Home Buyer s Guide. Bayarena. Paul. Austin Capital Mortgage.

Transcription

1 Austin Capital Mortgage Home Buyer s Guide Paul Bayarena

2 Home Purchase Guide and Texas Mortgage Loan A mortgage loan is by far the largest loan that many of us will take on in our lifetime, and with that in mind, I structured this guide to answer many questions that I have come across over the years, in what I hope is an easy to understand guide to the home buying process. Table of Contents About Paul Bayarena Austin Capital Mortgage Get Pre-Approved Use a Realtor Submit Your Purchase Offer Lock In Your Rate Application, Paperwork, &Conditions 1. Loan Application 2. Paperwork 3. Give Application & Paperwork to Loan Officer 4. Processing 5. Conditional Approval 6. Survey 7. Appriasal Is Ordered 8. Underwriting 9. Underwriting Conditions 10. Audit & Pre-Closing 11. Closing Department 12. Title Prepares the HUD Settlement Statement Reviewing the HUD I served honorably for six years in the in the United States Marine Corps infantry from 1990 to 1996, and in 2011 I reenlisted in the Texas Army National Guard. I studied business management at Texas State University, formerlly Southwest Texas State University, and after college, worked for Janus Capital, trading mutual funds; in 2001 I began my career in the mortgage industry with Austin Capital Mortgage. I have held Series 6 and 63 securities licenses and a Texas Mortgage Brokers license. I currently hold a Residential Mortgage Loan Offi cer license in Texas (NMLS #271114), and have been active in the mortgage industry since I also hold a Texas Real Estate license, though I do not practice real estate. Schedule Your Closing Closing and Signing Funding Utilities Frequently Asked Questions Do s and Don ts Home Purchase Checklist

3 About Us Austin Capital Mortgage Corporation is a full service residential mortgage banking fi rm based in Austin, Texas, and has been serving the needs of the residential mortgage community since Austin Capital Mortgage has continued to show its strong insight of the market, most recently by focusing on prime conventional and government loans and thus avoiding the recent turmoil and instability that has affected many companies throughout the industry. Founded by Aden Lasseter, our primary objective is to exceed expectations for our clients, and in doing so, our clients provide us with continual referrals, which is our primary means of business. By doing so, we will continue down our path of controlled, sustainable growth. Ultimately, we strive to create raving fans in the markets we serve. We strive to be a top tier lender; however, the real vision for Austin Capital Mortgage Corporation is to be the very best in the industry. Being the best in class is our ultimate destination our ideal state. Best in class is defi ned by combining technology, people, culture, product and price with the most effi cient execution platform while maintaining the highest degree of integrity and respect for our employees and our clients. Our search for excellence is based upon a set of values and principles that remain constant over time. Our Values and Principles Honor our duties and responsibilities Treat everyone as equals and value differences Establish and maintain a culture of empowerment and accountability Develop expertise and apply it to uniquely benefi t our customers Identify leaders and help them realize their potential Stay passionate about succeeding and celebrate each other s success Recognize and fulfi ll our responsibilities to the communities around us Create and maintain an environment that rewards working hard and working smart Our central purpose and role of Austin Capital Mortgage is to help people achieve the American Dream of home ownership. Through its most important asset its people we exist solely to provide residential fi nancing while providing an excellent experience for our clients and our employees. Our ultimate goal is to create lasting relationships with each of our clients so that we may continue providing excellent service for many years to come. Privacy is as important to us as it is to you, so you can rest easy knowing that your confi dential information will be kept secure and private. This is why our name that is one that is trusted throughout the community.

4 Step 1 Get Pre-Approved: Imagine fi nding a home, only to fi nd out later that you do not qualify; this can be a very heartbreaking situation, so avoid it by fi nding out home much you can afford before you start your search. Remember, buying a new home is a very emotional process, and because of this you should have your fi nancing in order prior to looking for a new home. Your first consultation with your loan offi cer is very important, so be sure to schedule enough time to go over all of your questions and concerns. It is also important that you go over your short term (1 to 4 years) and long term (5 to 9+ years) goals. Remember, the more information your loan offi cer has about your goals, and concerns, the better off you will be. Note: You should have quite a few questions. Remember, you are buying a house, so ask questions. Request the following: 1. Get Pre-Approved and not just Pre- Qualified. 2. Ask your loan officer for your Pre-Approval Letter. 3. Ask for a home purchase checklist: Ask your loan officer for a checklist of the supporting documents needed for your loan application. You should start gathering your supporting documents on your checklist immediately. Avoid the following: Looking for a home prior to getting your fi nancing in order. Not disclosing fi nancial concerns that you may have. Do NOT make any Cash Deposits into your accounts. This can cause a lot of problems, because the underwriter must be able to source where all deposits are coming from. Step 2 Use a Realtor: I know, I know, I don t want to pay a 3% commission to a real estate agent. Perhaps you are one of the few home buyers that can get by without a real estate agent, but for most of us, using a Realtor is one of the smartest moves you can make. I have been in the mortgage business for over 12 years, and I personally would never purchase a home without hiring a Realtor. You are not, however required to use one. Do the following: 1. Interview your Realtor: Make sure your Realtor is a good fi t for you, and is knowledgeable about the area you are looking to buy in.

5 Step 3 Submit Your Purchase Offer: Assuming you have been pre-approved and have your pre-approval letter in hand, have your Realtor submit your purchase offer to the seller s agent. 1. Contract: Make sure you receive a copy of the fully executed contracted, which means it must be signed by all parties. Step 4 Lock In Your Rate Once your mortgage rate is locked the lender secures it and it is based off the time and date it was requested. This means if the market improves a few days later, you cannot go back and ask for better terms, conversely, if the market gets worse and the rates move up, you are protected. 1. Lock Your Mortgage Rate: Your rate should be locked at the time of application, and once locked it is secured for its lock period, which is typically 30 to 45 days. Be sure to ask your loan offi cer how long your rate is locked in for. NOTE: There are some exceptions to this; if the market did improve dramatically, the investor might be willing to adjust your rate slightly, but it does not happen to often. Step 5 Loan Application, Paperwork, and Conditions Make sure when you sign the loan application that no signatures, initials, or dates are missing; doing so will only delay the loan process. 1. Loan Application: Schedule a time with your loan offi ce to go over your full loan application, and set aside 30 minutes to 1 hour, so you are not rushed and have plenty of time to ask questions. 2. Paperwork: This is perhaps the most tedious part of the home buying process, but it also is one of the most important. Make sure you receive a purchase checklist of all the supporting documents from your loan offi cer, if you have not received one already. Remember, if it is on the checklist, then it is required. Avoid the following: Do Not Get Upset About The Paperwork: The paperwork is just part of the process, and is required by the lender. We do not ask for anything more than what is required. Note: It is important that you send all the supporting documents in at one time; this will make for a much smoother closing process.

6 3. Give Your Loan Application and Supporting to Your Loan Officer: After you have signed, initialed and dated your loan application and disclosures, and gathered your supporting documents, you will need to give them to your loan officer. The most expedient way to do this is by scanning your loan application and supporting documents, then them to your loan offi cer. 4. Processing: Once your loan officer has received your loan application and supporting documents, your loan offi cer will then review what you have sent in to make sure that nothing is missing. If anything is missing, your loan offi cer will notify you and let you know, so you can get it to him/her as soon as possible. 5. Conditional Approval: At this time, your loan processor will run your loan through the Automated Underwriting Approval System. After receiving the automated loans approval, your loan will then be submitted to Underwriting. 6. Title Policy: At this time, your title policy will also be requested from the title company 7. Survey: Your survey will be ordered is the seller did not provide one, or if there have been changes made to the property since the last one was done, i.e. a pool was added, deck, fence, or room. 8. Appraisal Is Ordered: Your appraisal will be ordered once the loan has received conditional approval. NOTE: We are prohibited by law to ask for a specifi c appraised value, per the Home Value Code of Conduct (HVCC), and are likewise prohibited from speaking directly with your appraiser. 9. Underwriting: The underwriter is the person who thoroughly reviews your loan application, and looks for anything that missing, or out of place; the underwriting will ultimately make the fi nal loan approval. 10. Underwriting Conditions: About 90% of all loans will have some kind of underwriting conditions. Conditions can be anything from a missing signature, an additional lender form, Letter of Explanation (LOE), updated bank statements, etc It can be pretty much anything the underwriter feels is needed for fi nal loan approval. 11. Audit and Pre-Closing: Once the underwriter has cleared off all loan conditions, the fi le will then be audited by the attorneys and the closing department. Once this is completed, the loan will then move to the closing department. 12. Closing Department: The closing department will prepare the instructions and loan documents for the title company. These are the documents that the buyer will sign at closing.

7 13. Title Prepares the HUD Settlement Statement: The Escrow Officer is the person who prepares the HUD Settlement Statement. Once the HUD Settlement Statement is completed, the attorneys, the lender s closing department, and your loan offi cer will review it, and make any corrections if needed. Step 6 Reviewing the HUD: Your loan offi cer will review the HUD with you the buyer, and if everything looks good, your loan offi cer will schedule a time for your closing with the title company. 1. HUD Settlement Statement: Prior to closing you will receive your HUD Settlement Statement, which shows an itemized breakdown of all the cost associated with your home purchase. Step 7 Schedule Your Closing: 1. Schedule Closing: Your loan offi cer will schedule a time for your closing to make it as convenient as possible for you. Step 8 Closing and Signing: Well at this point you are almost done, and the only thing left is to sign your loan documents. Make sure to bring the following to your closing. 1. Two Forms of ID: Borrower(s) will need to bring two forms of ID to closing. Make sure our Drives License is not expired. 2. Down Payment: The amount due at closing must be in the form of a Cashier s Check, and made out to the title company you are closing at. Step 9 Funding: In most cases your loan will fund the same day you close, but there are times when the loan funds the following business day. Make sure you are prepared if your loan will not fund on the day of signing, as you will not received the keys to your home until the loan funds. Step 10 Utilities: Make sure you plan to have your utilities on the day you move in.

8 Frequently Asked Questions 1. What is Prequalification? A process by which a potential homebuyer qualifi es for a home mortgage before making an offer on a house. A lending institution agrees to make a loan in the specifi ed amount to the person it has pre-qualifi ed. 2. My real estate agent recommended that I get a pre-approval letter. What is a preapproval letter, and why should I get one? The lender gives a commitment letter that states the lender agrees to provide a mortgage to a homebuyer. Commitment letters help you set realistic goals while you re house-hunting, provide the same negotiating ability as a cash buyer and enable you to move quickly once the perfect home is found. 3. When mortgage lenders refer to PITI what are they referring to? PITI is principal, interest, taxes and insurance the components of a monthly mortgage payment. 4. When my loan officer asks me if I want to waive escrows, what exactly does she mean? When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them in-cluded in your monthly payment. Waiving escrows may add a small fee to your closing costs. You can only waive escrows if your loan to value is 80% or less on your fi rst lien. 5. What does my mortgage lender mean by points or orientation fee? One point is equal to one percent of the loan amount. Points and orientation fees are used to buy down the interest rate and are tax deducti-ble on purchase transactions. 6. How does the annual percentage rate differ from the interest rate? The annual percentage rate (APR) is the effective rate of interest for a loan if the calculation is based on the original loan amount less the closing costs. This is the rate that will appear on your preliminary Truth-In- Lending. Please note that the APR is higher than the interest rate on your Real Estate Lien Note. 7. How do I know what my interest rate will be? Upon your request, your loan offi cer will search for the lowest rate and lock your rate. The lock-in guarantees they homebuyer an interest rate provided the loan closes with that buyer and specifi ed property within a set period of time. The property lock-in also specifi es the number of points to be paid at closing. 8. Do I need to have a certain amount of money left after I buy my home? Most loan programs require a cash reserve suffi cient enough to make the fi rst two mortgage payments (PITI).

9 Frequently Asked Questions Cont. 9. What is Private Mortgage Insurance (PMI)? PMI is insurance required to cover the lender should the borrower default on the loan. PMI is not tax deductible. 10. Do I always have to have PMI on my loan? PMI can be eliminated by having a down payment of at least 20% or by obtaining a second lien with an or an program. 11. Will I have two separate payments if I have a second lien? The second lien is often from a different lender than the fi rst lien. Therefore, borrowers with a second lien will make two separate payments each month one on the fi rst lien and one on the second lien. 12. What does my lender mean by paper trail? A paper trail is copies of all paperwork necessary to prove a fi nancial transaction: copies of all checks, deposit slips, loan paperwork, forms to liquidate assets, etc. 13. Why did I receive a Truth-In-Lending? Truth-In-Lendings are sent to all borrowers after a loan applica-tion has been made, regardless of whether they have a contract on a property. The Truth-In-Lending Act is a federal law requiring lenders to reveal all of the terms of a mortgage. The APR that appears on the Truth-In-Lending will be higher than the interest rate on your Real Estate Lien Note. 14. When will I find out what my final figure is for the total costs to close? The title company will prepare a Settlement Statement detailing the closing fi gures. We will review this statement and provide you with an amount for closing. If you need this fi gure more than 24 hours before closing, call our offi ce and re-quest a new good faith estimate. Remember to bring a cashier s check made payable to the title company. 15. Where do I go for closing? Your closing will take place at the title company. The title company name and address appears in your sales contract. We will contact you to schedule a time for your closing. 16. Where do I send my first mortgage payment? Refer to your First Payment Letter in your closing documents to determine where to send your fi rst mortgage payment. If you receive a statement from your new lender prior to the due date of your fi rst payment, send your payment to the new lender. Remember to include your new loan number on your check.

10 A Few Reminders of Do s and Don ts Before You Close On Your Loan DO bring a cashier s check made out to the title company for your closing costs. You can bring a personal check to closing for $1500 or less. DO notify us if your salary or other compensation has changed from what has been noted on your loan application. DO inform us if your address changes from what appears on your original loan application. We will complete rental and mortgage verifi cation for all of your residences within the last two years. DO obtain homeowner s insurance with minimum coverage equal to the amount of your total loan or the replacement value of the house. Call our offi ce (512) with your agents name and phone number at least 10 days before closing. DO keep documentation (or a paper trail ) on any large deposits into your account. A paper trail is copies of all paperwork necessary to prove fi nancial transaction: copies of all checks, deposit slips, loan paperwork, forms to liquidate assets, etc. DO notify us if you move funds from one account to another and provide a paper trail on any transactions. DO make sure you have a clear termite report on the property. If the termite report is not clear, provide a receipt for treatment that shows the chemicals and the amount used for treatment. DON T acquire any additional credit lines or make any large purchases on existing credit without fi rst consulting us. For example: Purchasing a car or buying appliances for your new home will change your debt to income ratios. DON T change jobs without consulting us. A change in compensation may affect your ability to qualify. Borrowers must have a two year history of bonus and/or commissions to be counted as income. Lenders may verify employment on the day of closing as a quality control check. DON T co-sign with anyone to obtain a line of credit or make a purchase. The payment will show up on your credit report as an additional debt. DON T negotiate your contract with an allowance and expect to get money back at closing. An allowance can be used to pay closing costs and/or prepaids.

11 Texas Mortgage Home Purchase Checklist Documents Needed For Purchase 1. Copy of sales contract of the home you are purchasing 2. Copy of canceled earnest money check (both sides), showing that if cleared your account. 3. Copy of your HUD (settlement statement) if you are selling a house to purchase a the new one. 4. Copy of the property Survey with seal and signature from the surveyor. 5. Copy of employment pay stubs for the last 30 days for each borrower. 6. Copy of most recent 2 years W2s for each borrower. 7. K1s, if your bonus or commissions exceeds 25% of your income, if applicable. 8. Copy of most recent 2 years signed Tax Returns, for each borrower if fi led separately. 9. Copy of most recent 2 months statements ALL PAGES with your name and account number on all accounts (Checking, Saving, and Money Market). 10. Copy of IRA / Keogh / 401K / Profi t Sharing Most recent statements covering a 3 month period. You must have your name and account number on the statement. 11. Copy of non-retirement accounts ALL PAGES with your name and account number for all stocks, bonds, mutual funds. You must have your name and account number on the statement. 12. If divorced, provide a copy of divorce decree and note child support /alimony. 13. A copy clear of the borrower and co-borrower s driver s license (front and back). 14. Permanent Resident Alien: Copy of Visa (front and back.) if applicable. You Will Also Need To Include - If Self-Employed 1. If Self-employed we need a copy of most recent 2 years tax returns personal and corporate, or partnership, and YTD profit and loss balance sheet. You Will Also Need To Include - If Your Own More Than One Home 1. Copy of your current homeowner s insurance policy with agent contact name and phone number for each property owned. 2. Copy of your current mortgage statement with account number for each property owned. 3. Addresses of any other real estate owned and lease agreements for each property owned. 4. Copy of property tax bill for each property owned.