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Do you need financing?

My Recommended Local Lenders
Luke Kaemingk Countrywide Home Loans Direct: 360-788-2410 Mobile: 360-223-3339 Fax: 360-756-8696 Email: Luke_Kaemingk@countrywide.com Web: www.Lukek.com	Gary Tice Fairhaven Mortgage Direct: 360-224-1402 Mobile: 360-224-1492 Fax: 360-714-1911 Email: gary@fairhavenmortgage.com  Web: www.garyticemortgage
Jack Santeford (in our office!) Mortgage Broker Associates  Direct: 425-422-9266 Toll-free: 1-888-723-3689 Mobile: 425-422-9266  Fax: 425-672-0662 Email: easymoney@seanet.com Web:	Jack DeCook Wells Fargo Home Mortgage  Direct: 360-676-9888 Toll-free: 1-877-434-0403 Mobile: 360-319-7119 Fax: 360-676-8871 Email: jack.decook@wellsfargo.com Web: www.wfhm.com/jack-decook

Some buyers plan to pay cash; that is, they will not use a mortgage to purchase their home. If that is your plan, skip the rest of this page.

If you have an on-going relationship with a lender, terrific! Call, email or write your lender, and ask her or him to get you pre-approved for the loan you will need to purchase your new home.

If you do not know a lender where you plan to move, feel free to contact the people listed on this page. Or, if you prefer to work with a lender from another financial institution, let me know and I will refer you to someone local at that bank or mortgage brokerage office.

Are you comfortable with the lender you choose? A first step in this process is interviewing each lending officer you contact. Getting a "feel" for the person is just as important as learning that you qualify for the money you  will use to buy the property you've always wanted. 

How Much Home Can You Afford?

Before you look at various homes, prepare the information your lender needs. He or she will tell you exactly what you can afford so that you do not spend time looking at “too much” home. Three key factors govern how much home you can afford: a) the down payment; b) your ability to qualify for a mortgage; and c) the closing costs associated with your transaction.

DOWN PAYMENT REQUIREMENTS: Most loans today require a down payment of between 3-5%, depending on the type and terms of the loan. Some require more. If you choose to put 20-25% down, you may qualify for specific fast-track programs and eliminate mortgage insurance. It is possible to obtain a 0 down loan; they simply cost more than loans where you agree to make a down payment at the time you close on the transaction.

Although in many cases, the more you put down the better, this is not always the case. A bigger down payment means smaller monthly payments and lower interest expense for as long as you remain with a mortgage. But if you  put your available funds to work for you so that they earn more than the interest rate on your loan, you could be dollars ahead with a smaller down payment. Also, a smaller down payment may allow you to keep your extra cash liquid and available for an emergency.

CLOSING COSTS:  In addition to the down payment on your home, you will be pay loan processing fees and other closing costs. These fees are paid in full at the time of the final settlement, unless you are able to include these in your financing. Typically, closing costs range between 2-5% of your loan. Be sure to ask your lender about these fees.

QUALIFYING FOR THE LOAN: Most lenders require that your monthly payment not exceed 25-30% of your gross monthly income. Your mortgage payment usually includes four items….the PITI (principal, interest, taxes, and insurance). If you are a first-time home buyer, you may not be aware of some of the tax advantages of home ownership.

When you buy a home, all interest on your mortgage is tax deductible; so is your property tax assessment. This tax advantage will effectively increase your take-home pay. Your total monthly PITI and all debts (from installments to revolving charge accounts) should not exceed 33-38% of your gross monthly income. This is a general rule of thumb; other factors may influence your ability to obtain a home loan. These factors include a) income, b) credit report, c) assets, and d) the property itself. Ask your lender for details regarding how these four factors combine to determine your ability to qualify for a mortgage.

 Obtaining Mortgage Financing

The information below is designed to help you move through the process of financing your home. If you have questions about the process, ask me. If I don’t know the answer, I will put you in touch with people who do.

Are you prequalified? If so, you have already accomplished the first step making you the kind of buyer most sellers want to do business with! If you are not, it is easily accomplished. Chat with a local lender. He or she will identify the maximum amount of mortgage you can carry. This information is helpful as we look at homes in search of that special one you want to buy. He or she will then tell you how you can become pre-approved.

Have you made formal application for your loan (become approved)? Meet with the loan officer to make application for financing. This appointment usually lasts about an hour. You will have plenty of time to ask questions and to review an estimate of all the costs involved in obtaining your loan. The lender will want to know several things about your financial situation. You can speed acceptance of your application if you promptly provide the following information:

1. The kind of loan you are seeking: FHA, VA, conventional? Something else?
2. For a stated income loan: a 2-year employment history, including salary; and if you are self-employed or are paid on commission, 2 years of complete tax returns, a P&L statement, and a balance sheet through the most recent quarter.
3. Bank information: all bank accounts with addresses, account #s, and balances.
4. Credit information: all credit and installment debts, account #s, balances, minimal payments.
5. Deposit: you may be asked to make a deposit toward the costs of the credit report, appraisal, and title report in order to obtain financing. When you talk about loan approval, ask about this fee.  

Have you signed a purchase and sale agreement? Once you and the seller have agreed to all terms and special features, you will arrive at a final sale price. With seller and buyer signatures on the dotted lines, you are on your way to owning that new home! 
 

Requested documentation often takes time to obtain. The following times are general. Each case is a bit different; to give you an idea so that you do not worry about when to expect notification that your loan has been approved, see below:

a. title report	3-5 days
b. credit report	1-2 weeks
c. mortgage ratings	2 weeks
d. verification of deposit	2 weeks
e. verification of employment	2 weeks
f. appraisal	1-2 weeks (conventional; 2-4 weeks (FHA/VA)

Sometimes additional information, such as a copy of a divorce decree, evidence of child support payments, credit explanation letters, gift letters, and other items are sought.

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