1. HOME MORTGAGE PROCESS: QUALIFICATION AND ORIGINATION Angelica L. Smith Spring 2011

2. Agenda  Definition of Home Mortgage  Key Players in Home Mortgage Process  Home Mortgage Process  Qualification Requirements  Tips  Summary Quiz

3. What is a mortgage? Mortgage – is a pledge of property to secure payment of debt. Types of real estate properties:  Singe-family residential  Commercial properties

4. Key Players in Home Mortgage Process BuyerSellerReal Estate Agent Title Insurer/Title Company AppraiserMortgage Lender Underwriter Escrow Agent

5. Home Mortgage Process Closing and Funding Underwriting and Approval Document Review Application Pre-qualification

6. Pre-qualification vs. Pre-approval  Initial review  Lender gives an estimate of loan amount borrower may qualify  NO cost  Sample Sample  In-depth review  Lender gives a specific amount the borrower is approved  Application fee is charge Pre-qualification Pre-approval

7. Mortgage Application Checklist  SSN and DOB  Income Verification  Tax Information  Employer information  Bank Information  Credit Information  Self-Employment Information  In-school/Student Information  Divorce or Separation Information  A copy of gift letter

8. Qualification Requirements  Credit Score  Debt-to-Income Ratio  Down Payment  Cash Reserves

9. Two Primary Underwriting Standards Payment-to-income – the ratio of monthly payments to monthly income. Loan-to-Value – the ratio of the amount of the loan to the appraised value of the property.

10. Closing Costs  Origination Fee  Appraisal Fee  Credit Report  Tax Service Fee  Processing Fee  Flood Certification  Escrow Fee

11. Closing Costs  Title Search  Title Insurance  Private Mortgage Insurance  Survey Fee  HUD-1 Settlement Statement HUD-1 Settlement Statement

12. Why home mortgage process stop?  Rejection of mortgage loan  Buyer’s Remorse  Low Appraisal  Inspection Report reveals defects  Contract is contingent upon selling

13. Tips when buying a house  Don’t buy if you can’t stay put  Start by shoring up your credit  Aim for a home you can really afford  Buy in a district with good schools  Get professional help  Choose carefully between points and rate  Before house hunting, get pre-approved  Do your homework before bidding  Hire a home inspector

14. Quiz 1. As long as you can afford it, buying a home is always a smart idea.  True  False 2. What's the most important factor in choosing a home?  The view  The amount of acreage in the lot  The location  The quality of the kitchen

15. Quiz Continuation 3. Most real estate agents represent the...  Seller  Buyer 4. Once you decide that you want to buy a home, what's the first thing you should do?  Get an agent  Look at homes  Check your credit record

16. Quiz Continuation 5. When you choose the location of a home, what single factor is traditionally likely to help most in maintaining, or even boosting, the resale value when it comes time to sell?  How close it is to a large medical center  How close it is to a big office district  Whether it is in a good school district  Whether the property taxes are low

17. Sources  Wikipedia  Freddie Mac Freddie Mac  Personal Dividends Personal Dividends  Internet Mortgage Group Internet Mortgage Group  For Sale By Owner.com For Sale By Owner.com  CNN Money

18. QUESTIONS? THANK YOU FOR LISTENING!