Qualifying for a San Mateo Mortgage
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Chris Williamson, Mortgage Advisor with Mortgage California explains what a lender looks for in a loan application including credit requirements, income requirements, assets, down payment, closing costs and the Good Faith Estimate.
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Qualifying for a San Mateo Mortgage
- 1. 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 Williamson Mortgage Advisor - Mortgage California Phone: (650) 520-0915 www. SanMateoMortgageBlog.com
- 2. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Questions During the Webinar • Financing experts are available to answer questions throughout the presentation • 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
- 3. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Questions During the Webinar You may type questions in at any time during the presentation – Question box on your screen
- 4. Qualifying for a Mortgage Chris E. Williamson Mortgage Advisor Phone: (650) 520-0915 Email: Chris@ChrisEWilliamson.com Blog: www.SanMateoMortgageBlog.com
- 5. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Purpose & Goals of the Webinar Purpose • Empower and Educate Home Buyers Goals • Share with you the things we’ve learned about qualifying for a mortgage loan • Leave you more aware and informed about financing
- 6. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Overview • Poison Pill of Home Buying • What is a Pre-Approval • The CIA of Lending • Down Payment • Gift Funds • Closing Costs • Good Faith Estimate • Loan Application
- 7. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Poison Pill of Home Buying • Financial Unpreparedness • Not Putting Your Financial House in Order is Setting Yourself Up for Failure Key: Find a Loan First, then Find a Home
- 8. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Pre-Approval vs. Pre-Qualification Get Pre-Approved, Not Pre-Qualified • Pre-Qualification ▫ An informal estimate of what you can afford • Pre-Approval ▫ A loan commitment from a reputable lender
- 9. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 What is a Pre-Approval A Pre-Approval is Verifying your…. • Credit Score and Continuing Liabilities • 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
- 10. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 The CIA of Lending • The 3 Most Important Components of Your Pre-Approval ▫ Credit ▫ Income ▫ Assets
- 11. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 What is Credit? • Snapshot of How You Handle Debt • Risk Assessment for the Lender • Look at Previous 2 Years of Debt Management • Project 3 Years of Your Ability to Repay Mortgage
- 12. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 What Makes Up Your Credit?
- 13. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 How is Credit Measured? • Three Credit Bureaus ▫ Experian ▫ Equifax ▫ TransUnion • Median Score
- 14. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Credit • What is Good Credit? ▫ Above 680 • What is Bad Credit? ▫ Below 620 • Credit Score Above 580 to Qualify for a Mortgage
- 15. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Income – W-2 Employees Documentation Needed • 2 Paystubs (Covering 1 Month) and YTD Income • 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
- 16. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Income – Self-Employed Documentation Needed • 2009 Profit and Loss Statement • 2007-2008 Tax Returns • 2 Year Work History as Self-Employed
- 17. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Debt to Income Ratios • Housing Expense = Principal+Interest+Taxes+Insurance • Front End Ratio ▫ 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
- 18. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Assets • Your Assets Determine ▫ Down Payment ▫ 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
- 19. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Gift Funds • Money from Family to Go Towards Down Payment • Speak with Your Mortgage Advisor Before You Accept 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
- 20. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Down Payment • Loan Programs with Less than 20% Down Payment ▫ 3.5% Down = FHA ▫ 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
- 21. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 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 Borrower to Borrower • Impossible to Pinpoint Exact Numbers Before You Find a Home
- 22. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Closing Costs • Items Payable in Connection with the Loan ▫ Appraisal ▫ Loan Points ▫ Processing Fee ▫ Underwriting Fee ▫ Application Fee ▫ Document Preparation Fee
- 23. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Closing Costs • Escrow and Title Charges ▫ Owner’s Title Policy ▫ Lender’s Title Policy ▫ Courier Fee ▫ Recording Fee ▫ Wire Fee
- 24. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Closing Costs • City Transfer Tax ▫ San Mateo only City in San Mateo County Ex: $5/$1,000 purchase price $500,000 = $2,500 ▫ Customarily Split 50% Buyer/50% Seller • County Transfer Tax ▫ Customarily Paid by Seller
- 25. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Reserves and Prepaid Costs • In Addition to Closing Costs and Down Payment • Prepaid Interest • Mortgage Paid in Arrears ▫ Opposite of Rent • Prepay One Year Homeowner’s Insurance
- 26. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Loan Application • Resume to the Lender • What’s Required? ▫ 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
- 27. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Resources You Can Use at Home
- 28. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 SanMateoMortgageBlog.com
- 29. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Financing Questions? http://sanmateomortgageblog.com/mortgage-financing-question/
- 30. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Upcoming Classes and Webinars
- 31. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Home Buyer 2.0 First Time Home Buyer Class 2.0 Tuesday, January 19th at 7pm Sign up at www.budurl.com/BuyerClass
- 32. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Condo Buying Class Guide to Buying a Condo – Including New Financing Regulations Thursday, January 21st at 7pm Sign up at www.budurl.com/CondoWorkshop
- 33. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Enjoy this Webinar? • Please help us spread the word by telling your friends and family.
- 34. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Apply Online
- 35. Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915 Free Consultation Chris Williamson Phone: (650) 520-0915 Email: Chris@ChrisEWilliamson.com www.SanMateoMortgageBlog.com