Home Seller’s Guide to Mortgages

by Rhonda PorterWashington State Licensed Loan Officer MLO-1213241

Mortgage Master Service Corporation CLA 40445

• Senior Loan Officer at Mortgage Master Service Corporation , where she’s been employed since April 2000.

• Licensed Mortgage Originator MLO121324 for homes located in Washington State

• Author of nationally recognized blog, The Mortgage Porter

• Interviewed by NPR, Seattle Times, MSN Money, WSJ Market Watch.

• 2012/2011 WAMP Outstanding Loan Originator finalist

• Lives in Seattle area with hubby, three kids (off to school), flat coated retriever and kitten

• Enjoys cooking and painting on black velvet (in her spare time)

Dissecting the Preapproval LetterPreapproval vs Prequal letter. Check for verbiage in the letter. Does it state the borrower is preapproved or prequalifed. There IS a difference. A prequal letter typically means the buyer has been interviewed by the lender and not "preapproved".

Preapproval Letters should include:• All borrower's names• Sales price• Loan amount• Type of financing (conforming, FHA, VA,

USDA, jumbo, etc.• Indication that credit has been reviewed• State if income has been verified• Source of down payment (savings, sale of

home, gift from parents, seller contribution, etc.)

• Any conditions the loan approval is subject to (such as the appraisal and a "clear" title

• The date the letter was written as well as an expiration date.

• Loan originators License or Registration number.

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Conforming Financing Seller’s GuideMaximum Seller ContributionsBased on the sales price, it varies depending on amount of down payment and occupancy. Contribution can only be applied towards bona fide closing cost, pre-paids and reserves.

Primary Residence• 25% or more down payment = 9%

• less than 25% and up to 10% down = 6%

• less than 10% down = 3% max. seller contribution

Second Home• 25% or more down payment = 9%

• less than 25% and up to 10% down = 6%

Investment Property• 2% maximum seller contribution

Conforming Loan Limitsfor King, Pierce & Snohomish Counties

• 1 Unit: $506,000• 2 Unit: $647,750• 3 Unit: $783,000• 4 Unit: $973,100

For other Washington county limits, click here.

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FHA Financing Seller’s Guide• Minimum down payment 3.5% - 5%

• Maximum allowed Seller contribution is 6% of bona fide closing cost, prepaids and reserves

• No mandatory Seller paid closing cost at Mortgage Master Service Corporation.

• Owner occupied only

• Higher loan limits than conforming in Seattle, Pierce and Snohomish Counties

• Flexible underwriting guidelines

• No income limits

• Appraisals are essentially the same as conforming. Possible second appraisal if property was "flipped" - HUD does not allow 2nd appraisal fee to be paid by buyer.

• Less reserve requirements if borrower owns different property

• Buyers who pay alimony may consider this program due to flexible underwriting

• Popular with young professionals who have great employment and income and are shy on down payment

• 203k rehab programs allow for remodeling with an all-in-one FHA mortgage

FHA Loan Limits King, Snohomish & Pierce Counties

• 1 Unit: $567,500• 2 Units: $726,500• 3 Units: $878,150• 4 Units: $1,091,351

For FHA loan limits in other Washington counties, please click here.

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VA Mortgage Loans Seller’s Guide• Eligible to those who have served

in our military.

• Not difficult to underwrite

• Appraisals are done through VA's system

• Seller pays for buyer's escrow fee

• Maximum allowed seller contribution is 4%

• VA Jumbo loan amounts up to 1 million VA Loan Limits

King, Snohomish & Pierce Counties

$500,000 for zero down payment

NOTE: VA does not set loan limits. VA down payments for loan amounts over the zero down limit are 25% of the difference.

For example, a $600,000 sales price has a minimum down payment of $25,000 in King County. 600,000 - 500,000 = 100,000. 100,000 x 25% = 25,000.

For other VA loan limits in Washington State, click here.

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USDA Rural Home Loans Seller’s Guide • Only available for homes

that are in designated rural areas. (not orange on map)• Income limits apply based

on county and family size. • Owner occupied only• No maximum seller

contribution • 100% loan to value (zero

down payment).

NOTE: if you’re selling a home that is in an eligible area, consider accepting USDA offers to expand your property to more potential buyers.

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Jumbo/Non-Conforming Seller’s Guide• Loan amount over $506,000 in King, Pierce or Snohomish County. • Typically requires higher credit scores • Less than 20% down payment possible with piggy back mortgages or LPMI (lender paid mortgage insurance)• Additional reserves typically required of buyers• Two appraisals may be required• Seller contribution varies depending on the lender.

NOTE: Seller’s with “jumbo” priced homes should be sure to include VA and FHA buyers as they have higher loan limits.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote

Condominiums What Lenders Look For

•Owner occupancy ratios below 51%• Someone owning more than 10% of the units• Inadequate reserves•Delinquent HOA dues• Pending (or active) litigation•How many units are sold (if new construction)•Make sure your condominium has current "approved" status with HUD for FHA financing. Click here to check

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AppraisalsAppraised values are based on homes similar to your property that have recently sold in your neighborhood. Because appraised values are based on other homes that have sold, the values tend to lag behind current resale value.

Lenders will use the lower of the sales price or appraised value. If an appraisal comes in lower than the sales price, either the sales price needs to be reduced OR the buyer may need to make up the difference with additional down payment.

USDA will allow the buyer to finance closing cost IF the appraised value comes in above the sales price. Conventional VA and FHA loans do not permit this.

NOTE: if you are "flipping" a home, be prepared to provide documentation of the improvements made to the home to the buyer's lender.

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How Soon Can We Close?This is just intended to be a rough guide as to what can be expected for closing times with various mortgage programs.

There are always exceptions - some transactions may be quicker and others may take more time.

Transactions can and do close quicker than 30 days - this is just to provide an estimate.Conforming: 30 - 40 Days

FHA: 30 - 40 DaysVA: 30 – 45 DaysJumbo: 30 – 50 Days (if second appraisal required)USDA: 60 – 75 DaysFHA 203k: 60 - 75 Days

A home that requires a second appraisal, most likely due to being a “flip” or jumbo loan may take an additional 10 days to close.

If you’re considering a quick close, check with the buyer’s lender to make sure they’re up for the job!

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Seller Closing Costs SummaryProgram Minimum MaximumConforming $0 Based on down payment & occupancy

FHA Tax Service Fee* 6% of Sales PriceVA Buyer’s Escrow Fee 4% of Sales PriceUSDA 0% No maximumJumbo 0% Varies based on lender

*NOTE: Mortgage Master Service Corporation does not charge the buyer the tax service fee (typically runs around $80) and therefore there is zero "minimum" fee due from the seller with an FHA transaction. Lenders vary with their policy on this.In the case of a flip, when a second appraisal is required by the underwriter, the buyer is not allowed to pay for the second appraisal. The cost for the appraisal is around $500 for a single family dwelling FHA mortgage.

All closing cost to be paid by the seller needs to be negotiated in the purchase and sales agreement.Closing cost is limited to the actual closing cost, prepaids and reserves and may not go towards down payment. Closing cost credit that exceeds the buyer's allowable closing cost may be refunded back to the seller. www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote

References and Resources• APR (Annual Percentage Rate)• Conforming Loan Limits• Credit Scores• Debt to Income Ratios• Do's and Don'ts during the Mortgage Process [Flyer]• Down Payment• FHA Loan Limits• FHA guidelines on "flips"• Finance Flyers for Listings Sample [Flyer]• HUD - FHA Condo approved list• Loan Application• Preapproval • Rate Quote• Seller Contributions• The Mortgage Porter - Blog• USDA income limits• VA Loan Limits

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The Fine PrintThe content provided is presented or compiled for your convenience by Rhonda Porter and is provided for informational purposes only. It does not necessarily represent the views or opinions of Mortgage Master Service Corporation.

Neither Rhonda Porter nor Mortgage Master Service Corporation assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information disclosed, or represents that its use would not infringe privately owned rights.

The information provided should not be construed as offering legal, financial or other advice to be relied on by the reader to make or refrain from making any decision or to take any action.

The investment, mortgage or financial services or strategies mentioned in and throughout this website may not be suitable for you.

Mortgage Master Service Corporation is an Equal Housing Opportunity Lender.All rights reserved. All content, including but not limited to text, photos and videos are protected by US Copyright. Plagiarism will not be tolerated.

Rhonda Porter is NMLS Licensed Mortgage Originator MLO-121324.

Mortgage Master Service Corporation NMLS# CLA-40445.

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