE THE ADVANTAGES 10. WHAT ARE THE ADVANTAGES OF 15- AND 30-YEAR LOAN OF 15- AND 30-YEAR LOAN

TERMS?TERMS? Principle – Principle – The original amount of money that was borrowed.The original amount of money that was borrowed. Interest –Interest – The amount the lender charges you for borrowing the The amount the lender charges you for borrowing the

moneymoney 30-Year:30-Year:

Larger tax deductions.   Larger tax deductions.   15-year:15-year: Loan is usually made at a lower interest rate.  Equity is built faster Loan is usually made at a lower interest rate.  Equity is built faster

because early payments pay more principal. because early payments pay more principal.

11. WHAT HAPPENS IF INTEREST 11. WHAT HAPPENS IF INTEREST RATES DECREASE AND I HAVE A RATES DECREASE AND I HAVE A

FIXED RATE LOAN?FIXED RATE LOAN?

Investigate Refinance OptionsInvestigate Refinance Options

12. WHAT ARE DISCOUNT 12. WHAT ARE DISCOUNT

POINTS?POINTS?

Allows you to lower your interest Allows you to lower your interest raterate

Cost involvedCost involved Recommended if you plan to say in Recommended if you plan to say in

your home for some timeyour home for some time Tax Deductible on a home PurchaseTax Deductible on a home Purchase

13. WHAT IS INCLUDED IN A 13. WHAT IS INCLUDED IN A MONTHLY MORTGAGE PAYMENT?MONTHLY MORTGAGE PAYMENT?

PrincipalPrincipal InterestInterest Real Estate TaxesReal Estate Taxes Home Owners InsuranceHome Owners Insurance Mortgage InsuranceMortgage Insurance

14. WHAT IS AN ESCROW 14. WHAT IS AN ESCROW

ACCOUNT? DO I NEED ONE?ACCOUNT? DO I NEED ONE?

Established by your Lender to Pay Established by your Lender to Pay for your Taxes and Insurance from for your Taxes and Insurance from your monthly mortgage paymentyour monthly mortgage payment

Sometimes they are optional, check Sometimes they are optional, check with your Lenderwith your Lender

15. HOW MUCH OF A DOWN 15. HOW MUCH OF A DOWN

PAYMENT DO I NEED?PAYMENT DO I NEED?

5% or less5% or less Closing CostsClosing Costs Home Owners InsuranceHome Owners Insurance InspectionsInspections RepairsRepairs

16.WHAT IS A LOAN TO VALUE (LTV) 16.WHAT IS A LOAN TO VALUE (LTV) HOW DOES IT DETERMINE HOW DOES IT DETERMINE

THE SIZE OF MY LOAN?THE SIZE OF MY LOAN?

Amount of Money you Amount of Money you borrower compared with borrower compared with Purchase Price or Purchase Price or Appraiser ValueAppraiser Value

17. 17. WHAT MAKES UP CLOSING WHAT MAKES UP CLOSING

COST?COST? Attorney's or escrow fees Attorney's or escrow fees   Property taxes (to cover tax period to date)  Property taxes (to cover tax period to date)   Interest (paid from date of closing to 30 days before first Interest (paid from date of closing to 30 days before first

monthly payment)  monthly payment)   Loan Origination fee (covers lenders administrative cost)  Loan Origination fee (covers lenders administrative cost)   Recording fees  Recording fees   Survey fee Survey fee   First premium of mortgage Insurance (if applicable)  First premium of mortgage Insurance (if applicable)   Title Insurance (yours and lender's)  Title Insurance (yours and lender's)   Loan discount points  Loan discount points   First 2-3 payments to escrow account for future real estate First 2-3 payments to escrow account for future real estate

taxes and insurance  taxes and insurance   Paid receipt for homeowner's insurance policy (and fire Paid receipt for homeowner's insurance policy (and fire

and flood insurance if applicable)  and flood insurance if applicable)   Any documentation preparation fees Any documentation preparation fees Third Party Appraisal FeeThird Party Appraisal Fee

18. WHAT RESPONSIBILITIES DO 18. WHAT RESPONSIBILITIES DO I HAVE DURING THE LENDING I HAVE DURING THE LENDING

PROCESS?PROCESS? Be sure to read and understand everything before you Be sure to read and understand everything before you

sign.  sign.   Refuse to sign any blank documents.  Refuse to sign any blank documents.   Do not buy property for someone else.  Do not buy property for someone else.   Do not overstate your income.  Do not overstate your income.   Do not overstate how long you have been employed.  Do not overstate how long you have been employed.   Do not overstate your assets.  Do not overstate your assets.   Accurately report your debts.  Accurately report your debts.   Do not change your income tax returns for any reason. Do not change your income tax returns for any reason. Tell the whole truth about gifts. Tell the whole truth about gifts. Do not list fake co-borrowers on your loan application. Do not list fake co-borrowers on your loan application.   Be truthful about your credit problems, past and present. Be truthful about your credit problems, past and present.

   Be honest about your intention to occupy the house  Be honest about your intention to occupy the house   Do not provide false supporting documents. Do not provide false supporting documents.

19. WHAT IS RESPA?19. WHAT IS RESPA?

Real Estate Settlement Procedures ActReal Estate Settlement Procedures Act Protects you the borrower from Protects you the borrower from

Lending AbusesLending Abuses All costs associated with the loan must All costs associated with the loan must

be fully disclosed to you.be fully disclosed to you. HUD Phone Number 800-669-9777HUD Phone Number 800-669-9777

20. WHAT HAPPENS AFTER I'VE 20. WHAT HAPPENS AFTER I'VE

APPLIED FOR MY LOAN?APPLIED FOR MY LOAN? Between 4-6 weeksBetween 4-6 weeks Assist the lender with all requestsAssist the lender with all requests Loan gets approvedLoan gets approved Schedule a closing dateSchedule a closing date

21. WHAT SHOULD I LOOK OUT 21. WHAT SHOULD I LOOK OUT FOR DURING THE FINAL WALK-FOR DURING THE FINAL WALK-

THROUGH?THROUGH?

Examine every corner of the empty houseExamine every corner of the empty house Check Floor to CeilingCheck Floor to Ceiling Be sure Seller fixed any problems Be sure Seller fixed any problems

promisedpromised Make sure everything is perfect Make sure everything is perfect BeforeBefore

you closeyou close

22. WHAT CAN I EXPECT TO 22. WHAT CAN I EXPECT TO

HAPPEN ON CLOSING DAY?HAPPEN ON CLOSING DAY? Bring your Paid Home owners insuranceBring your Paid Home owners insurance Bring a Cashiers check for money you owe Bring a Cashiers check for money you owe

for down-payment and closing costsfor down-payment and closing costs You will get proof of inspections and / or You will get proof of inspections and / or

warrantieswarranties Sign on the dotted line Sign on the dotted line  Mortgage Note  Mortgage or Deed of Trust Mortgage Note  Mortgage or Deed of Trust

    Binding Sales Contract Binding Sales Contract Keys to your new home Keys to your new home

23. CAN I PAY OFF MY LOAN 23. CAN I PAY OFF MY LOAN

AHEAD OF SCHEDULE?AHEAD OF SCHEDULE?

YesYes Check with lender for any Pre-Check with lender for any Pre-

payment penaltiespayment penalties

Welcome HomeWelcome Home

Thanks for joining me todayThanks for joining me todayIf you have any questions If you have any questions

please call Susan Harvey (800) 716-1612please call Susan Harvey (800) 716-1612 ext. 646 or email: sharvey@thehls.com.ext. 646 or email: sharvey@thehls.com.