Aaron Gitler                                                 Neena VlamisCEO                                              ...
HOME BUYING CHECKLIST                                                                       THE EXTRAORDINARY MADE ORDINAR...
HOME BUYING TIPS                                                                                                     PAYME...
A D V A N TA G E S O F P R E - A P P R O V A L                                                                            ...
THE LOAN PROCESS                                                                                    U N D E R S TA N D I N...
EXPLANATION OF LENDER AND CLOSING FEES*                                                                                   ...
I N C O M E TA X D E D U C T I O N S                                                                                      ...
MORTGAGE GLOSSARY                                                                                                         ...
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A and N Mortgage\'s Home Buying Packet


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Everything you need to understand the steps of the homebuying process, and be prepared for your new home.

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A and N Mortgage\'s Home Buying Packet

  1. 1. Aaron Gitler Neena VlamisCEO PresidentA and N Mortgage Services, Inc.With 21 years of combinedindustry experience, Neena Vlamisand Aaron Gitler, president andCEO respectively, joined forces in2002 to form A and N MortgageServices, Inc. The two dog ownersdecided to start their businesswhile hanging out on the dogbeach, and Gitlerʼs dog, Ralph, stillcomes to the office every day. AnIllinois State Credit Union Service HOMEProvider, A and N MortgageServices made the list of Top TenMost Dependable MortgageBrokers of Chicago in ChicagoMagazine in 2007. Creating atight-knit, family company, Vlamissays her favorite part of her job is BUYING PACKET“sitting down with a client andgetting to the root of their financialfears and questions.” For rightnow, Gitler and Vlamis are workingtoward growing their relationships with Illinois State Credit Unions and the real estatecommunity. While they both still enjoy visiting the dog beach, Vlamis likes to spendher free time with her husband, Dean of PERL Mortgage, and her two sons. 1945 N. Elston Ave. Chicago, IL 60642 773.305.LOAN (5626) www.AandNmortgage.com
  2. 2. HOME BUYING CHECKLIST THE EXTRAORDINARY MADE ORDINARY A and N Mortgage Services exists to serve you, the home buyer. With dozens ofBuying your first home is exciting but all the details and deadlines can be quite overwhelming. companies promising low rates and competitive pricing, what makes ourThis A and N Mortgage Services, Inc. home buying packet and helpful checklist will ensure that the customers keep coming back to us? A and N Mortgage provides efficient loans,process of buying your first home is stress-free. the knowledge to find the right loan product and exceptional service. A and N Schedule Closing With: Mortgage streamlines the loan process by keeping our clientʼs loans with us fromHome Inspections: application to funding. The result has built our reputation as the premier Contact: Phone: originator of residential loans in the Chicagoland area. ____ Realtor _____________ ______________Contact:" " Phone: ____ Borrower ____________ _____________________________ _________________ ____ Loan Officer ____________ ______________ Residential mortgages are about more than money. As an integral part of our ____ Attorney ____________ ______________ service, we take the time to learn about each of our clients, their families, lifestyles and priorities. With this information, we develop a unique home financing strategy that meets the clients specific circumstances and long term Are Conditions Met? goals. (Need to be met five days before closing).Paperwork:_____ Conditions/Paperwork still needed Set up Utilities: We keep your financial needs in mind and notify each client if a better suited (refer to loan application checklist ____ Phone program becomes available even after their closing. or loan approval, if approved.) ____ Electric ____ Cable_____ Call insurance company for hazard/ ____ Internet fire/homeowners insurance. ____ Gas_____ Lock the interest rate. ____ Water The enclosed packet will help you to better understand the home buying process Bring to Closing: and your financial needs. ____ Driver’s LicenseProvide: ____ Cashier’s/Certified Check made payable_____ Insurance to you. A and N Mortgage promises to make your loan process smooth and stress-free. With our in-house processing, document production, funding and closing_____ Inspection Reports departments, we maintain full control over your loan from beginning to end. We look forward to making your home buying and home owning experience a success. 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com
  3. 3. HOME BUYING TIPS PAYMENT SHOCK To avoid payment shock please fill in the following information so that you know how muchDONʼT CHANGE JOBS you can afford to pay monthly for your housing payment.This can create complications for loan qualification. Underwriters will have to reverifyemployment and gather additional paychecks to secure your financing. CAR PAYMENT:DONʼT SWITCH BANKS OR MOVE YOUR MONEY STUDENT LOAN:Moving your money can cause complications in the verification process. New accounts HOUSEHOLD UTILITIES:and large deposits in the last 6 months will have to be explained and can delay the closingof your loan. CHILD SUPPORT: SCHOOL TUITION:PAYING OFF BILLS HEALTH CLUB MEMBERSHIP:Your mortgage consultant will advise if it is necessary to pay off bills to help you qualify for HOMEOWNERS INSURANCE:a loan. They will also show you the best way to pay off bills and make sure you haveevidence of the bills being paid in full. GROCERIES: CELL PHONE :DO NOT MAKE ANY MAJOR PURCHASES INTERNET SERVICE:Donʼt buy that new car, furniture or sound system yet. A large payment can affect theamount of home you qualify for and can make it more difficult for your loan to be CABLE/SATELLITE DISH:approved. ENTERTAINMENT: CREDIT CARD PAYMENT :FINANCING OTHER EXPENSES:To help you find the right amount of financing, it is best to take a moment and calculate theother expenses that will be part of your monthly responsibility. When applying for a loan,your mortgage consultant will add these expenses to your proposed mortgage payment to This number added to your totalmake sure that you are not taking on too much debt. (See Payment Shock) monthly mortgage payments (with escrows, insurance, assessment) TOTAL: should be lower than 50% of your gross monthly income. 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com
  4. 4. A D V A N TA G E S O F P R E - A P P R O V A L OUR PROGRAMSPre-approval gives you a head start on your home buying process. BEST FOR BORROWERS WHO PROGRAM LOAN CHARACTERISTICS Plan to live in property for 7 years or 10, 15 OR 30 YEAR Same rate and payment for durationTHE REALTOR ADVANTAGE: more and want total payment stability FIXED RATE of 10, 15 or 30 year termsWhen youʼre pre-approved, you are the first in the offer line, making you aware of yourbuyerʼs intentions. Pre-approval will insure that the deal will close smoothly and helps Plan to live in property for 3,5 or 7 Lower interest rate and monthly 3/1, 5/1, 7/1, 10/1 YEARcreate a stronger client relationship that will lead to a faster closing. years, want payment stability and can payment remain the same for 3, 5, accept changes later ADJUSTABLE RATE or 7 years OR Starting the 4th, 6th or 8th year, theTHE BUYER ADVANTAGE: Plan to move with in 3,5 or 7 years and rate will adjust per year want loan to remain in place whenPre-approval lets the buyer be in control during a bidding war by allowing buyers to figure change occursout their limits and budget. It cuts down buying time and also gets the mortgage Low monthly payment of interest for Live in areas with high real estate INTEREST ONLYpaperwork out of the way so that buyers can focus on finding a home rather than securing 1, 3, 5 or 7 years only appreciationtheir financing. OR At the end of the 5 or 7 years, principal payment is added, Plan to move or refinance in a few years increasing the monthly paymentBORROWERʼS PRE-APPROVAL CHECKLIST: amount OR 1st time buyer who wants more house for their money HOMEOWNER INSURANCE AGENT Buyer who may need more relaxed FHA (Fixed or Adjustable) Loan amounts may vary and types credit guidelines and who may have THE PREVIOUS TWO (2) YEARS’ COMPLETE TAX RETURNS less funds to invest of properties may be restricted per Federal House Authority guidelines THE PREVIOUS TWO (2) YEARS’ W-2 FORMS FHA mortgage insurance is required. TWO (2) MOST RECENT PAY STUBS Loan amounts may vary and types Buyer who may need more relaxed FHA 203K of properties may be restricted per credit guidelines and who may have less funds to invest in properties in Federal House Authority guidelines COPY OF PURCHASE CONTRACT FOR NEW HOME need of repair FHA mortgage insurance is required. THE PREVIOUS TWO (2) MONTHS BANK STATEMENTS Ask your A and N Mortgage Consultant for other programs that may fit your home buying needs. AND MOST RECENT ASSET VERIFICATION 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com
  5. 5. THE LOAN PROCESS U N D E R S TA N D I N G Y O U R C R E D I T WHAT’S IN YOUR SCORE? HOW TO IMPROVE YOUR SCORE Credit scores are calculated from a lot of di erent It takes time to x your score because there isCALL A AND N MORTGAGE TO GET During this phase, we’ll pull your credit scores and credit data in your credit report. This data can be no quick x. The best plan is to manage yourPRE-APPROVAL FOR YOUR LOAN: begin checking necessary documentation such as: grouped into the following ve categories. credit responsibly over time. 10 %10 %15 % 30 % 35 %When searching for a home, it is important that THE PREVIOUS TWO (2) YEARS’ COMPLETE TAX RETURNS PAYMENT HISTORY It is important to stay current and pay you bills onyou are pre-approved so that your broker and the Detailed account payment information time. Paying o a collection does not remove itpotential seller know that you are serious about THE PREVIOUS TWO (2) YEARS’ W-2 FORMS such as credit cards, retail accounts, from your credit report. If you are having troublepurchasing. It enhances your bargaining position installment loans and mortgages. making payments, contact your creditors.and helps you budget how much you can afford. TWO (2) MOST RECENT PAY STUBS COPY OF PURCHASE CONTRACT FOR NEW HOME AMOUNTS OWED Pay o your debt instead of moving it from one THE PREVIOUS TWO (2) MONTHS BANK STATEMENTS This is made up of account balances, credit card to another , and keep balances low. AND MOST RECENT ASSET VERIFICATION proportion of credit lines used and Don’t close unused credit cards as a short term proportion of loan amounts still owing. strategy to raise your score or open a number HOMEOWNER INSURACE AGENT of credit lines you don ’t need.FIND YOUR DREAM HOME: LENGTH OF CREDIT HISTORY Don’t open a lot of new accounts rapidly if youThe application process begins once you’ve An appraiser will determine the value of the prop- This details time since accounts opened, have been managing credit for a short time.explored properties and found your new home. erty you wish to buy. A title will be ordered by the . speci c types of accounts and time since New accounts will lower your average account ageYour documentation will be submitted by your seller’s attorney to ensure that the property is clear account activity. and can look risky if you are a new credit user .mortgage consultant to our in-house of liens and unpaid taxes.underwriting team to process your loan. NEW CREDIT Do your rate shopping for a given loan within a The number of recently opened accounts, focused period of time. If you can make inquiries credit inquiries, time since recent account casually, it will look as though you are searchingTHE CLOSING: opening and re -establishment of positive for many credit lines rather than obtaining credit history following past payment problems. research for one line.The seller attorney will coordinate with your ’s A and N Mortgage will make sure that your loan isattorney and mortgage consultant to schedule a ready when you are. Your closing will not be TYPES OF CREDIT Apply for and open new credit accounts only asclosing. The appropriate loan documents will be delayed by underwriting conditions or funding needed. Have credit cards but manage them The number of various types of accountssent to the title company for you to sign. problems. responsibly, closing an account doesn’t make it you have (credit cards, retail accounts, installment loans, mortgage, consumer, go away. nance, etc.).1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com
  6. 6. EXPLANATION OF LENDER AND CLOSING FEES* P R O P E R T Y TA X PAY M E N T Below is a quick guide for tax escrows. Each county has its own due date for taxes. At each due date, your lender will require approximately 8 months of escrows (at your closing) in order to pay yourLENDER taxes and have a cushion for tax increase. APPLICATION: ADMINISTRATION: CLOSING 1st PAYMENT COOK COUNTY DEKALB, DUPAGE, KANE, KENDALL, LAKE, MCHENRY, WILL An application is filled out at this time This fee allows the lender to carry the loan from March 8 months/ TI* 7 months and a credit report is ordered. This closing until completion of sale to the investor. JANUARY cost allows your mortgage consultant April Pay taxes/Collect 3 months* 8 months to research and acquire the best rate FEBRUARY and program for you. UNDERWRITING: May Taxes due Mar.1 /Collect 4 month 9 months This fee pays the underwriters for reviewing MARCH APPRAISAL : your documentation and approving your loan. This is payment for the appraiser June 5 months 1 0 months/ TI* who will assess the value of your TAX SERVICE: APRIL home based on other similar properties This fee allows your lender to access your July 6 months P y taxes/ Collect 5 months** a in the neighborhood. property tax information and ensure that MAY your taxes are paid up to date. August 7 months Taxes due June 1/Collect 6 months PROCESSING: JUNE This cost begins your loan process; September 8 months/ TI TI/ Collect 2 months** your mortgage consultant begins to JULY collect financial documents to be October 3 months/ Pay Taxes Pay taxes /Collect 3 months submitted to underwriting such as W2’s, * These payments will be finalized in the “good faith” document supplied by your lender The title and closing fees vary by title . AUGUST bank statements and proof of assets. company in which you are buying. November 10 months/TI* Pay taxes /Collect 3 months** SEPTEMBER Taxes due Sept.1stTITLE & CLOSING December Collect 5 months 4 months CITY OF CHICAGO TRANSFER STAMPS: OCTOBER TITLE INSURANCE: 7.50/1000 The buyer is responsible for $7.50 This fee pays for the title search on the January Collect 6 months 5 months per thousand of sale price of property. For NOVEMBER property, which insures ownership of the instance, a $300,000 sale price will require property, examines current and past tax $2250 for city transfer stamps. February 7 months 6 months payments and reveals any existing liens on the DECEMBER property. For a purchase it is standard that the sellers attorney orders this; which means that ATTORNEY: Attorney fees do not typically exceed $650 on *If the payment is due within 30 days of closing, the title company must collect a Title Indemnity (TI) the title fees cannot be confirmed until your mortgage consultant receives an estimate. residential property. This fee can be paid to the which is 1 1/2 - 2 times your last tax payment. This insures that the title company will have enough attorney directly or from proceeds of closing. money to pay your taxes in the event there is a tax increase. CLOSING: **If the tax bill is already available and/or mailed by the county, the title company will collect the exact This fee is for the title company to notarize * These payments will be finalized in the “good faith” document supplied by your lender. amount of money due for your taxes and pay them directly to the county. Simultaneously, your lender your loan papers at the closing table, file the The title and closing fees vary by title company will collect escrow to begin saving for the next payment. If necessary, your mortgage consultant will documents that need to be recorded, prepare the closing statement which tells you the details in which you are closing. incorporate taxes into the loan amount so that no money is due out-of-pocket at closing. of your transaction. These numbers are estimates and will vary by lender, loan type and county. Please ask your mortgage consultant for details on your specific closing date, county and loan program. 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com
  7. 7. I N C O M E TA X D E D U C T I O N S CLOSING CHECKLISTCan I deduct the sum of my monthly How does my inheritance or giftpayments for the year on my income taxes? money used for the purchase of my house factor into my income taxes? Make sure that you know how much Don’t forget your spouse!You can only deduct the interest portion of your payment.This includes interest paid on mortgages to buy, build or money to bring to your closing. Money from inheritance or from a gift that goes Many people plan to sign their documentssubstantially improve your first or second home. Money directly into a real estate transaction is not subjectpaid to principal cannot be part of your deduction. on behalf of themselves and their co-owner. to taxes. There is no financial gain for you as the You will need a cashiers or certified check for your This can only be done with a Power of Attorney recipient (other than the purchase of your home, down payment, if funds need to close are less than document stating that the non-present ownerWho gets the deduction which is already acknowledged by the govern- $50,000. If more than $50,000 funds will need to be gives the signing borrower this privilege. Evenwhen we file separately? ment in your taxes when you sell your home). wired to the title company closing costs by the title if you are the only one on title, your spouse still company. These errors include interest paid per day has to sign to exercise their homestead rights.A taxpayer can deduct interest he or she pays on a mort- (which is determined by the day of the month on whichgage if the taxpayer is the legal or equitable owner of the How do I know if I’m eligible you close), title charges, and recording fees forproperty. In the marital setting, ownership rights and tax for real estate tax deduction? documents such as your mortgage and deed. Maketreatment when filing separately can get complicated. both of these checks payable to yourself.If a home is owned jointly, each spouse can deduct half If you pay real estate taxes on property you own, Bring key documents.the interest payments. your real estate taxes are fully tax deductible, whether they are imposed by state, county, city, Know where and when your If you are signing on behalf of anotherWhat happens when I make my January township, or some other local government body . closing is taking place. borrower, you must bring a Power of Attorneypayment in late December? Which years As co-owners, you can deduct the amount paid in document identifying this arrangement. Y ou half. If you pay taxes for someone else (such as should also collect the co -borrowers driverstaxes gets this deduction? Write down the time and address of the title company a relative) for property you do not own, you do license information and social security number you are using along with their phone number just in not get that deduction. for certain patriot act documents that requireIf you make your January payment during the month of case you need to notify them if you are running late.December it can be applied to the earlier year. However, , this information.your statement from your lender showing your total interest Am I able to deduct my transferpaid for the year will not reflect this payment. You will stamp payment along with otherneed to deduct your correct amount on your income tax fees paid at my closing? Set aside extra time.statement explaining why their calculation is incorrect. Bring Identification. No. You are only allowed to deduct origination While A and N Mortgage streamlines the loan processCan I deduct my homeowners Y must have at least one form of picture ou points and prepaid interest, not other lending, and is always on time, third parties may cause delays.association assessment? title or transfer stamp costs. However, you are The title company or attorneys involved may cause the identification such as a drivers license, state ID able to deduct these amounts from your capital or passport in order to close. Please make sure closing to take longer than planned. Do not planNo. This payment which includes insurance on the gain when you sell your property . that your identification has not expired. anything, especially movers, too soon after your closingbuilding as well as general maintenance for common unless you have an alternate person who can superviseareas is not an income tax deduction. your move. * Please see your accountant for further details on these questions (i.e., how to fill out an itemized form). 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com
  8. 8. MORTGAGE GLOSSARY MORTGAGE GLOSSARYAdjustable Rate Mortgage (ARM) FHA 203K Loan Negative Amortization Quitclaim DeedMortgage loans under which the interest rate is A loan that enables homebuyers to finance both the Occurs when a borrower makes an minimum payment A deed that transfers without warranty whatever interestperiodically adjusted as agreed to at the inception of the purchase (or refinance) a home and the costs of that may not cover the interest that is due. Loan balance or title a grantor may have at the time the conveyance isloan. rehabilitation. then increases as a result. made.Amortization Fixed Mortgage Rate (FRM) Non-Conforming Rate LockThe systematic and continuous payment of an obligation A mortgage where the interest rate does not change for A mortgage amount that exceeds that which is eligible for A commitment issued by a lender to a borrower or otherthrough installments until the debt has been paid in full. the life of the loan. purchase by FNMA or FHLMC. All loans above this mortgage originator guaranteeing a specified interest rate amount are considered to be non-confirming or jumbo for a specified period of time at a specific cost.Annual Percentage Rate (APR) Gift Letter loans.The total yearly cost of a mortgage as expressed by the A letter of affidavit that indicates that part of a borrower’s Tenancy-in-Commonactual rate of interest paid. The APR includes the base down payment is supplied by relatives or friends in the Origination Process As opposed to joint tenancy, when there are two or moreinterest rate, points, and any other add-on loan fees and form of a gift and that the gift does not have to be repaid. Process in which a lender solicits business, gathers individuals on title to a piece of property, this type ofcosts. As a result, the APR is invariably higher for the rate required information and commits to loan money, for the ownership does not pass ownership to the others in theof interest the lender quotes for the mortgage but gives a Joint Tenancy purchase of real estate. event of death.more accurate picture of the likely cost of the loan. Keep A form of ownership or taking title to property in whichin mind that most mortgages are not held for their full 15 Private Mortgage Insurance (PMI) Transfer Tax each party owns the whole property and ownership is notor 30 year terms, so the effective APR is higher then the separate. In the event of death of one party, the survivor Paid by a borrower to protect the lender in case of default. State or local tax payable when the title passes from onequoted annual percentage rate because the points and owns the property in its entirety. PMI is typically charged to the borrower when the loan-to- owner to another.loan fees are spread out over fewer years. value ratio is greater than 80%. Jumbo Loan Truth-in-LendingBridge Loan Pre-Approval A loan greater than $_________________ or more in the A federal law that requires lenders to fully disclose, inAn equity loan secured to solve short-term financing continental United States. These limits are set by the A term used to mean that a borrower has completed a writing, the terms and conditions or a mortgage, includingproblems. federal National Mortgage Association and the Federal loan application and provided debt, income, and savings the annual percentage rate (APR) and other charges. Home Loan Mortgage Corporation. Because jumbo loans information that has been reviewed and pre-approved byConforming Loan cannot be funded by these two agencies, they usually an underwriter. UnderwritingA loan for up to and including $_______________ in the carry a higher interest rate. The process of evaluation a loan application to determinecontinental United States (Alaska and Hawaii limits are Pre-Qualification the risk involved for the lender. It involves an analysis ofhigher.) Loan Servicing After a loan officer has made inquires about a borrower’s the borrowers ability and willingness to repay the debt The tasks a lender performs to protect a mortgage debt, income, and savings, he or she can write a written and the value of the property.Debt-To-Income Ration (DTI) investment, including collecting monthly payments from statement about the borrower’s chances for qualifying forThe ratio or aggregate monthly debt to aggregate monthly borrowers and dealing with delinquencies. a home loan. VA Loanincome. A low cost, fixed-rate loan offered to veterans and their Loan-To Value (LTV) Ratio Qualifying Ratios spouses. In most cases these loans require little to noFHA Loan The relationship between the dollar amount of a Calculations that are used in determining whether a down payment and are not available for investmentA loan that is insured by the Federal Housing Authority. borrower’s mortgage loan and the value of the property. borrower can qualify for a mortgage. There are two ratios. properties or manufactured housing.This type of loan is geared toward providing moderate to The “top” or “front” ratio is a calculation of the borrower’slow income families mortgages, and is subject to the monthly housing costs (principal, taxes, insurance,qualifying guidelines set forth by the Federal Housing mortgage insurance, homeowners’ association fees) as aAuthority. percentage of monthly household income. The “back” or “bottom” ratio includes housing costs as well as all other monthly debt. 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com 1945 North Elston Ave. Chicago, IL 60642 ph 773.305.LOAN (5626) fx 773.305.7000 www.AandNmortgage.com