ACCESS BROKERAGE, INCORPORATED

Our clients deserve the best!

QUICK SUMMARY OF MORTGAGE LOANS

Compliments of Jim Parker,

Exclusive Buyer Agent

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WHAT CAN/SHOULD YOU REALLY AFFORD?

A "shoot from the hip" response to this question should be 30% of your monthly gross income. You will hear about front end and back end ratios. Simply the front end ratio is the ratio of monthly mortgage payment to gross income.(Conventional loans require 28% or less.) The back end ratio is the monthly mortgage payment plus monthly auto loan, credit card, or other loan payment. (Conventional loans require 36% or less.) If neither ratio can be achieved, you may want to try FHA or VA type loans.

NOTE: Look for homes below your upper price range. If you find something less expensive that you like, you will be able to save money. It has been my experience that every $10,000 in home price means a difference in features of a home.

• Websites such as www.eloan.com or www.bankrate.com or www.lendingtree.com and there are several other websites.
• The HomeFinder section of the Sunday Atlanta Journal-Constitution for different types of loans and lenders
• You may even wish to ask friends/co-workers who recently closed on a home loan who they might recommend.
• Talk with your Buyer Agent for suggestions.

• TALK WITH A LENDER AND GET QUALIFIED/APPROVED FOR A LOAN

  You know your personal financial situation better than anyone else. However, unless you talk with a lender, you won't know the rates and terms of their real estate loans. After you talk with a lender, they can give you a document to prove to your agent and the Seller that you "are" qualified to purchase the property.

  The difference between "prequalifying" and "preapproval" could make a major difference in your negotiations process.

  • “Pre-qualification" is just an estimate that a lender makes based on information you furnish to them like income, expenses, and other factors. There are no written papers/documents furnished at this stage of the loan process. Nothing is verified at this time either. Being pre-qualified means that a lender has used a brief conversation to judge that you're a good loan candidate. It's no guarantee that you will be approved for the loan.

  • "Pre-approval" is more thorough. During the pre-approval stage, you complete an application ===Click here to see sample loan application=== that informs the lender about how much you make, how much you currently owe (loans and debt) and how much you've saved. Your credit report is reviewed and credit score is determined. The lender then can provide you with a letter stating that you've been pre-approved and for a certain loan amount.

  Generally, Agents and Sellers put more credibility into a pre-approval, since an agreement of sale that is presented to a seller with the pre-approval letter attached suggests that the potential buyer has a strong credit file.

  You should talk with at least three mortgage companies within a 30 day period without a major reduction in credit scoring. Ask about the types of loans that fit your situation.

  • Interview local lenders (i.e., your bank, credit union, friends'/family's institution, etc,.) and discuss with your Buyer Agent for reality check.
  • Share income, credit history, and personal information with Lender and Buyer Agent
  • Select one lender that offers solutions to your financing needs.
  • Work with your Buyer Agent to find a property and negotiate a contract
  • Sign documents at closing to take title of property and get owners title insurance.
  • The lender you make loan application with needs to furnish you a Good Faith Estimate (GFE) which itemizes number for you. See the last question in the list below to understand what information the GFE provides. Ask each lender for their "par" rate of interest. (This is the interest rate you would pay without paying discount points. Each discount point will cost $$$ to reduce your rate by about 0.125%. Divide monthly savings into cost of discount point(s) to determine payback period.)

  MORTGAGE CALCULATOR & RESOURCE WEBSITES

  Excellent Mortgage Calculator - Please note: Add 20% to payment for homeowner's insurance, property taxes, and mortgage insurance

  Internet Resources: Bank Rate ; E-Loan;Lending Tree

  WHAT DOES "CLOSING" MEAN AND WHAT HAPPENS AT CLOSING?

  The term "closing" simply means signing the final loan paperwork with an attorney and transfer of title to you. (i.e., Signing on the dotted line - on lots of forms). This "loan (home purchase) closing" process is where Buyer and Seller finally meet to transfer money, property ownership, and keys.

  The closing attorney places all the lender, attorney, Buyer and Seller related closing costs onto one two-page form (HUD-1 - see link above). The first page summarizes what the Buyer and Seller will pay or receive. The second page details closing costs, prepaids(homeowner's insurance & property taxes), etc., and the balances are transferred to the appropriate Buyer/Seller columns on the first page. ===Click here to review the HUD-1 Real Estate Settlement Statement that you will see with final numbers in the columns perhaps 24 hours prior to closing or at the loan closing in the attorney's office. IMPORTANT: Compare the numbers that the lender gives you with the Settlement Statement form with your Exclusive Buyer Agent to understand if "all" closing costs are accounted for and within reason for Georgia.===

  WORKSHEET OF QUESTIONS TO COMPARE LENDERS

  Before asking your first question, you may want to perform some calculations on your own to determine the monthly amount you plan to pay for a home and see if it fits within your budget. You may simply multiply your Gross Monthly Income by 30% as a guideline for average monthly payment. A more sophisticated worksheet is available from me. But it simply involves estimating monthly mortgage; utilities; and miscellaneous household expenses such as lawn care, furniture, draperies, and monthly home maintenance costs. Don't forget to add the costs to move including any early move out penalties from apartments, moving & truck rental expenses, home inspection, homeowner's insurance, and some other prepaid costs before closing.

  Better FICO scores may mean a no documentation loan;

  if you are a first time homebuyer, there may be special loans;

  interest only loans may work best in specific situations ===Click here to see my discussion on interest only loans===,etc;

  Think about what is important to you:

  Low monthly payment?

  Low or "NO" down payment?

  Low interest rate?

  ===Click here for for the "PRINTABLE PDF" version of the worksheet below. Lender Comparison Worksheet - use during discussions with lenders! ===

  This is not the complete list of questions that would fit each individual situation. Use it as a guideline. Add or change questions to fit your specific situation.

  QUESTION	LENDER #1	LENDER #2	LENDER #3	COMMENTS
  Lender Name	___________	___________	___________	___________
  Phone #	#	#	#	-
  Loan Program Names What type of loan(s) best fit my specific buying situation? What are your specific guidelines to qualify for these loans?(FICO scores, income level, employment, assets, liabilities, etc.) Please explain how each is better than the others.	-	-	-	-
  Loan term & Conditions 30 years 15 years 3, 5, or 7 year fixed and then adjustable thereafter. Are there any limits on seller contributions: Closing costs(e.g., limited to 3% of sales price)? Dollar limits for allowances for repairs? Other restrictions?	-	-	-	-
  Amount of down payment required for the specific program (Note: some programs offer NO money down programs) Do you offer 100% finance loans (i.e., NO-DOWN PAYMENT)? Do you have programs that DO NOT require closing costs? What are their pros and cons for me?	-	-	-	-
  Interest Rate: Note: Record rates for 15 year & 30 year loans; 80%1st Mortgage & 10-15% 2nd Mortgage; Adjustable Rate; Interest Only: 100%; FHA/VA; First-Time-Homebuyer loans; or Special Circumstance Loans. When will the rate be locked (i.e., guaranteed) and when will I get written notice (i.e., interest rate lock letter) that the rate is locked? How long can I lock my interest rate without penalty or payment - 30/60/90 days? What are the ADVANTAGES & DISADVANTAGES of locking now? How can I get a better interest rate?	-	-	-	-
  Cost of Discount Points: (Percentage of Loan to drop interest rate)How much do loan discount points cost? What is the payback period? (36 or fewer months is acceptable.)	-	-	-	-
  How can I eliminate Private Mortgage Insurance?(PMI or MIP on FHA Loan)Note: PMI on loans generated on or after 1-1-2007 is tax deductible, but only under certain circumstances. Does the loan have a monthly PMI charge? How much per month?	-	-	-	-
  Loan Prepayment Penalty on Any Program I like? Does the loan have a prepayment(i.e., paying your loan off early) penalty? If so, what are the costs and terms?	-	-	-	-
  Documentation: What documentation will you need from me to qualify for the loan?W-2's, Bank and Investment Statements, etc,.	-	-	-	-
  Length of time How long will you take to process my loan (from date of loan application to loan approval)?	-	-	-	-
  Using IRA Funds: What are the pros & cons to use IRA retirement funds for a down payment? Consult a CPA too. Note: IRS Publication #590 states the will permit up to $10,000 for down payment without penalty, but appropriate taxes are charged and you have a period of time to pay it back without penalty.	-	-	-	-
  Escrows/Prepaids: Will your lender allow the seller to pay prepaid escrows (i.e., property taxes and homeowner's insurance)in the agreed upon closing costs? Will the lender allow me to pay annual property taxes and homeowner's insurance directly?	-	-	-	-
  Property Survey: Does the lender require one? (If not & you want it, ask the closing attorney to order it. 2-3 weeks.)	-	-	-	-
  May I make additional payments toward principle without penalties?	-	-	-	-
  Lender costs: What are your fees: application, origination, appraisal, credit report, processing fees, and other charges? (Note: The lender you select will provide you a Good Faith Estimate of charges to back this information up.)	-	-	-	-
  Good Faith Estimate: When will you furnish a Good Faith Estimate(GFE)? The GFE should reflect five separate major financial factors: INTEREST RATE: The rate of your loan(This is normally after you lock your rate so they can prepare a good faith estimate using the appropriate interest rate); MONTHLY MORTGAGE PAYMENT: including principal, interest, taxes, PMI and hazard/homeowner's insurance; CLOSING COSTS ESTIMATE: of "required" and "optional" closing costs;Please click here for my discussion of "Closing Costs and What Affects interest rates" ESCROWS or PREPAID ESTIMATE: Prepaid hazard/homeowner's insurance and property taxes to establish escrows; and AMOUT REQUIRED AT CLOSING ESTIMATE: amount required at closing.	-	-	-	-
  Flood Certification: When can I get certification that property is not in a Flood Zone? (Note: Usually a fast turnaround on this.)	-	-	-	-

  TELL ME WHAT YOU ARE LOOKING FOR ON MY DESIRED FEATURES FORM

  SEND AN EMAIL WITH ANY QUESTIONS (Jim@abuyeragent.com)

  or just call me at 770-971-5418 (Office) or 770-265-7293 (Cell Phone)

  Go to these other helpful areas of www.abuyeragent.com
  My Services	Homebuyer Rights	"Free" HomeBuyer Tips	Myths About Exclusive Buyer Agents	FAQs
  Websites of Homes for Sale	Questions to ask Your Lender	Other Usefull Research Tools	Schools, Neighborhood, & General Information	Home Maintenance, Warranties, & Other Useful Information

  Return to Access Brokerage Website

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  "James E. Parker is a licensed Real Estate Broker in only the State of Georgia and holds his license with Access Brokerage, Incorporated, located at 1634 Rex Drive, Marietta, GA 30066 north of Atlanta in Cobb County, Georgia that serves Atlanta metro area that includes the counties surrounding Atlanta, Georgia."

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