Home Buyer Self Pre-Qualification Workbook

Transcription

1 Home Buyer Self Pre-Qualification Workbook Bethel Community Development Corporation Bethel Community Development Corporation 1525 Michigan Avenue Buffalo, NY (716) , ext 225 Fax: (716)

2 1525 Michigan Avenue Buffalo, NY (716) , ext 225 Fax: (716) As of the interest rate is at. Confidential Information 2

3 Introduction Buying a home is one of the most exciting times in a person s life. It can also be one of the most frustrating because of the number of financial questions that need to be answered and all the papers that have to be reviewed and signed. Lenders ask lots of financial questions in order to get a clear financial picture of the person seeking a loan. The lender must be sure that the person has the income to afford the loan and will be responsible in making the mortgage payments on time. This workbook is designed to help you answer questions about your current financial situation including your household income, assets and bills and help you determine if you are ready to buy a home and can qualify for a mortgage. The form is divided into separate sections on income, assets, credit history, alternative credit, shelter cost and summary. We have included a separate section for you as the primary borrower and a section for your spouse or co-borrower. Please answer each section as completely as possible. The staff of Bethel Community Development Corporation is available to help you with completing this form so do not hesitate to ask. Congratulations for taking the first step toward buying a home. FILL IN YOUR NAME AS THE BORROWER: Name: Address: Phone: Best Time To Call: City, State & Zip code: Marital Status: Married Divorced Never Married Widower Age: Present Employer: Job Title: NAME OF SPOUSE OR CO-BORROWER: How Long: Name: Address: Phone: Best Time To Call: City, State & Zip code: Marital Status: Married Divorced Never Married Widower Age: Present Employer: Job Title: How Long: Confidential Information 3

4 Income Anyone lending you a large sum of money will need to understand how you are going to pay it back. That means understanding your past, present, and future income. Read the entire section before you fill in any numbers, since you may not need to place figures on every line. Earned Income. Earned income is defined as your annual salary, or total yearly wages before taxes are taken out. If you are a salesperson or waitress or you earn tips or commission, include them just like on your annual income tax form. If you own your own small business (Clothing Store, Barber Shop, Consultant Company, etc.), enter your earned income on line #2 and #3. INCOME SOURCE Borrower (Annual) Co-borrower (Annual) 1. Earned Income Including Wages, Salary, Commissions, Bonuses And Tips From All Jobs Before Any Payroll Deductions. 1a. Is overtime or Commission included in line #1? Yes or No Yes or No 2. If You Own And Operate Your Own Business, List Your Yearly Self-Employment Net Income Before Business Expenses. 3. If You Own And Operate Your Own Business, List Your Yearly Self-Employment Net Income After Business Expenses. Additional Income. In addition to jobs, some families receive other income, such as Social Security, Alimony or Child Support. Often, that income can be used when qualifying to purchase a home. If you receive income from one of the sources listed below, please include it in the workbook. INCOME SOURCE 4. Social Security, Social Security Income (SSI), Aid to Families with Dependent Children (AFDC), Or Public Assistance. 5. Payments From: Pension Plans, Retirement Plan, Survivor Or Disability Pensions. List Amount Before Medicare Deductions. 6. Other Sources Of Income, which may be Veterans Administration (VA) Payments, Or Armed Forces Transfer Payments. 7. Payments received for the care of foster children. 8. Earned Income tax credit. 9. Any Other Income. *TOTAL INCOME RECEIVED (lines 1-9): Borrower (Annual) Co-borrower (Annual) *In the examples on pages 8 and 9, we will assume a combined income of $48,200. Based on the income information provided above the total income will vary per household. Confidential Information 4

5 Assets Anyone lending you a large sum of money will be interested in your collateral, that is what else you own and could use to cover your debts if you were to lose your income for some reason, for example, if you lost your job. Did you or someone in your family file federal or state income taxes last year (2002)? If a refund was received indicate the amount? How much do you have saved to purchase a home? Assets. Examples of assets you could use as collateral include Stocks, Bonds, Savings and Retirement Accounts (like IRA s), Land, Car(s), or other investments. I. Cash Accounts: If you have accounts at more than one institution, for example a bank account and credit union account at church or work identify them separately. BORROWER: SPOUSE OR CO-BORROWER: Accounts Accounts Total: Total: II. Automobiles: If you own a vehicle(s) please list below. BORROWER: SPOUSE OR CO-BORROWER Motor Vehicle Make: Year: Motor Vehicle Make: Year: Motor Vehicle Motor Vehicle Make: Year: Make: Year: Confidential Information 5

6 III. Real Estate: If you currently own property please answer the questions below. (a). (b). If you currently own your own home, in what year was it purchased? What was the purchase price? Were you the original purchaser, or did you inherit the property from a relative? Original Buyer Inheritor What would you estimate this house would sell for today? $ If you own any rental property, or if your present home is a two-family or multi-family home, please list your annual rental income and the estimated sale value of the property. BORROWER: Number of Rental Apartments Number of Rental Apartments Market Value: Rental Income Market Value: Rental Income SPOUSE OR CO-BORROWER Number of Market Value: Rental Apartments Rental Income Number of Rental Apartments Market Value: Rental Income IV. Are there any other valuable assets that can be listed as collateral? Identify them below. Valuable assets can include jewelry, antiques or artwork. BORROWER: SPOUSE OR CO-BORROWER Asset: Value: Asset: Value: Asset: Value: Asset: Value: Asset: Value: Asset: Value: Confidential Information 6

7 Credit History Anyone lending you a large sum of money is entitled to know if you pay your debts on time. Liabilities Have you filed for Bankruptcy within the past seven (7) years? Discharge Date: In this table list any credit card debt, personal or education loans, or any other credit obligations. Please include those in which you may be a cosigner. These items can be listed jointly, combining Borrower and Co-Borrower debts. Credit Cards: Name & Company Monthly Payment Unpaid Balance Dept Store: Student Loans:: Child Support, Alimony or Separate Maintenance that you pay: Total Debts: Confidential Information 7

8 Alternative Credit For those families that are young or have never had many credit accounts, Lender s will sometimes allow families to use their good payment records with certain companies to establish Credit Worthiness. Alternative forms of credit include utility payments, rent receipts, etc.. Please include such payments below. Car Insurance Gas Electric Telephone Rent Cable Cell Phone Pager Rent to Own Are the following paid on time? If not on time, are they paid more than two months late? Computing Your Debt to Income Ratio If you have very little debt and a relatively good income, you can easily understand that a lender would welcome you as a customer. At the same time, it is easy to understand why lenders are reluctant to lend money to people with very low incomes and a lot of debts. The relationship between debt and income can be computed easily; mortgage lenders do it all the time. A good practice is that your total debts should not exceed Ten Percent of your total income. To see how you measure up, divide your Total Debt Payments (page 8 bottom line) by your Total Income (page 4, bottom line). For example: Total Debt $4,362* = Debt to Income Ratio or Total Income 48,200** =.09 or 9% *We made up this number for the sake of this example. Your actual debt will vary based on the information provide on page 7. **We made up this number for the sake of this example. See Total Income Chart on Page 4. If you have questions about this section, or require assistance, please call the Staff at Bethel CDC. Confidential Information 8

9 How Much Can I Afford? Mortgage Estimation. You can use this chart to find out how large a mortgage you may qualify for based on your annual income and interest rates currently being quoted for 30-year mortgages. The chart is based on the assumption that your fixed monthly debt does not exceed 10% of your monthly income. Your fixed monthly debt is considered as credit card payments, car loans, student or personal loans, child support, etc. Example: Assume your joint annual income is approximately $48,200. In the chart below, read across the top line and you fall between $45,000 & $50,000, but closer to $50,000. Then read downwards in the left-hand column, and select an interest rate, as suggested by your Bethel CDC Counselor. They will probably have placed this rate on the inside cover of this form or you may telephone Bethel CDC at , ext 225. In the case of a household with an income of $48,200 at an interest rate of 6.5%, the maximum purchase price of a home you could afford would be a little under$125,250, depending upon your other assets & liabilities. Interest Rate (%) Annual Income ($) 35,000 40,000 45,000 50,000 55,000 60,000 65, , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,276 95, , , , , , ,237 90, , , , , , ,506 86,312 97, , , , ,258 Now fill out the rest of the form. Based on your joint annual income, use the chart above to determine the mortgage amount you could afford. Confidential Information 9

10 Shelter Costs Shelter Costs. Shelter costs are costs you are paying for your current mortgage or rent and utilities. These costs will give you an idea of the payments you will be making as a new homeowner in the Cold Spring Revival District. Mortgage Payment Calculation. The amount of your mortgage payment will depend on how much you borrow, the term (repayment period) of the loan, and the interest rate. If you know how much you need to borrow (the purchase price minus your down payment and/or purchase subsidies) and what your rate will be, you can use this chart to find what your monthly principal and interest payment will be i f you get a standard 30-year fixed rate mortgage. i Loan Amount ($) 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 80, , , , , , , This chart is based on a mortgage amount that will include the principle sum borrowed, interest, taxes, and insurance. When considering your mortgage payment assume that 30% of your mortgage payment is for taxes and insurance. i. National Foundations to Credit Counseling, Keys to Home Ownership, 2001, pg 10. Example: You have worked through this workbook and pre-qualified yourself for a loan amount of $120,000, with an interest rate of 5.5%. Follow the chart above to select the loan amount of $120,000 in the far left column. Then follow the row of interest rates of 5.5%. Your mortgage payment (principle, interest, taxes and insurance) will be approximately $981 per month. Enter the number you have found for your estimated Mortgage Payment in Shelter Cost table below. Please complete the table below. The instructions are listed for sections A-D. Please remember that your gas, electric and water cost depends on the usage and appliances you have in your home. A. Mortgage (P & I) Or Rent Current Estimate Instructions A. Enter your current mortgage or rent payments. The estimate mortgage payment (Principal, Interest, Taxes and Insurance) will be provided from the table above. B. Gas B. Enter your current gas payment, if applicable. The estimate gas payment is based on the Niagara Mohawk Energy Guide. C. Electric C. Enter your current electric payment if applicable. The estimate electric payment is based on Niagara Mohawk Energy Guide. D. Water: $11.26 p/cubic ft. Sewer: $48.30 p/4 thousand Cubic ft. Total: D. Enter your current water bill payment, if applicable. Water estimates is based on usage per cubic ft. and calculated quarterly (March, June, September and December). Confidential Information 10

11 Thank you for taking the time to complete this workbook. Bethel CDC Staff is available to discuss the information you have provided in this workbook. Please contact us (716) , ext. 221, Monday Friday, 9:00 am 4:00pm. Please sign the Release Authorization Section so that Bethel CDC Staff may be able to discuss the information you provide with a Financial Institution and/or Counseling Agency. Please complete the Credit Authorization and Authorization to Release Credit if you are requesting a credit report as part of your pre-qualification process. Please be advised that a Counseling Agency will charge $15.00 to process a credit report Release Authorization I/We & authorize Bethel Community Development Corporation to release the information provided in the Pre-Qualification Workbook to a Financial Institution to determine my eligibility for a Home Mortgage. I understand that information provided is for homeownership counseling for the Cold Spring Revitalization District. This information will be held in confidence. Borrower Signature Date Co-Borrower Signature Date Credit Authorization I/We authorize a Financial Institution or Counseling Agency to secure a credit report on my/our behalf. I/We understand that this will be done for the sole purpose of counseling to assist us in purchasing property. This credit report will be held in confidence. Full Name (Print): Address: City/State/Zipcode: Phone: Social Security Number: Borrower Co-Borrower Authorization to Release Credit Information By signing this form I/We consent to staff members of the above-named entities sharing credit and related information as part of the Bethel CDC Homeownership Pre-Qualification Process. Borrower Signature Date Co-Borrower Signature Date Confidential Information 11

12 Bethel CDC 1525 Michigan Avenue Buffalo, NY Phone: (716) , ext 221 Fax: (716) Let Bethel Community Development Corporation Help You to Get Your New Home Confidential Information 12