CITY INSIGHT HOUSTON   •   NOV 26, 2018

• A loan application is like a puzzle. 
• You must have all pieces to receive

“Loan Approval.”

Why pre-qualify?

• Identify the sales price range

• Make sure buyer is comfortable with financing numbers and terms (monthly payment, down payment etc.)

• Don’t waste your time & gas! Make sure you are working with a qualified buyer!

Pre-Qualification

• A pre-qualification is not an “Approval” – it is stating that based on a credit review and the borrowers stated income and assets  they qualify within the acceptable guidelines for a mortgage.

• The borrowers application is run through an automated underwriting system.
• It is subject to all information being verified and documented.

Conditional Qualification

• Conditional Qualification is based on an automated underwriting system and a preliminary review of the borrowers credit, asset/income documentation.

Benefits of TBD approval

• Your borrower’s income and credit are reviewed before they find a property

• This is the strongest and best method for a buyer to know and be confident in what they can afford

• The buyers are fully underwritten for credit and income and given a hard approval for their maximum monthly mortgage payment.

• Your Borrower can make an offer on a home with a Conditional Approval letter not just a Pre-Qual letter, making their offer closest to a ‘cash’ offer.

• Faster Closings once property is obtained

DOWN PAYMENTS

• • JUMBO – Minimum 700 credit score
    • Loan amount $453,101
    • Down payment starts at 5% subject to credit scores and guidelines

• • CONVENTIONAL –   Minimum 620 Credit score
    • Max loan amount $453,100

• • • PRIMARY RESIDENCE
      • • 3% for first time homebuyers  (certain guidelines apply)
        • 5% or more for borrowers that have previous owned a home

• • SECOND HOMES: 10% down

• • INVESTMENT: 20%  down
  • Anything less than 20% down will have PMI included in the payments

DOWN PAYMENTS

• • FHA –  Minimum 550 Credit score – Loan limits can vary by county
    • *550-579 credit score 10% down payment minimum required
    • *580+ credit score  3.5% down payment minimum required
    • PRIMARY RESIDENCE ONLY
      • 0% down  (certain restrictions apply)
        • 3.5% down
        • Mortgage insurance remains for the life of the loan
  • VA  – Minimum 580 Credit score
    • • • PRIMARY RESIDENCE ONLY
        • 0% down
        • No mortgage insurance

Concessions

• • CONVENTIONAL – 
  • • Less than 10% down payment: 3%

• • • More than 10% down payment: 6%

• • • Investment Properties: 2%
  • FHA    6%

• • VA 4%
• Concessions max include contributions from all parties: seller, realtor and lender

• Owners title policy is not included in the concessions

Processing

• File is submitted to the Jr. Processor  who performs any necessary verifications needed i.e. verification of employment, tax transcripts etc.
• File is then moved to the Processor

• The loan processor reviews all the documents for accuracy to confirm the information provided is acceptable for underwriting.
• The loan processor then updates the automated approval and submits the loan file to the underwriter for validation.

Loan Approval

• Underwriting will review the file and the submitted documentation. If an underwriter feels additional information is needed, they can approve the loan subject to additional information usually referred to as “Conditions.”
  • This is usually referred to as a “Conditional Approval.”

• The processor and loan officer will work together to gather the requested “conditions”.
• Your loan is now fully approved and waiting now for contract and appraisal.

Executed Contract

• The borrowers find their dream home and now have an executed contract.
• Once I have received the contract, I will update the loan disclosures with the contract information to prepare for submission back to the underwriter with any outstanding conditions and wait for appraisal.

Inspection and Appraisal

• Once we hear the inspection report is back and there are no major issues with the house, we order the appraisal.
  • We wait to order the appraisal until after the inspection is complete because the borrower has to pay for the appraisal in advance. Therefore, we don’t want to charge the borrower for the appraisal if they aren’t moving forward with that particular property.
  • The appraisal fee is the only up-front cost the borrower has to pay
• Appraisal Turn Times:
  • Normal – 5-7 days
  • Rush – 2 to 3 days (additional cost apply)
  • VA – 10 business days (No rushes allowed)

Clear to Close

• The processor will turn in the requested conditions back to the underwriter. The underwriter will then issue a “Clear to Close” provided all conditions comply and nothing else is needed.
• Once a file is clear to close, the file is turned into our closing department.

Closing Department

• The closing department will assign the file to a CD specialist to who will work with the title company to make sure all fees are correct.  The CD must be sent out to the borrower 3 days before closing.  There are no exceptions to this. Once the final CD is approved, the closer will email the closing documents to title and the wire is ordered. All parties go to closing, sign their documents and the loan funds.