BUYING AND SELLING: A guide to the home lending process 210 SOUTH MAIN STREET, 1st Floor MIDDLETOWN, CT 06457 Phone: 860-788-7237 Fax: 203-413-6240 NMLS#: 117273 www.northeast-mortgage.com

NorthEast Financial: Your source for home financing NorthEast Financial is Connecticut’s Premier Mortgage Company. We work very hard to get the best mortgage product possible for our clients The staff at NorthEast Financial uses their years of experience and knowledge of the mortgage industry to assist in the diverse needs of our clients. At NorthEast Financial, we pride ourselves on fully comprehending the plethora of mortgage programs available to the public. We are consistently monitoring mortgage rates and loan program trends, including the effects of the bond markets and secondary mortgage markets in order to close loans in the shortest time and lowest rates possible. Our mission, at NorthEast Financial, is to use our vast experience to not only get you the best rate possible but to also give you great customer service! We don’t just want your business we want to be your long term mortgage professionals. ABOUT NORTHEAST

Learn From Available Resources: Licensed Loan Officer Your licensed Loan Officer is an expert in mortgage lending. Unlike a registered Loan Officer, a licensed Loan Officer has passed national and state exams, ensuring they are equipped to guide and advise. You can rely on your licensed Loan Officer to: Answer all of your mortgage, loan process, lending and home-buying questions. Determine what you qualify for, and keep the monthly payment within your budget. Recommend options based on your unique needs, and future plans. Real Estate Agent Your real estate agent is an expert in the local real estate market, and will be your advisor for your home search. You can rely on your Real Estate agent to: Answer all of your home search, market comparison, and sales prices negotiation questions. Listen to your needs to find you a great need within your price range. Provide you with market-specific information to aid in your decision-making process. Real Estate Attorney Your Real Estate Attorney is an expert in closing your real estate transactions, and will be your advisor on tying all the loose ends. You can rely on your Real Estate Attorney to: Answer all your legal closing questions. Listen to your needs and protect you from any unforeseen liabilities attached to the property.

Renting vs Buying Reasons to Buy: You can usually own a home for a similar monthly payment vs. renting something Real Estate typically builds equity for a good return on investment Potential tax deductions for loan interest Purchasing a property usually affords you more living space You can customize and upgrade your property as you need and want Potential Reasons to Rent: You do not intend to live in the region for more than a year You are highly uncertain about the security of your employment Allows you to adjust to loss of employment by transitioning to a lower payment, thereby minimizing monthly costs * ESTIMATE the cost of buying a home vs. renting something (you can base this estimation on current interest rates and the present real estate prices) Before you make any decision, consult with a Mortgage Lender to help you calculate potential mortgage payments and contact a Real Estate agent for current real estate market details.

PRE-APPROVAL LETTER Your Loan Officer will begin the process by reviewing your credit, income, and monthly debt payments to get an idea of your pre-approval loan amount. Once you have been pre-approved, you will receive a pre-approval letter from NorthEast Financial. Top Reasons to Get Pre-Approved: Identifies the loan programs you qualify for. With a wide variety of loan programs available it’s important to know which types you qualify for and which will best suit your needs. Determines how much your loan amount will be so you can shop within your range and helps prevent disappointments if you do not qualify for as much as you hoped. Seller’s may not accept your offer without a pre-approval letter providing you qualify to purchase the home. You are in a better position to negotiate a lower purchase price, and/or a seller’s concession to help pay for closing costs.

Loan Options: Everyone’s situation is different, there is no one-size-fits-all mortgage. You can work with your dedicated Loan Officer to figure out which loan program best suits your needs, goals and qualifying factors. Here is a brief overview of the most popular loan programs: USDA LOAN – 100% FINANCING 640 Min. FICO / DTI 37% I 45% / Property must be in an “eligible” area / Requires NO Money Down (see page 7) FHA LOAN – LOW MONEY DOWN 620 Min. FICO / DTI 43% I 50% / FICO < 620 DTI 45% / Min 3.5% (see page 8) CONVENTIONAL LOAN – LOW MONEY DOWN 660 Min. FICO / DTI 37% I 45% / Loan Amount > $417,000 / 5% Down Payment = No PMI (see page 10) VA LOAN – 100% FINANCING FOR MILITARY VETERANS 640 Min. FICO / DTI 31% I 43% / Must Obtain Certificate of Eligibility / Requires NO Money Down (see page 11) CHFA – 100% FINANCING 640 Min. FICO / DTI 40% I 50% / 660 Min. w/ Down Payment Assistance / 100% LTV I 105% CLTV DTI 33% I 43% / Finance Closing Costs Without Seller Concession (see page 12)

USDA (United States Department of Agriculture) The USDA provides a 100% financing option for homebuyers. USDA interest rates are typically lower then conventional mortgage rates, credit requirements are more lenient, and you don’t have to be a first-time home-buyer to qualify. Not all counties within Connecticut are eligible for a USDA loan.

FHA (Federal Housing Administration) The FHA insures loans so you will only need to put 3.5% of the purchase price as a down payment. Just like USDA loans, FHA interest rates are typically lower than Conventional mortgage rates, and credit requirements are more lenient. You can use an FHA Loan to purchase a home anywhere, with max loan amount amounts varying by each county. However, you don’t have to be a first-time homebuyer to qualify.

FHA 203K – For Home Improvements/Repairs The FHA 203K gives homebuyers the option to upgrade the home they wish to purchase. The costs of the upgrades/repairs will be included into the loan, so you do not have to pay for it out-of-pocket. This loan is especially popular for homebuyers wanting to upgrade kitchens, re-do bathrooms, or just want to add their own personal touch.

VA Loan (The Department of Veterans Affairs) A VA Loan, is a government- back program for military veterans. Veterans are not required to have money for a down payment, and there is no monthly mortgage insurance You are required to obtain your certificate of eligibility to take advantage of the 100% financing option.

CHFA (Connecticut Housing Finance Authority) CHFA funds loans for first-time homebuyers so they can finance the entire purchase price. You may even be able to finance your closing costs! Some restrictions may apply.

Conventional Loan Conventional loans no longer require you to put 20% to the purchase price as your down payment You now only need to put 5% of the purchase price as a down payment to take advantage of this incredible option. Rates are typically a little higher than some of the government-backed programs( FHA, USDA, VA), however the closing costs will be a little lower.

Make an Offer! When you find the home you like, work with your Real Estate Agent to make an offer based on what is right for you, what makes sense for the current demand in the real estate market, the condition of the home, recent sales of comparable homes in the area, and many other factor your Real Estate Agent Deems appropriate.

Avoid Becoming Under-qualified for Your Loan! DO NOT allow your credit report to be pulled. Inquiries can negatively affect credit scores. DO NOT start using your credit cards to make purchases that will increase your debt. ANY change in debt can have an adverse affect on the final mortgage. DO NOT open new credit cards or store accounts since these will add to your debt. DO NOT purchase a new car or take on a new loan or auto lease. DO NOT change jobs. If at all possible, avoid making any employment changes between making your mortgage application and closing on your home. DO NOT spend money in your savings or checking account without speaking with your Loan Officer. Your approval might be contingent upon having a certain amount of funds in your accounts. DO NOT close accounts unless instructed to do so by your Loan Officer. Closing credit card accounts, and/or paying off auto loans, may have a negative impact on your credit scores.

Completing the Mortgage Process: Loan Application – Once you and the seller have agreed to a purchase price and terms, all parties will sign a sales contract. You will then meet with your Loan Officer to sign all necessary loan documents and disclosures Loan Approval – There are three major steps that are being accomplished between getting pre-approved and closing on your new home with NorthEast Financial - Appraisal: An appraisal is necessary to be sure that you are paying fair market value for the home you are purchasing. - Title and Escrow: Your attorney will order these services and then forward to NorthEast Financial. - Underwriting – Each loan will be sent to an approved underwriter who reviews the application, supporting documentation, financial information, sales contract, appraisal and title to be sure all necessary criteria and regulations are met.

Document Checklist: Income: Most recent pay-stubs covering the last 30 days (for all borrowers) Last 2 years W-2 income statements (for all borrowers) Last 2 years signed tax returns (for all borrowers) If you receive Social Security, Disability, Pension, or any other form of fixed income, please provide a copy of the award letter(s) If self-employed or part owner in your company, please provide last 2 years business tax returns as well Proof of alimony or child support income if it is needed for income qualification (Divorce Decree or Court Orders are considered proof) *If there are any life events on the horizon that may effect your income, assets, or employment, please be sure to notify your Loan Officer. Providing this information will help us provide you with the exceptional customer service you deserve. Assets: 2 months of the most recent checking and savings bank statements (all pages) Most recent asset statements for 401k, IRA, stocks, and any other liquid assets Copy of any good faith deposit checks made to the seller Property: If you have already found a home you are interested in buying, please bring in: Real Estate Agent’s Contact information *This information will provide us with the means to contact your agent about the property and receive the fully executed purchase and sales agreement (if you have one) and look into the annual property tax figures

Congratulation on Your New Home! After your loan has reached final approval, you will be contacted to schedule a day, time, and place to close your loan. (your purchase/sales agreement may already have a closing date identified) What you should bring to closing – Driver’s license or government issued identification Certified check or cashier’s check for your down payment the Loan Officer or your Closing Agent will give you the exact amount about a day prior to closing After closing, meaning when all the documentation is signed, and the closing agent distributes money from the sale, and you will receive the keys to your new home. You are finally ready to move in.

At Northeast Financial (Connecticut’s Premiere Mortgage Company), we pride ourselves on helping you learn more about the process and are willing to work with you every step of the way. Call us today! 860-788-7237