Financing And Your New Home

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Providing information regarding the lending process to home-buyers

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Financing And Your New Home

  1. 1. Financing and your new home Congratulations! You have decided to embark upon the search for a new home. Your Realtor, with an expertise in the Real Estate market, will be working with you to find your dream home for the best value negotiable. This document is designed to help you understand the loan process, and the steps you will need to take to obtain financing for this very important investment. Contents How Much House? Loan Programs The Loan Process Timetable Resources www.openmortgageseattle.com 701 5th Ave Suite 7340 – Seattle, WA 98104 206.838.9680
  2. 2. How Much House? The price range you start looking for houses in depends on how much money you can borrow, and what you would like your monthly mortgage payments to be. A Pre-Qualification Letter is a fast way to see how much you are pre-qualified to borrow, and will give you a guideline to what price range you could be looking at for a house. Your Realtor when writing an offer on a property can also use this letter as proof that you qualify for the appropriate financing. A Pre-Qualification Letter does not commit you to a broker, lender, or loan program and should be free and expedient (delivered within one business day of applying). You can fill out an application for a Pre-Qualification Letter online at: https://davidcapelli.mortgagexsites.com/mercury/loanappweb/L oanAppNew.aspx?AWSAccountsID=503111&LanguageID=1 www.openmortgageseattle.com 701 5th Ave Suite 7340 – Seattle, WA 98104 206.838.9680
  3. 3. Loan Programs There are many different lending programs offered by hundreds of financial institutions. If you opt to work through a particular bank, a Loan Officer representing that bank will guide you through the different Mortgage Packages offered by that institution. If you opt to work with a Mortgage Broker, a Loan Officer will work with many different banks to find the most competitive lending sources and mortgage products available to you. The market varies daily- Your Mortgage broker will assist you in selecting a suitable mortgage and offer mortgage and property related financial advice. Here are three of the most basic mortgage products offered: Fixed Rate Mortgage A mortgage loan the interest rate will remain the same through the term of the loan. Adjustable Rate Mortgage A mortgage loan where the interest rate is periodically adjusted based on an index Interest Only A loan in which for a set term, the borrower pays only the interest on the principal balance. www.openmortgageseattle.com 701 5th Ave Suite 7340 – Seattle, WA 98104 206.838.9680
  4. 4. The Loan Process As mortgage consultants, it is our job to make the loan process flow seamlessly. We see the loan process in 6 steps: • Pre-qualification • Loan program consultation • Applying for a loan • Conditional approval of your loan • Funding Pre-qualification An initial determination based on income and credit history that shows how much financing you qualify for. Loan Program Consultation A detailed breakdown of the current market, available loan programs, and your financial goals that leads to a decision on what mortgage product you will apply for. Applying for a loan Supplying the information required by a lending institution to fund your loan. Conditional approval of your loan The lending institution has approved your file. They will request additional documentation needed to fund your loan at this time. Funding Financing is finalized. www.openmortgageseattle.com 701 5th Ave Suite 7340 – Seattle, WA 98104 206.838.9680
  5. 5. Timeline The timeline for every home loan is very different depending on your scenario. This chart illustrates a generic example of steps taken to obtain a mortgage loan. Step 4 Step 2 Step 3 3-6 weeks from signing 1-2 weeks from signing purchase 2-4 weeks from signing Initiation purchase and sales agreement and sales agreement purchase and sales agreement • Obtain Pre- • Lender gives • Sign Purchase Qualification conditional approval Agreement with through a Loan Officer of your loan Realtor • Loan Officer submits • Choose a Realtor • Complete Loan additional paperwork Funding Application • Make an offer on a to lender • Lender orders appraisal home • Sign closing and title work • Loan Program paperwork on your • Obtain Home Hazard Consultation Loan home at escrow Insurance Quotes Officer company www.openmortgageseattle.com 701 5th Ave Suite 7340 – Seattle, WA 98104 206.838.9680
  6. 6. Frequently Asked Questions Why does every lender have a different rate? Every conventional conforming loan that is made ends up in one or two places; Fannie Mae or Freddie Mac. Different companies have different ways of getting there. Some people pitch very low rates, and are able to offer them by charging excessive fees that buy down the rate, or are advertising rates based on short lock periods and ARMS that rapidly increase over time. When it comes to rates the important thing to ask is “What is the best rate I can get and how much will it cost me?” Open Mortgage Seattle is committed to finding the lowest rates available on the market without tagging on junk fees. If it saves you money in the long run to buy down your rate we will discuss that in your investment options, but we will not advertise low rates that are guaranteed to cost you money in the long run. What’s the difference between being pre-qualified and pre- approved? A Pre-qualification letter looks like a pre-approval letter, but has not been submitted to an underwriter. Someone may issue a pre-qualification letter to intrigue your business, but funding is not approved. Pre-approval means you have completed an application with a loan officer which has been reviewed by an underwriter at a bank. This letter shows how much you are qualified to borrow and states that funding is guaranteed. How long does it take to get Pre-Approved? 24 hours max. Pre-Approval letters can often be sent within hours of contacting your Loan Officer. www.openmortgageseattle.com 701 5th Ave Suite 7340 – Seattle, WA 98104 206.838.9680
  7. 7. What types of documents will I need for the pre-approval process? If you are providing full documentation of your income, you may need to provide: • W-2’s (2 years) • Pay-stubs (past 2) • Asset statements (bank statements/retirement account) What types of things affect the loan? You credit history, down payment, and debt to income ratio are the main factors you have control over that affect the amount you qualify for and the rate available to you. The mortgage market itself is affected daily by stocks, bonds, and economic reports. The state of the market mandates what programs are available at what rates for your scenario. How much money should I put down? Any down payment will reduce your monthly mortgage. With a down payment of 20% or more you can avoid the cost of mortgage insurance. You do not need a down payment to secure funding at a desirable rate. There are many affordable mortgage programs available, including loans that require little or no down payment. What if I have no money for a down payment? There are many affordable mortgage programs available that require little or no down payment. What if I have a low credit score? There has been a lot of talk lately about the bottom falling out of the sub-prime lending market. Open Mortgage Seattle has over 10 years of experience in finding the best mortgage options for all of our clients- regardless of your credit score. www.openmortgageseattle.com 701 5th Ave Suite 7340 – Seattle, WA 98104 206.838.9680
  8. 8. Resources Open Mortgage Seattle Website www.openmortgageseattle.com Loan Application for GFE and Pre-Approval https://davidcapelli.mortgagexsites.com/mercury/loan appweb/LoanAppNew.aspx?AWSAccountsID=50311 1&LanguageID=1 US Department of Housing and Urban Development www.hud.gov Mortgage Calculators www.davidcapelli.com/MortgageQualifierCalc www.davidcapelli.com/MortgageCalculators Real Estate Glossary www.davidcapelli.com/RealEstateGlossary Daily Lock Advisory www.davidcapelli.com/DailyRateLockAdvisory Open Mortgage Seattle Direct Line 888.948.0159 www.openmortgageseattle.com 701 5th Ave Suite 7340 – Seattle, WA 98104 206.838.9680

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