qualifying for a san mateo mortgage

Qualifying for a Mortgage

Thanks for joining tonight’s webinar. We will begin shortly. To download the slides, please visit

http://budurl.com/WebinarSlides

Tonight’s Speaker

Chris WilliamsonMortgage Advisor - Mortgage California

Phone: (650) 520-0915

www. SanMateoMortgageBlog.com

Questions During the Webinar

• Financing experts are available to answer questions throughout the presentation

• This is an interactive learning environment. You will

Chris Williamson [email protected] Phone: (650) 520-0915

• This is an interactive learning environment. You will get the most value from this program by having your specific questions answered.

• The only dumb question is the one you don’t ask

Questions During the Webinar

You may type questions in at any time during the presentation –Question box on your screen


Qualifying for a Mortgage

Chris E. Williamson

Mortgage Advisor

Phone: (650) 520-0915

Email: [email protected]

Blog: www.SanMateoMortgageBlog.com

Purpose & Goals of the Webinar

Purpose

• Empower and Educate Home Buyers

Goals


Goals

• Share with you the things we’ve learned about qualifying for a mortgage loan

• Leave you more aware and informed about financing

Overview• Poison Pill of Home Buying

• What is a Pre-Approval

• The CIA of Lending


• The CIA of Lending

• Down Payment

• Gift Funds

• Closing Costs

• Good Faith Estimate

• Loan Application

Poison Pill of Home Buying

• Financial Unpreparedness

• Not Putting Your Financial House in Order is Setting Yourself Up for Failure


Yourself Up for Failure

Key: Find a Loan First, then Find a Home

Pre-Approval vs. Pre-Qualification

Get Pre-Approved, Not Pre-Qualified

• Pre-Qualification

▫ An informal estimate of what you can afford


▫ An informal estimate of what you can afford

• Pre-Approval

▫ A loan commitment from a reputable lender

What is a Pre-Approval

A Pre-Approval is Verifying your….• Credit Score and Continuing Liabilities

• Income


• Income

• Asset

A Pre-Approval Gives You...• Purchasing Power▫ A Pre-Approved Buyer is a CASH Buyer

• The Upper Limit of What You Can Afford

The CIA of Lending

•The 3 Most Important Components of Your Pre-Approval


▫ Credit

▫ Income

▫ Assets

What is Credit?

• Snapshot of How You Handle Debt

• Risk Assessment for the Lender

• Look at Previous 2 Years of Debt Management


• Look at Previous 2 Years of Debt Management

• Project 3 Years of Your Ability to Repay Mortgage

What Makes Up Your Credit?


How is Credit Measured?

• Three Credit Bureaus

▫ Experian

▫ Equifax


▫ Equifax

▫ TransUnion

• Median Score

Credit

• What is Good Credit?

▫ Above 680

• What is Bad Credit?


• What is Bad Credit?

▫ Below 620

• Credit Score Above 580 to Qualify for a Mortgage

Income – W-2 Employees

Documentation Needed

• 2 Paystubs (Covering 1 Month) and YTD Income

• 2007-2008 Tax Returns and W-2s


• 2007-2008 Tax Returns and W-2s

• 2 Year Work History

• To Count Overtime and Bonuses in Your Income

▫ 2 year work history with same employer and same position

▫ Letter from employer to show likelihood of continuation

Income – Self-Employed

Documentation Needed

• 2009 Profit and Loss Statement

• 2007-2008 Tax Returns


• 2007-2008 Tax Returns

• 2 Year Work History as Self-Employed

Debt to Income Ratios

• Housing Expense = Principal+Interest+Taxes+Insurance

• Front End Ratio

▫ Housing Expense Only / Gross Monthly Income


▫ Housing Expense Only / Gross Monthly Income

▫ Ideally Should Be Less than 38%

• Back End Ratio

▫ (Housing Expense + Continuing Liabilities) / Gross Monthly Income

▫ Ideally Should be Less than 45%

▫ Can Be as High as 55% with Compensating Factors

Assets

• Your Assets Determine

▫ Down Payment

▫ Closing Costs


▫ Closing Costs

▫ 2-6 Months Reserves (depending on loan program)

� Reserves = Principal, Interest, Taxes and Insurance

• Show 2 Months Bank, Investment and Retirement Account Statements

• Large Deposits Need to be Sourced and Documented

Gift Funds

• Money from Family to Go Towards Down Payment

• Speak with Your Mortgage Advisor Before You Accept or Deposit Any Money


or Deposit Any Money

• Gift Letter

▫ States money is a true gift & doesn’t have to be repaid

• Show Cancelled Check or Wire from Donor

• Show Receipt of Money Into Your Account

▫ Deposit Slip and Bank Statement

Down Payment

• Loan Programs with Less than 20% Down Payment

▫ 3.5% Down = FHA

▫ 5%-15% Down = Conventional


▫ 5%-15% Down = Conventional

▫ Require Mortgage Insurance

▫ Impounds Required for Less than 15%

• 20% Down is Ideal

▫ Best Interest Rates and Terms

▫ No Impounds

▫ No Mortgage Insurance Req’d

Closing Costs

What Can I Expect to Pay to Close the Loan?

• Closing Costs are Like Thumbprints

• Vary from City to City, Program to Program and


• Vary from City to City, Program to Program and Borrower to Borrower

• Impossible to Pinpoint Exact Numbers Before You Find a Home

Closing Costs

• Items Payable in Connection with the Loan

▫ Appraisal

▫ Loan Points


▫ Loan Points

▫ Processing Fee

▫ Underwriting Fee

▫ Application Fee

▫ Document Preparation Fee

Closing Costs

• Escrow and Title Charges

▫ Owner’s Title Policy

▫ Lender’s Title Policy


▫ Lender’s Title Policy

▫ Courier Fee

▫ Recording Fee

▫ Wire Fee

Closing Costs

• City Transfer Tax

▫ San Mateo only City in San Mateo County

� Ex: $5/$1,000 purchase price


� Ex: $5/$1,000 purchase price

� $500,000 = $2,500

▫ Customarily Split 50% Buyer/50% Seller

• County Transfer Tax

▫ Customarily Paid by Seller

Reserves and Prepaid Costs

• In Addition to Closing Costs and Down Payment

• Prepaid Interest

• Mortgage Paid in Arrears


• Mortgage Paid in Arrears

▫ Opposite of Rent

• Prepay One Year Homeowner’s Insurance

Loan Application• Resume to the Lender

• What’s Required?

▫ Name/Date of Birth


Name/Date of Birth

▫ Social Security Number

▫ Income

▫ Assets

▫ Address(es) for Last 2 Years

▫ 2 Year Employment History

▫ Continuing Liabilities

▫ All Real Estate Owned

Resources You Can Use at Home


SanMateoMortgageBlog.com


Financing Questions?http://sanmateomortgageblog.com/mortgage-financing-question/


Upcoming Classes and Webinars


Home Buyer 2.0

First Time Home Buyer Class 2.0


Tuesday, January 19th at 7pm

Sign up at

www.budurl.com/BuyerClass

Condo Buying Class

Guide to Buying a Condo – Including New Financing Regulations


Thursday, January 21st at 7pm

Sign up at

www.budurl.com/CondoWorkshop

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Free Consultation

Chris Williamson


Chris Williamson

Phone: (650) 520-0915

Email: [email protected]

www.SanMateoMortgageBlog.com

qualifying for a san mateo mortgage

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