new home buying seminar riddell and duncan
TRANSCRIPT
Home Buyer HandbookPRESENTED BY:
SWBC Mortgage Corporation6611 W. Hefner Road, Suite B
Oklahoma City, OK 73162(405) 858.7770
Dean RiddellBranch Manager
NMLS #196895(405) 229.1559 mobile
Perry DuncanSr. Loan Officer
NMLS #315549(405) 227.3121 [email protected]
www.PerryDuncanHomeLoans.com
Like us on Facebook at www.facebook.com/SWBCOklahomaCity
© 2012 SWBC. All rights reserved. Loans are subject to credit and property approval. Other guidelines may apply. Rates are subject to change.
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Your Pathway to Home Ownership
Obtain MortgagePre-Approval
Find Your New Home
Make an Offer and Obtain an Accepted
Contract
Confirm Loan Program and Lock Interest Rate
Inspect the Property and Resolve Inspection
Issues
Secure Home Owner’s Insurance Appraise the Property
Clear Remaining Underwriting
Conditions and Receive Loan Approval
Attend Closing and Receive Your Keys!
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Obtain Mortgage Pre-Approval
Before You Go House-Hunting, Get Pre-Qualified*– 10-15 minute phone interview to determine initial qualifications– Pre-qualification information based on the verbal information given and your
credit report.– Pre-qualification letter may be issued to include in a contract submission.
Even Better, Get Pre-Approved*– Forward any required items promptly to your SWBC loan officer, and a pre-
approval may be issued within 24-48 hours of receipt of the documentation. – A pre-approval letter is recommended to be submitted with any offer, to
strengthen your position.
*Loans are subject to final approval by lender
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Documentation Items Needed for a Mortgage Pre-Approval
In general, the following items are needed when you apply:
1. Valid identification and Social Security number2. The last two statements on all checking, savings, stock, mutual funds, IRA, or other
liquid asset accounts3. Accurate addresses and landlord/mortgage company information for past two years4. Loan information, including balance and monthly payment5. Copy of fully executed Sales Contract, if available6. Copy of cancelled earnest money check, if purchasing7. Funds for credit report and appraisal 8. Documentation on any additional source of income to be used in qualifying, if
applicable9. Your most recent pay stubs for the last 30 days10. W-2 forms and full federal tax returns with schedules for the past two years
*This list is not meant to be all-inclusive. More or less information may be required and will be determined on an individual basis.
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Credit Healthy Tips…
• Pay all bills on time• Hold credit balances below 30% of their limit – do not max
out credit cards• Maintain accounts for a long period of time. Account history
is important with credit scoring. • Limit the number of times you have your credit pulled. • If you payoff collections, request letters of deletion. Updating
activity on a derogatory account will hurt your credit. • Monitor your credit on an annual basis.
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Confirm Loan Program and Lock Interest Rate
FHA
Conventional
VA
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VA Mortgages• Must have VA eligibility.• Requires an upfront funding fee,
which can be financed into the loan.
• No mortgage insurance.• NO DOWN PAYMENT – Offers
100% financing.• Allows for the seller to contribute
up to 4% in closing costs. • 620 minimum credit score.• No Pre-Payment Penalty.• Assumable loan. • Competitive interest rates. • Lower buyer closing costs.
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FHA Versus Conventional Mortgages
FHA Conventional
Government-insured Privately Insured
Minimum Credit Score 620 620, for 80% LTV with no PMI
Minimum Down Payment 3.5%, can be gifted or assisted by bond programs 3%, must be borrower’s own funds. Option for family member to give full 20% down payment.
Combined Loan-to-Value Requirements
Able to take advantage of Down Payment Assistance (DPA) Programs: max CLTV is 96.5
without DPA, 105% with approved DPA97%
Mortgage InsuranceRequired on all loans. Collect up-front mortgage
insurance and monthly mortgage insurance.
Typically requires a minimum credit score of 660. Buyer can choose monthly mortgage insurance, a
one-time single premium, or lender single-pay mortgage insurance premiums
Assumable Yes No
Prepayment Penalty No No
Competitive Interest Rates Yes Yes
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First Time Buyer
s
Minimum
Down Paymen
t
FHA Mortgage
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FHA Mortgage Insurance• All FHA mortgages require mortgage insurance, regardless of the down payment. • Up-front mortgage insurance premium (UFMIP)
1.75% of the base loan amount– Can be financed into the loan– Eligible to be paid as part of the seller contribution
• Monthly mortgage insurance premium
• LTV is < = 78% then there is no annual/monthly required15 Year or Less
• 1.75% UFMIP / .60% monthly at > 90% LTV• 1.75% UFMIP / .35% monthly at < 90% LTV
10 – 15 Year Mortgages
• 1.75% UFMIP / 1.25% monthly at > 95% LTV• 1.75% UFMIP / 1.20% monthly at < 95% LTV
20 – 30 Year Mortgages
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FHA Mortgage Insurance and Monthly Payment Calculation
$150,000 purchase price30-Year Fixed-Rate Mortgage
Minimum Down: 3.5% or $5,250UFMIP = 1.75% or $2,533
Mortgage Insurance = 1.25%
Sales Price – Down Payment x 1.25% = Annual Mortgage Insurance(or)
$1,809.37 per year ($150.78 per month)
Sales Price – Down Payment + UFMIP = Loan Amount(or)
$150,000 - $5,250 + $2,533 = $147,283
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At a 4% interest rate, the monthly payment could look like this:
Estimated Principal and Interest
$704.01
Estimated Mortgage Insurance
$150.78
Estimated Property Taxes
$150.00
Estimated Homeowners’ Insurance
$100.00
Estimated Monthly Payment
$1,104.79
FHA Mortgage Insurance and Monthly Payment Example Cont.
The above is for illustrative purposes only. Individual circumstances may vary.
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FHA Credit RequirementsChapter 7 Bankruptcy
• Must wait two years after discharge• Twelve months may be sufficient if the bankruptcy was caused by extenuating
circumstances such as an illness or death• Must re-establish good credit• Show that the events that caused the bankruptcy are unlikely to occur again
Chapter 13 Bankruptcy• One year of payout has elapsed• Satisfactory payment performance• Must receive permission from the court to enter into a mortgage transaction• Consumer credit counseling follows the Chapter 13 guidelines
Foreclosure• Three years must have passed since the Sheriff’s Deed was recorded• All short sales follow foreclosure guidelines
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FHA Credit Requirements Cont…
Judgments and Tax Liens• Must be paid off prior to FHA financing• Exceptions only made if payment arrangement has been agreed upon with creditor
and a 12-month payment history can be documented
Collections• FHA does not require collections to be paid• Underwriting will analyze the risk to determine if the amount of outstanding
collections is allowable
Late Payments• Do not restrict borrowers from obtaining FHA financing• The overall credit profile is analyzed
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Your Credit Score
Payment HistoryAccounts OwedLength of Credit HistoryNew CreditTypes of Credit Used
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FHA Property Requirements*
Items that require repair• Inadequate access / egress from
bedrooms to exterior of home• Leaking or worn out roofs• Evidence of structural problems• Defective paint surfaces (lead-based
paint prior to 1978)• Structural Soundness• Health and Safety concerns
– Broken windows– Blocked doors– Exposed wiring– Exposed floorboards– Mold
*This is not a complete list. More or less information may be requested.
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FHA Income / Debt QualificationsDebt-to-Income ratio: 31 / 43• House payment not to exceed 31% of your gross monthly income• House payment plus all other debts not to exceed 43% of your gross monthly income• Ratios can be pushed up to 50% on a case-by-case basis, using automated
underwriting with compensating factors Income• Must provide a two-year work history
– If your current job is your first, school records required• Gaps in employment exceeding one month must be explained• Must have expected continuance of employment• Income stability more important than job stability• Must average bonus, overtime, commission, and self employment income over 24
months• Alimony and child support must continue for three years to be considered• Part-time work may be used if a two-year history can be documented
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First-Time Home Buyer Down Payment Assistance
A first-time buyer is defined as:
“Someone who has not owned real estate for the previous three years”
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What OHFA Offers
• 30-Year Fixed Rate Mortgage– Affordable rates– Available to first-time buyers and NON-first-time buyers.
• Funding always available.
• No additional home inspections or property condition requirements.
• Highest income limits for down payment assistance.
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OHFA Income Limits
First-Time Home Buyer
1-2 Household Size$61,500
3+ Household Size$70,725
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OHFA Assistance Calculations• Purchase Price = $150,000• Down Payment = 3.5% or $5,250• Base Loan Amount = $144,750 ($150,000 - $5,250)• UFMIP = 1.75% or $2,533• Loan Amount = $147,283 ($144,750 +2,533) • OHFA Assistance = 3.5% or $5,154• The OHFA Assistance ($5,154) can be used toward buyer’s
down payment.
The above is for illustrative purposes only. Individual circumstances may vary.
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OHFA Restrictions
• Must be below income limits, based upon property country and location requirements (determined by program)
• Must be below purchase price limits
• 620 credit score required
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Finding Your Dream Home
Choose single family home, townhome or
condo
Choose home
features
Decide on a
location
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Working with aProfessional Real Estate Agent
Offer personalized service designed to pre-select homes within your price range and that meet your criteria.
Schedule appointments for you to see homes, research fair market value of homes of interest, and provide information on schools, taxes, etc.
Handle all negotiations over the price and terms of your offer, arrange for home inspections, and review all closing paperwork.
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Working With aProfessional Real Estate Agent
Hire Professionals to Protect
Your Interests
Cost to you is ZERO!
Your REALTOR® is paid by the
seller!
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Making an Offer…
Before Making An Offer…
• Get recent selling prices of homes in the area.
• Be careful not to let your feelings rule.
• Do a background check on the property. How long has it been on the market? Why is it being sold?
• Check out the neighborhood and talk with the neighbors.
• Consider the home’s resale value. • Review the contract in detail before
signing.
Points of Negotiation Within Your Offer…
• Sale Price• Seller-Paids or Seller-Concessions.
Often times, the offer will be structured asking the seller to pay a portion of the buyer’s closing costs. Subtracting this figure from the sale price will determine the actual net to the seller.
• Contingencies. A contingency is a condition specified in the offer that must be met before the contract is legally binding.
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Secure Home Owner’s Insurance
Once you go under contract, you will be responsible for obtaining home owners’ insurance.
You will work with your insurance agent to choose a deductible and premium option that will best fit your needs.
Once your quote is finalized you will need to forward the name, phone number and name of insurance agency to your SWBC loan processor.
Ask us for more information on home owners insurance available through SWBC.
Information needed by your home owner’s agent*:
• Purchase Price• Square Footage• Year Built• Number of levels on home• Garage size• Number of bathrooms• Source of heat and number of fire places• Style of Exterior (i.e., wood siding, stucco,
etc.)• Roof age and type• Any electrical updates and year done
*This list is not all-inclusive. Additional information may be required.
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Inspect The PropertyA good inspector will check the following:
– General condition of the property.– Electrical, heating, and cooling
systems. – Exterior structure, possible water
damage, garage doors, and chimney.
– Interior structure, insulation, foundation, windows, and doors.
– Pest control. The buyer generally hires the inspector. The inspector examines the entire home and then provides a detailed report.
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Appraise the Property
• The appraisal is an evaluation of the property’s value.
• The appraiser visits the property and reviews recent prices of similar properties in the area.
• You will receive a copy of the full report upon completion.
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Clear Underwriting Conditions and Receive Full Loan Approval
• Once the appraisal is received, it is sent to underwriting to be reviewed along with the final submission of your credit package.
• The underwriter may request additional documentation items at this time.
• Upon receipt of all documentation and clearing of final loan conditions, your loan is approved!
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Attend Closing and Receive Your Keys! Congratulations!
You are a HOME OWNER!
Let us help guide you to home ownership!
SWBC Mortgage Corporation6611 W. Hefner Road, Suite B
Oklahoma City, OK 73162(405) 858.7770
Dean RiddellBranch ManagerNMLS #196895
(405) 229.1559 [email protected]
www.DeanRiddellHomeLoans.com
Perry DuncanSr. Loan OfficerNMLS #315549
(405) 227.3121 [email protected]
www.PerryDuncanHomeLoans.com
Like us on Facebook at www.facebook.com/SWBCOklahomaCity
© 2012 SWBC. All rights reserved. Loans are subject to credit and property approval. Other guidelines may apply. Rates are subject to change. 8540-
4569