HOME Mortgage Process: Qualification and origination

1. HOME Mortgage Process:Qualification and origination Angelica L. Smith Spring 2011

2. Agenda • Definition of Home Mortgage • Key Players in Home Mortgage Process • Home Mortgage Process • Qualification Requirements • Tips • Summary Quiz

3. What is a mortgage? Mortgage – is a pledge of property to secure payment of debt. Types of real estate properties: • Singe-family residential • Commercial properties

4. Key Players in Home Mortgage Process

5. Home Mortgage Process

6. Pre-qualification vs. Pre-approval Pre-qualification Pre-approval • Initial review • Lender gives an estimate of loan amount borrower may qualify • NO cost • Sample • In-depth review • Lender gives a specific amount the borrower is approved • Application fee is charge

7. Mortgage Application Checklist • SSN and DOB • Income Verification • Tax Information • Employer information • Bank Information • Credit Information • Self-Employment Information • In-school/Student Information • Divorce or Separation Information • A copy of gift letter

8. Qualification Requirements • Credit Score • Debt-to-Income Ratio • Down Payment • Cash Reserves

9. Two Primary Underwriting Standards Payment-to-income – the ratio of monthly payments to monthly income. Loan-to-Value – the ratio of the amount of the loan to the appraised value of the property.

10. Closing Costs • Origination Fee • Appraisal Fee • Credit Report • Tax Service Fee • Processing Fee • Flood Certification • Escrow Fee

11. Closing Costs • Title Search • Title Insurance • Private Mortgage Insurance • Survey Fee • HUD-1 Settlement Statement

12. Why home mortgage process stop? • Rejection of mortgage loan • Buyer’s Remorse • Low Appraisal • Inspection Report reveals defects • Contract is contingent upon selling

13. Tips when buying a house • Don’t buy if you can’t stay put • Start by shoring up your credit • Aim for a home you can really afford • Buy in a district with good schools • Get professional help • Choose carefully between points and rate • Before house hunting, get pre-approved • Do your homework before bidding • Hire a home inspector

14. Quiz 1. As long as you can afford it, buying a home is always a smart idea. • True • False 2. What's the most important factor in choosing a home? • The view  • The amount of acreage in the lot • The location • The quality of the kitchen

15. Quiz Continuation 3. Most real estate agents represent the ... • Seller • Buyer 4. Once you decide that you want to buy a home, what's the first thing you should do? • Get an agent • Look at homes • Check your credit record

16. Quiz Continuation 5. When you choose the location of a home, what single factor is traditionally likely to help most in maintaining, or even boosting, the resale value when it comes time to sell? • How close it is to a large medical center • How close it is to a big office district • Whether it is in a good school district • Whether the property taxes are low

17. Sources • Wikipedia • Freddie Mac • Personal Dividends • Internet Mortgage Group • For Sale By Owner.com • CNN Money

18. THANK YOU FOR LISTENING! QUESTIONS?