Home sellers guide to mortgages


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Home sellers guide to mortgages

  1. 1. Home Seller’sGuide to Mortgagesby Rhonda PorterWashington State Licensed Loan Officer MLO-1213241Mortgage Master Service Corporation CLA 40445
  2. 2. • Senior Loan Officer at Mortgage Master ServiceCorporation , where she’s been employed sinceApril 2000.• Licensed Mortgage Originator MLO121324 forhomes located in Washington State• Author of nationally recognized blog, TheMortgage Porter• Interviewed by NPR, Seattle Times, MSNMoney, WSJ Market Watch.• 2012/2011 WAMP Outstanding Loan Originatorfinalist• Lives in Seattle area with hubby, three kids (off toschool), flat coated retriever and kitten• Enjoys cooking and painting on black velvet (in herspare time)
  3. 3. Dissecting the Preapproval LetterPreapproval vs Prequal letter. Check forverbiage in the letter. Does it state theborrower is preapproved or prequalifed.There IS a difference.A prequal letter typically means the buyerhas been interviewed by the lender andnot "preapproved".Preapproval Letters should include:• All borrowers 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, saleof home, gift from parents, sellercontribution, etc.)• Any conditions the loan approval issubject to (such as the appraisal and a"clear" title• The date the letter was written as wellas an expiration date.• Loan originators License or Registrationnumber.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  4. 4. Conforming Financing Seller’s GuideMaximum Seller ContributionsBased on the sales price, it variesdepending on amount of down paymentand occupancy. Contribution can only beapplied 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. sellercontributionSecond Home• 25% or more down payment = 9%• less than 25% and up to 10% down = 6%Investment Property• 2% maximum seller contributionConforming Loan Limitsfor King, Pierce & Snohomish Counties• 1 Unit: $506,000• 2 Unit: $647,750• 3 Unit: $783,000• 4 Unit: $973,100For other Washington county limits, click here.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  5. 5. FHA Financing Seller’s Guide• Minimum down payment 3.5% - 5%• Maximum allowed Seller contribution is 6% ofbona fide closing cost, prepaids and reserves• No mandatory Seller paid closing cost atMortgage Master Service Corporation.• Owner occupied only• Higher loan limits than conforming inSeattle, Pierce and Snohomish Counties• Flexible underwriting guidelines• No income limits• Appraisals are essentially the same asconforming. Possible second appraisal ifproperty was "flipped" - HUD does not allow 2ndappraisal fee to be paid by buyer.• Less reserve requirements if borrower ownsdifferent property• Buyers who pay alimony may consider thisprogram due to flexible underwriting• Popular with young professionals who havegreat employment and income and are shyon down payment• 203k rehab programs allow for remodelingwith an all-in-one FHA mortgageFHA Loan LimitsKing, Snohomish & Pierce Counties• 1 Unit: $567,500• 2 Units: $726,500• 3 Units: $878,150• 4 Units: $1,091,351For FHA loan limits in other Washingtoncounties, please click here.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  6. 6. VA Mortgage Loans Seller’s Guide• Eligible to those who have served inour military.• Not difficult to underwrite• Appraisals are done through VAssystem• Seller pays for buyers escrow fee• Maximum allowed seller contribution is4%• VA Jumbo loan amounts up to 1 millionVA Loan LimitsKing, Snohomish & Pierce Counties$500,000 for zero down paymentNOTE: VA does not set loan limits. VA down paymentsfor loan amounts over the zero down limit are 25% ofthe difference.For example, a $600,000 sales price has a minimumdown 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, clickhere.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  7. 7. USDA Rural Home Loans Seller’s Guide• Only available for homes thatare in designated rural areas.(not orange on map)• Income limits apply based oncounty and family size.• Owner occupied only• No maximum sellercontribution• 100% loan to value (zero downpayment).NOTE: if you’re selling a home that is in aneligible area, consider accepting USDAoffers to expand your property to morepotential buyers.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  8. 8. Jumbo/Non-Conforming Seller’s Guide• Loan amount over $506,000 in King, Pierce orSnohomish County.• Typically requires higher credit scores• Less than 20% down payment possible with piggy backmortgages 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 besure to include VA and FHA buyers as they have higherloan limits.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  9. 9. Condominiums What Lenders Look For• Owner occupancy ratiosbelow 51%• Someone owning more than10% of the units• Inadequate reserves• Delinquent HOA dues• Pending (or active) litigation• How many units are sold (ifnew construction)• Make sure your condominiumhas current "approved" statuswith HUD for FHA financing.Click here to checkwww.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  10. 10. AppraisalsAppraised values are based on homes similar to your property thathave recently sold in your neighborhood. Because appraised valuesare based on other homes that have sold, the values tend to lagbehind current resale value.Lenders will use the lower of the sales price or appraised value. If anappraisal comes in lower than the sales price, either the sales priceneeds to be reduced OR the buyer may need to make up thedifference with additional down payment.USDA will allow the buyer to finance closing cost IF the appraisedvalue comes in above the sales price. Conventional VA and FHAloans do not permit this.NOTE: if you are "flipping" a home, be prepared to providedocumentation of the improvements made to the home to thebuyers lender.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  11. 11. How Soon Can We Close?This is just intended to be a rough guide as to what can beexpected for closing times with various mortgage programs.There are always exceptions - some transactions may bequicker and others may take more time.Transactions can and do close quicker than 30 days - this isjust to provide an estimate.Conforming: 30 - 40 DaysFHA: 30 - 40 DaysVA: 30 – 45 DaysJumbo: 30 – 50 Days (if second appraisal required)USDA: 60 – 75 DaysFHA 203k: 60 - 75 DaysA home that requires a second appraisal, most likely due to being a “flip” orjumbo loan may take an additional 10 days to close.If you’re considering a quick close, check with the buyer’s lender to makesure they’re up for the job!www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  12. 12. Seller Closing Costs SummaryProgram Minimum MaximumConforming $0 Based on down payment & occupancyFHA 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 sellerwith 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 notallowed to pay for the second appraisal. The cost for the appraisal is around $500 for asingle family dwelling FHA mortgage.All closing cost to be paid by the seller needs to be negotiated in the purchase and salesagreement.Closing cost is limited to the actual closing cost, prepaids and reserves and may not gotowards down payment. Closing cost credit that exceeds the buyers allowable closing costmay be refunded back to the seller.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  13. 13. References and Resources• APR (Annual Percentage Rate)• Conforming Loan Limits• Credit Scores• Debt to Income Ratios• Dos and Donts 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 Limitswww.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote
  14. 14. The Fine PrintThe content provided is presented or compiled for your convenience byRhonda Porter and is provided for informational purposes only. It doesnot necessarily represent the views or opinions of Mortgage MasterService Corporation.Neither Rhonda Porter nor Mortgage Master Service Corporationassumes any legal liability or responsibility for theaccuracy, completeness, or usefulness of any information disclosed, orrepresents that its use would not infringe privately owned rights.The information provided should not be construed as offeringlegal, financial or other advice to be relied on by the reader to make orrefrain from making any decision or to take any action.The investment, mortgage or financial services or strategies mentioned inand throughout this website may not be suitable for you.Mortgage Master Service Corporation is an Equal Housing OpportunityLender.All rights reserved. All content, including but not limited totext, photos and videos are protected by US Copyright. Plagiarism willnot be tolerated.Rhonda Porter is NMLS Licensed Mortgage Originator MLO-121324.Mortgage Master Service Corporation NMLS# CLA-40445.www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote