Up front:

- Down payment
o 10,000
- Closing costs
o 2-4% of purchase price
 6,600 – 12,000
- Out of pocket
o Home inspection
 $400-500

Lenders:

1) Mortgage broker
2) Local bank or credit union
3) Big/online lender

Consumerfinance.gov (Cfpb rate checker )

1) Credit score of 790 – Rate <6.9%

2) Credit score of 697 – Rate 7.375%

Getting pre-approved

1) Loan type
2) Max purchase price
3) Interest rate
4) Down payment
5) Lender costs
6) Estimated costs (taxes, title, insurance, appraisal)

Impt Documents:

- 30 days of paystubs
- 2 years W2s or 1099s
- 2 years tax returns
- 2 months bank statements
- Driver license
 1) Application
2) Credit pull – 45 day window where you can have mortgage credit pulled unlimited amount of
times (only changes 0 to 5 points)
3) Send documents
4) Receive full quote (rate, monthly payment, and all costs)
5) Receive pre-approval letter

Compare Loan offers

- Ask each lender for a TBD Loan estimate

o Easier to compare
o https://www.consumerfinance.gov/owning-a-home/loan-estimate/
o Prepayment penalty or Balloon apyment – ideally NO
o Estimated cash to close: bottom line figure (cashier’s check)
- Closing costs details
o Page 2 Section A: changes with lenders

Deciding

- Low cost and gut feeling

DON’TS

- Don’t make major purchases – especially new credit

- Don’t change/quit your job
- Move large amounts of money in and out of accounts
- Pay off debts or collections
- Make late payments

Writing an Offer

- You can negotiate what you want (more than price!)

o How long is the contract, how quickly you want to close, is seller can provide any credit
toward closing costs, inspection periods, can we ask for repairs, personal items
o Seller can accept or counter your offer
o If accepted the contract becomes binding and is the map of the transaction
- Write an offer that helps you win.
 - Ask agent how you can make your offer more competitive.
- Consider a compliant offer letter (details about the home itself).
- Ask your lender to call the listing agent (can help show that financing will not fall through).

Getting a Home Inspection

- Certified home inspector examines the home to identify any issues to bring to attention
o Will produce a report that will make it feel like “the sky is falling”
- Receive inspection report
o Look for big issues (roof problems for example)
- Your contract will determine if/when you can negotiate repairs to be fixed by the seller
- Buyers can back out, request repairs/concessions/renegotiate terms

Underwriting process

- Lender will take the pre-approval and work on finalizing a full approval
- They want to make sure you can pay back the loan by examining and documenting risk
- You may talk to your loan officer or a loan processor
- Conditional approval
o Might need evidence of home owner’s insurance
o Most recent paystub
o HR contact for verification of employment

Insurance

- At this tage, you’ll want to get homeowner’s insurance to cover: fire, natural disaster, etc.
- Can shop for insurance coverage (e.g. current car insurance company)
- Usually is included monthly in payment
- First full year of homeowner’s insurance is paid for upfront

Lender will do an appraisal of the home’s value

- Mainly for and ordered by the lender

- Ideally, the appraisal value will be at or above the purchase price
- Lender uses lesser of purchase price or appraised value (for the loan amount)
o If appraisal value is lower than purchase price, can get a chance to renegotiate
- Appraisal inspection is scheduled and report is sent to buyer

Just before closing

 - Closing Disclosure (final version of loan estimate)
- Final walkthrough 24 hours before
- Review closing disclosure and compare it to loan estimate

At closing

- Closing table is schule

- Review all documents/ask questions
- Get copy of all closing docs

First payment and beyond

- 1st payment is usually due in over 30 days

- P&I payment won’t change if fixed loan
- Pay attention to escrow account (Taxes and insurance)