Workshop 2. Shopping for a Mortgage Loan

Transcription

1 Workshop 2. Shopping for a Mortgage Loan

2 Pros and Cons of Each Lending Business Banks Credit Unions More money to lend Highly regulated Less Loan Options Less regulated More Options Less money to lend Non-Profit Where can you get a home loan? Which one is better? Savings & Loans Mortgage Companies Less choice Highly regulated Least regulated Most loans sold to investors We do not allow you to use Mortgage brokers!!

3 Loan products may vary by: Interest rate (7%, 8%, 8.25% ) How good your credit is. How long you have had credit. The amount of debt you have now. How much down payment you you need.

4 Who am I talking to: Phone number: 1. Do you have any mortgage loans especially for.. Immigrants, non-resident aliens, etc.? First time home buyers? Community reinvestment act (CRA)? For those loans: what is the interest rate? Is the interest fixed or adjustable? How many years is the loan?

5 Does this loan require "private mortgage insurance" (PMI)? If so, How much is the PMI? Do you keep these loans or can they be sold? Is here a penalty if I pay off the loan early? 2. If I am not ready to buy now, how much will it cost to "lock-in" this interest rate? 3. Can you estimate the "annual percentage rate" (APR)? 4. What day of the month are mortgage payments due? 5. Please give me an estimate of your fees for: Application Credit report: Appraisal: Survey: Title insurance: Document fee: Are there any other fees?

6 Shop for a Mortgage Loan Decide on a loan product and a lender Loan application meeting with the lender Loan Denied Loan Pre-approval Resolve problem: Establish credit Rebuild credit Establish work history Sign and return Loan Commitment letter Workshop #3 Shop for real estate agent Find a house Sign contract Notify lender

7 under the Real Estate Settlement Procedures Act You have the right to Shop & compare Know the total cost of the loan Get a Good Faith Estimate of the loan & fees before paying any fees Know what fees are not refundable

8 under the Real Estate Settlement Procedures Act You have the right to Ask questions about any charges or loan terms you don t understand. A credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any of your income is from public assistance. Why?!! Know the reason if your loan application was not accepted. Ask for HUD settlement costs booklet Buying Your Home BUYING YOUR HOME Settlement Costs and Helpful Information U.S. Department of Housing and Ur Office of Housing - Federal Housin June 1997 HUD

9 under the Real Estate Settlement Procedures Act, If you are applying for a loan through a mortgage broker... You have the right to: Ask the mortgage broker to explain exactly what the mortgage broker would do for you. Know how much the mortgage broker is getting paid by you and the lender for the loan. Loan Application The Pay Me List

10 Documents that lenders want from you when applying for a home mortgage... Personal Identification Documents Work History last 24 months And where is money this from??? Proof of Other Income

11 Rent History last 24 months Federal Income Tax Returns for the last 2 years (including W-2 s) If you have not been in the US for more than 1 year.. Get a Tax Summary Document of the last year from IRS that shows No Tax Filed OR Show documents of the date of your arrival to the US

12 Last 3 Statements of All Your Bank Accounts Credit Report and Credit Score

13 Homework Begin shopping for a mortgage loan by contacting one of the lenders from the list below and ask them the questions on the attached form Comparing Mortgage Loans.

14 Lender institution Coalition of Lenders These are lender approved by the International Institute IDA Program American Eagle Credit Union Delmar Financial Company Southern Commercial Bank Person to contact Telephone number Danielle Bond Bruno Mruckovski Jasna Murckovski National City John Blair US Bank Walter Daniels Lenders are in alphabetical order by financial institution name

15 Lender 1 Lender 2 Lender 3 Name of Bank/Mortgage Company: Address: Who am I talking to: Phone number: 1. Do you have any mortgage loans especially for.. Immigrants, non-resident aliens, etc.? First time home buyers? Community reinvestment Act CRA? For those loans, what is the interest rate? Is the interest fixed or adjustable? How many years is the loan? Does this loan require "private mortgage insurance" (PMI)? How much? Do you keep these loans or can they be sold? Is here a penalty if I pay off the loan early?

16 2. If I am not ready to buy now, how much will it cost to "lock-in" this interest rate? 3. Can you estimate the "annual percentage rate" (APR)? 4. What day of the month are mortgage payments due? 5. Please give me an estimate of your fees for: Application Credit report: Appraisal: Survey: Title insurance: Document fee: Are there any other fees?

17 Loan Application Documents Your lender will tell you what documents you need to bring to your loan application appointment. You will need to bring documents for the applicant and each co-applicant. Here is a list of the documents that are usually required: Social Security card, alien status card if non resident alien, and driver s license or other photo identification Name, address, and phone number, and starting and ending dates for every place you have worked over the last 24 months. (Write a letter of explanation for any gaps in employment.) Pay stubs for the last 1-2 months for each job you are working Proof of any other income you have (such as child support, etc.) Federal income tax returns for the last 2 years, including W-2s (If you did not file taxes for one or both years, obtain a Tax Summary from the Internal Revenue Service (IRS) Name, address, and phone number for every landlord you have had for the last 24 months. Last 3 statements for any bank account(s) you have For each creditor you are paying, list the name and address of the creditor, type of account, balance due, and monthly payment amount Take originals of these documents. Lender will make copies. Do not leave your originals there. Always keep your originals in a safe place

18 I need I Want

19 I need I Want

20 Near Bus Stops? Near stores? Near Schools? Near Work? Near Worship Place? Near Friends & family?

21 What Does A Real Estate Agent Do? Helps you find houses that meet your needs. Gets you in to look at those houses Writes the sales contract Negotiates with the seller s agent May refer you to inspectors and title company Accompanies you at the closing Who pays the real estate agent? Their commission comes out of the sales price of the house. Buyers do not pay them!

22 Hello, My name is Mr. Best Salesman. I am a: Seller s Agent? Listing Agent? Buyer s Agent? Dual Agent? And the best one for me is..?

23 Condos and Mobile Homes We Do not recommend people buy Mobile Homes or Condos Condos: In Addition to paying for your mortgage, you pay for several other fees. There are rules for the Condo Complex you must follow (for instance no pets allowed in your condo). You pay for fees for the maintenance of the property, and for other things your building might have, like a pool or gym. Mobile Homes: We do not recommend mobile homes, because like cars they lose their value over time. If you buy a mobile home today for $20,000, in one year it will be worth about $15,000. Houses gain value over time. If you buy a home today for $100,000, in 10 years it may be worth $125,000

24 The bricks Chimney Foundation Mortar between the bricks Walk around the outside and take a good look at Roof Porch Corners of the building Doors & windows

25 Look for water and plumbing damages Stains, puddles and bad smell!

26 Turn on water and flush toilets. Look for leaks and water pressure Turn on lights and several appliances at the same time to see how is the electrical service working Turn on the heat and the air conditioning to see how they work

27 What to look for in the Seller s Disclosure? Has the Seller lived in the property over the last 12 months? Have any systems been replaced by the seller? How old is the roof? Did the seller have any pets? Termites! Bugs that eat wood in the home Hazardous Substances (chemicals, poisons, etc.) Basement & crawl space Sewer leaks