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Financing For First Time Home Buyers · Earn Your Leisure

0:10
Speaker 1: It. What's up everyone, Matt Garland here NMLS number five
0:14
Speaker 1: eight seven zero zero, but I'm better known as MG
0:18
Speaker 1: the Mortgage Guy, and welcome to earn your Leisure University.
0:22
Speaker 1: All right, so tonight I'm going to be your host.
0:26
Speaker 1: We're going to talk a little bit about for my
0:28
Speaker 1: first time home buyers and we're going to discuss the
0:32
Speaker 1: home buying process. But before we get to that, I'm
0:35
Speaker 1: going to share my screen for you guys, so that
0:38
Speaker 1: way you guys can see the presentation that I put
0:41
Speaker 1: forth together for you. So welcome to ey L University.
0:45
Speaker 1: Like I said, my name is Matt Garland NMLS number
0:48
Speaker 1: five A seven zero zero, better known as MG the
0:50
Speaker 1: Mortgage Guy. Today we're going to talk about first time
0:53
Speaker 1: home buyers. So let's get started. Most people always ask me, yo, Matt,
0:57
Speaker 1: what I need to get started to be a first
0:59
Speaker 1: time home buyo or a house Everything starts with your mindset.
1:03
Speaker 1: I say this all the time. Right, you have to
1:05
Speaker 1: be prepared for home ownership, So ask yourself these questions
1:09
Speaker 1: or your first time home buyers. Are you ready for
1:11
Speaker 1: home ownership? What are your real estate goals? Okay? Do
1:16
Speaker 1: you have the capital? Meaning do you have money, right,
1:20
Speaker 1: Most people want to be house rich and cash poor.
1:25
Speaker 1: Never be house rich in cash for cash poor. I
1:28
Speaker 1: don't care if you're getting one hundred percent financing. I
1:30
Speaker 1: don't care if you're getting any home buyer grants. It
1:33
Speaker 1: doesn't matter to me. You need to have some money saved.
1:37
Speaker 1: How soon do you want to close? Have realistic expectations
1:41
Speaker 1: on your time frame? Check out if you have a
1:43
Speaker 1: current lease, when does that least expire? If you're living
1:46
Speaker 1: at home, how's that situation working out? Whatever the case
1:49
Speaker 1: may be, have a realistic expectation for when you want
1:53
Speaker 1: to close on your home and number. Most importantly, are
1:57
Speaker 1: your documents organized? This is key, Okay, keep your documents
2:03
Speaker 1: organized every time. If you know you're gonna buy a house,
2:06
Speaker 1: you know, create a file, create a drop box, a
2:09
Speaker 1: Google docs, you know, start putting your pay stubs there.
2:11
Speaker 1: Every time you get an updated bank statement, put your
2:14
Speaker 1: bank statements in a file. You're doing your you get
2:17
Speaker 1: your w tools, you're doing your taxes, you know, upload
2:21
Speaker 1: that into a file and call a file like home
2:23
Speaker 1: ownership file or something like that, and just start putting
2:26
Speaker 1: together all your documentations. So that way you guys are
2:30
Speaker 1: prepared all right, now, speaking of documentation, what do you
2:36
Speaker 1: need to start the pre approval process? While you need
2:41
Speaker 1: your last two years of w tools because we need
2:43
Speaker 1: to show a two year work history, last two years
2:47
Speaker 1: tax returns, and really you want to provide tax returns
2:51
Speaker 1: if you're self employed, if you have any rental income
2:55
Speaker 1: that you're collecting, if you file like a ten night
3:00
Speaker 1: if you get paid ten ninety nine, maybe yourn uber
3:03
Speaker 1: driver or a lift driver, a hairstylist, a barber, you know,
3:07
Speaker 1: anything that you get like maybe you sell affiliate links,
3:10
Speaker 1: you got digital marketing, online marketing sales, whatever you do
3:15
Speaker 1: right that you get a ten ninety nine from and
3:18
Speaker 1: if you file it on your taxes, I need to
3:20
Speaker 1: see your last two years of self employed ten ninety
3:23
Speaker 1: nine independent contractor is considered self employed. So please remember
3:28
Speaker 1: that last thirty days of pay stubs very key. So
3:32
Speaker 1: we need thirty days full pay stubs. If you get
3:34
Speaker 1: paid weekly, we need four pay stubs. If you get
3:36
Speaker 1: paid by weekly, we need two pay stubs. Right, last
3:40
Speaker 1: two months are your bank statements or any assets that
3:44
Speaker 1: you are using for the transaction. So if you're borrowing
3:46
Speaker 1: money from a four to one K, we need the
3:49
Speaker 1: last quarter statement if they if you using your checkings
3:53
Speaker 1: and your savings account, we need your last two months
3:56
Speaker 1: of your bank statements. Now those bank statements we need
3:59
Speaker 1: all pages. Well. Now, if you know, if you look
4:01
Speaker 1: at your bank statements, it may say page one to ten, right,
4:05
Speaker 1: and if that tenth page is intentionally left blank, underwriting
4:08
Speaker 1: will still need that tenth page, all right. So although
4:12
Speaker 1: it's blank, once underwriting sees one of ten and we
4:16
Speaker 1: only provided none, we need to see the ten all right,
4:20
Speaker 1: even if it's blank. I know it's stupid, but that's
4:22
Speaker 1: just the rules, all right. Copy of valid ID. If
4:26
Speaker 1: you are getting any gifts, you can get gifts from
4:29
Speaker 1: a family member or close friend, we need a copy
4:32
Speaker 1: of the gift letter, all right, and we need to
4:35
Speaker 1: a complete it. Loan application. Now, if I'm your lender,
4:39
Speaker 1: then obviously I'll send you that online loan application. But
4:44
Speaker 1: any bank you go to, you're going to have to
4:46
Speaker 1: complete an online loan application, the pre approval process. Let's
4:52
Speaker 1: go through it. So choosing a lender very important, guys.
4:58
Speaker 1: And I want to say this not trying to bash
5:02
Speaker 1: any of my fellow lenders, mortgage brokers, bankers, because that's
5:06
Speaker 1: not the purpose of my content for at least I
5:10
Speaker 1: try to encourage my entire industry. But you want to
5:14
Speaker 1: make sure you don't pick a Linda just because you
5:17
Speaker 1: have a quote unquote banking relationship with that Linda, meaning
5:21
Speaker 1: you have your checking account there, you have your savings account.
5:24
Speaker 1: You really need to be interviewing the loan officer someone
5:27
Speaker 1: like myself because you're not doing business with the bank
5:30
Speaker 1: per se. You're doing business with the person that's in
5:32
Speaker 1: my chair, right, So you have to make sure that
5:37
Speaker 1: that loan officer him or her understands your real estate
5:41
Speaker 1: goals completely because your first deal can set you up
5:44
Speaker 1: for your tenth deal. But it's very important on how
5:47
Speaker 1: you execute your first deal, on how this is all
5:50
Speaker 1: going to play out all right, So make sure your
5:53
Speaker 1: loan officer understands your real estate goals is number one.
5:57
Speaker 1: Number two. Does your loan officer have a support very important,
6:01
Speaker 1: especially in times right now where you have interest rates
6:04
Speaker 1: at all time lows. You want to make sure that
6:07
Speaker 1: loan office is not a one man band, so to speak,
6:10
Speaker 1: because you still don't want your service levels to drop
6:13
Speaker 1: off just because they're busy. You still want communication, so
6:17
Speaker 1: make sure they have some support, whether they have assistance processes.
6:21
Speaker 1: These are questions you need to ask, you need to interview,
6:26
Speaker 1: and how many years of experience that they have. Now,
6:28
Speaker 1: this is not a knock to any of my new beasts, right,
6:32
Speaker 1: but when you're dealing with experience professional, you can make sure.
6:39
Speaker 1: You have to make sure that they really understand it
6:42
Speaker 1: goes in and they have a track history of helping
6:45
Speaker 1: people accomplish their goals. So most of the time, obviously,
6:49
Speaker 1: if you're dealing with someone who's new, they may not
6:51
Speaker 1: have that experience, but they may be able to give
6:53
Speaker 1: you all the time in the world that you need
6:55
Speaker 1: versus someone like myself who may be experienced. All right,
7:00
Speaker 1: But I always recommend work with experience loan officer because
7:04
Speaker 1: they have a track history of closing deals. Because the
7:06
Speaker 1: name of the game is closing. ABC always be closing,
7:11
Speaker 1: all right. So the pre approval process the next steps
7:14
Speaker 1: after you choose your Linda, after you discuss your goals,
7:17
Speaker 1: you got to run your credit and review your income documents.
7:19
Speaker 1: That's what I do, right determine what mortgage programs you
7:23
Speaker 1: qualify for now, I'm gonna keep it right there for
7:27
Speaker 1: a second. Determine which mortgage programs you qualify for is
7:31
Speaker 1: very important. There's a ton of programs out there, but
7:34
Speaker 1: sometimes linders only want to give you one option. Make
7:38
Speaker 1: sure that you, guys, are asking the lender to provide
7:41
Speaker 1: you all the options that you qualify for, whether it's
7:46
Speaker 1: conventional mortgage, FAHA mortgage, whether it's thirty year fixed, twenty
7:51
Speaker 1: year fix, whatever it is. That way you can see
7:54
Speaker 1: the full picture. And always, always, always, always remember there's
7:58
Speaker 1: a big difference between mean eligibility and affordability. Just because
8:04
Speaker 1: a bank or a lender or a broker will approve you,
8:08
Speaker 1: it does not mean you can afford that mortgage, So
8:12
Speaker 1: choose wisely. Banks and loan officers like myself, we are
8:16
Speaker 1: in the business to make loans and to sell money.
8:20
Speaker 1: We will tell you your goals, We will tell you
8:22
Speaker 1: what you have to do to accomplish your goals, will
8:24
Speaker 1: tell you what you qualify for. We will close your loan.
8:27
Speaker 1: But guess what, at the end of the day, you
8:29
Speaker 1: are responsible for that mortgage payment. So please, please guys,
8:34
Speaker 1: it is very difficult. One of the scary things about
8:38
Speaker 1: low interest rates is that it is so much easier
8:43
Speaker 1: to overleverage because money is cheap and now you might
8:48
Speaker 1: bite off more than you can chew. Because let's just say,
8:52
Speaker 1: for example, when a rate to hire, you may like
8:55
Speaker 1: four percent, right, you may only be able to be
8:58
Speaker 1: pre approved for four hundred thousand, But now at rates
9:00
Speaker 1: are two point seventy five three percent, you can probably
9:04
Speaker 1: get five hundred and fifty thousand, you know what I'm
9:06
Speaker 1: saying because of that different interest rates. So the very
9:09
Speaker 1: scary thing about low interest rates is that people tend
9:16
Speaker 1: to overleverage. Don't over leverage, guys, don't bite off morning control.
9:21
Speaker 1: This is probably the most important thing that I can
9:24
Speaker 1: tell you, especially we got elections coming up, We have
9:27
Speaker 1: so many we got the Corona disease, we have so
9:31
Speaker 1: many things. Stock market going crazy right now, we have
9:34
Speaker 1: so many different things that are happening that no one
9:37
Speaker 1: knows if and when a recession will come. So over
9:40
Speaker 1: leveraging is a very scary thing. And that's something that
9:43
Speaker 1: I'm paying attention to when I'm when I'm having consultations
9:46
Speaker 1: with clients. So, but it's your responsibility. You guys are
9:50
Speaker 1: are adults at the end of the day. So you
9:53
Speaker 1: got a man and woman up and make sure you know.
9:56
Speaker 1: Just because the bank can approve you for a mortgage,
9:59
Speaker 1: doesn't I mean you can afford it? So sorry for
10:02
Speaker 1: the rent, but I had to go there, all right.
10:04
Speaker 1: So now after you discuss your terms for these programs,
10:07
Speaker 1: interest rates, closing course, et cetera. Now you're pre approved
10:10
Speaker 1: and you're ready to shot, all right, So let's just
10:14
Speaker 1: give you. I'm gonna give you a quick snapshot now
10:17
Speaker 1: of the loan programs and what's what you need to
10:20
Speaker 1: qualify for them. Now, mind you, this is not a
10:25
Speaker 1: commitment for me to lend to you, all right, I'm
10:27
Speaker 1: just giving you a snapshot of the programs. For FAHA
10:31
Speaker 1: and FAHA two or three K. Your minimum credit scores
10:34
Speaker 1: a five eighty. Minimum down payment is three point five
10:37
Speaker 1: percent of the purchase price. The max sellers concession allowed
10:43
Speaker 1: is six percent. Now, for those of you who don't know,
10:47
Speaker 1: a seller's concession is when a seller pays agrees to
10:51
Speaker 1: pay a portion of the closing course. Sorry had the
11:00
Speaker 1: text home, is when a seller agrees to pay a
11:03
Speaker 1: portion of a closing course. So ultimately, at the end
11:06
Speaker 1: of the day, let's say say if the sales price
11:08
Speaker 1: is one hundred K, then six percent is six thousand
11:12
Speaker 1: that the seller will agreed to pay for. FAHA allows
11:15
Speaker 1: one to four family properties, FAHA approved condos and mixed
11:20
Speaker 1: use properties. Now, for those of you who don't know
11:23
Speaker 1: what mixed use properties are, a mixed use property is
11:27
Speaker 1: typically when a commercial property, when you have residential on
11:31
Speaker 1: the top and commercial on the bottom. Right, FAHA will
11:35
Speaker 1: allow you to purchase this property as long as the
11:38
Speaker 1: total units don't total more than four total units and
11:42
Speaker 1: the residential square footage is at least fifty one percent
11:46
Speaker 1: of the square footage of the building. All right. So
11:50
Speaker 1: for those of you who are running your own business,
11:53
Speaker 1: maybe you have a restaurant, a bar, you know, you
11:56
Speaker 1: have some sort of sales business and you need a
11:58
Speaker 1: brick and mortar location. This can be ideal for you
12:03
Speaker 1: if someone if someone doesn't have that business. Remember written
12:07
Speaker 1: out to commercial clients, the rent is probably going to
12:09
Speaker 1: be more expensive than a residential So that can be
12:12
Speaker 1: a good opportunity for you to look for, all right,
12:15
Speaker 1: and they will allow you to do it with three
12:16
Speaker 1: and a half percent down. Your max loan amounts is
12:19
Speaker 1: based on the FAHA county loan limits. Now, only thing
12:25
Speaker 1: you have to do if you want to know what
12:26
Speaker 1: your FAHA County loan limits are google FAHA county loan
12:32
Speaker 1: limits for whatever county you live in, and they'll tell
12:35
Speaker 1: you from one to four family what the max loan
12:38
Speaker 1: amount is. FAHA office fixed and adjustable and adjustable mortgage rates.
12:43
Speaker 1: And FAHA is only for primary residents. I wish I
12:47
Speaker 1: could zoom in on this camera right now. Primary residents only. Okay,
12:54
Speaker 1: it's not for investment properties. You cannot use your LLC
12:57
Speaker 1: to purchase the FAHA purchase the house using the FHA loan.
13:01
Speaker 1: You can't put the mortgage, the FAHA mortgage in your LLC. No, no, no,
13:06
Speaker 1: no no, it's only four primary residents only. FHA does
13:12
Speaker 1: require a one year occupacy right, So that means you
13:16
Speaker 1: have to live in that property for at least twelve months,
13:19
Speaker 1: all right, and then if you want to rent out
13:22
Speaker 1: you can. I just wanted to make that clear because
13:25
Speaker 1: I get a lot of questions about that. Let's move
13:30
Speaker 1: on to another program, conventional loans. You have This is
13:33
Speaker 1: the ideal programs for conventional loans where you can put
13:37
Speaker 1: down at least three percent down payment. You have Fanny
13:40
Speaker 1: May Home Ready, Freddie mac Home Possible. You need a
13:43
Speaker 1: minimum of a six to twenty credit score. The down
13:46
Speaker 1: payment could be between three and twenty five percent of
13:48
Speaker 1: the purchase price max three percent selless concession is allowed.
13:53
Speaker 1: One to four families and Fanny May approved condos are allowed.
13:57
Speaker 1: The max loan amounts is based on the Fandy May
13:59
Speaker 1: loan limits or again just google Fanny Main loan limits
14:01
Speaker 1: and they'll tell you the loan limits for your area.
14:04
Speaker 1: Fixed or adjustable rates, interest rates, primary residents, second homes,
14:09
Speaker 1: and investment properties are allowed with Fanny May. With conventional loans. Now,
14:17
Speaker 1: let's I'm gonna do a little bit of deep dive
14:18
Speaker 1: into this one. So one to four family they do allow,
14:23
Speaker 1: but fanny May Home Ready. If you're buying a two
14:27
Speaker 1: to four family or duplex triplex aquad like some folks
14:31
Speaker 1: call it, then you will have to put down fifteen percent,
14:37
Speaker 1: even if it's on the occupied and if it's an
14:39
Speaker 1: investment property, you have to put down twenty five percent.
14:43
Speaker 1: With Freddie Mac Home Possible, you can potentially put down
14:47
Speaker 1: five percent on a duplex triplex aquad. But with any
14:51
Speaker 1: of these programs, they are income based programs, so we
14:57
Speaker 1: will have to determine basically, and you can just probably
14:59
Speaker 1: google it. Go to Google FREDDIEMAC home possible income limit,
15:04
Speaker 1: and then there'll be a map that will come up
15:07
Speaker 1: and you punching your address or the zip code of
15:10
Speaker 1: where you're looking to buy, and then the system will
15:13
Speaker 1: tell you the maximum income you can make to be
15:17
Speaker 1: qualified for this loan. So they use eighty percent of
15:21
Speaker 1: the AMI. The AMI stands for Area Media income. So
15:25
Speaker 1: let's just say, for example, the AMI is one hundred
15:29
Speaker 1: thousand dollars of income. They only use eighty thousand income
15:34
Speaker 1: to qualify, So if you make eighty five thousand dollars,
15:37
Speaker 1: you automatically don't qualify for this program. Another thing I
15:41
Speaker 1: want to tell you guys about this. If you're using
15:44
Speaker 1: a if you're losing a conventional loaning, you want to
15:47
Speaker 1: buy a multifamily, if you are a first time home buyer,
15:52
Speaker 1: conventional loans will not allow you to use rental income
15:55
Speaker 1: to help you qualify. Let me repeat that, if you
15:59
Speaker 1: are a first time home buyer, conventional loans will not
16:03
Speaker 1: allow you to use potential rental income from those units
16:08
Speaker 1: to help you qualify for the mortgage. The only program
16:12
Speaker 1: right now that will allow a first time home buyer
16:15
Speaker 1: to use rental income to help you qualify. Is an
16:18
Speaker 1: FH loan. All right, FAHA will lose seventy five percent
16:23
Speaker 1: of the gross rental income from those apartments to help
16:27
Speaker 1: you qualify. So let's just say you're collecting one thousand
16:30
Speaker 1: dollars a month in rent. FHA will use seven hundred
16:34
Speaker 1: and fifty dollars to help you qualify. Now, this is
16:37
Speaker 1: what I want to tell all your first time home buyers.
16:41
Speaker 1: These guidelines were conventional who just changed at the end
16:44
Speaker 1: of twenty nineteen. I have a video on my YouTube
16:48
Speaker 1: page MG the Mortgage Guide. You can go check that
16:50
Speaker 1: out too, but basically stayed in these new guidelines. When
16:55
Speaker 1: you see programs starting to change guidelines like this, that
16:59
Speaker 1: mean at some point everyone changes their guidelines to kind
17:03
Speaker 1: of match what the other one is doing. And it's
17:06
Speaker 1: all based off of risk analysis. So right now, FAHA
17:11
Speaker 1: allows this still, but conventional doesn't. So with that being said,
17:18
Speaker 1: that means you need to get on it and do
17:22
Speaker 1: not wait because everything about this industry, about the mortgage business,
17:28
Speaker 1: is all about timing, all about timing. The market does
17:33
Speaker 1: not wait for you, Okay, it does not wait for you.
17:38
Speaker 1: Let's go on to VA loans. VA loans minimum five
17:40
Speaker 1: eighty credit score, one hundred percent financing with no PMI
17:45
Speaker 1: six up to six percent sales concession allowed. One to
17:48
Speaker 1: four family VA approved condos allowed, and it's for primary
17:53
Speaker 1: residents only, with a one year requirement for primary residence. Again,
18:01
Speaker 1: does not allow first time home buyers to use rental
18:03
Speaker 1: income to help you qualify unless you can prove that
18:07
Speaker 1: you have prior rental property management. Okay. So and in
18:13
Speaker 1: most cases, if you're a first time home buyer, you're
18:16
Speaker 1: not going to have that type of experience, So you're
18:18
Speaker 1: going to have to be able to qualify on your own.
18:21
Speaker 1: That's why for me and all honestly, if someone's looking
18:23
Speaker 1: to buy a multifamily and if they can't qualify on
18:26
Speaker 1: their own income, then FAHA is the ideal program for
18:31
Speaker 1: that multifamily buyer. All right, So now we got a
18:36
Speaker 1: little bit of information about the programs. You know what
18:41
Speaker 1: it takes to get pre approved, you know with documents
18:43
Speaker 1: that you need. Now, congratulations, you went out shopping with
18:46
Speaker 1: your real to You saw one hundred and fifty thousand houses,
18:50
Speaker 1: you hated them all except for the one you fell
18:52
Speaker 1: in love with it. Now, congratulations, you put in the
18:55
Speaker 1: offer and now you're in contracts now, So in some states,
19:03
Speaker 1: every state operates differently. I'm based here in New York,
19:06
Speaker 1: So in New York, the process is you put in
19:09
Speaker 1: the offer what you're real to. The realtor puts in
19:11
Speaker 1: the offer what the seller's real to. They accept the offer,
19:16
Speaker 1: and then we're do a home inspection. After the home
19:19
Speaker 1: inspection is completed, then the contracts are sent to the attorneys.
19:24
Speaker 1: Then the bi goes meets with the attorney. The attorney,
19:28
Speaker 1: they sign contract, they give their down payment check. Then
19:31
Speaker 1: the seller, the buyer's attorney sends the contract over to
19:34
Speaker 1: the seller. To seller signs and now your congratulations, you
19:38
Speaker 1: have a fully executed contract. In states like Georgia, there's
19:43
Speaker 1: no attorneys. There's the realtors take care of this. And
19:47
Speaker 1: in a lot of states, you know, Florida is a
19:49
Speaker 1: real to state, I believe. I think Texas is also
19:52
Speaker 1: the So there's several states out there where they there's
19:54
Speaker 1: no attorneys. Is not attorney states. So now when you
19:57
Speaker 1: make your offer, your offer is actually you signing a
19:59
Speaker 1: contrac and it's handled by your real too. And then
20:02
Speaker 1: once you make your offer, you have a due diligence period.
20:06
Speaker 1: Some places are different. You know I've seen due diligence
20:09
Speaker 1: periods be five days, two weeks, ten days, whatever the
20:13
Speaker 1: case may be. All of that is negotiated between you
20:15
Speaker 1: and the real estate agents. But that's the typical process.
20:20
Speaker 1: So check with your local realta to determine what in
20:24
Speaker 1: your state, what that process look like. But if in
20:27
Speaker 1: any event, you're still going to get you're going to
20:29
Speaker 1: need a home inspection. If you're an attorney of state,
20:32
Speaker 1: you're going to meet with an attorney to sign contract.
20:34
Speaker 1: They're gonna and then once your contract is executed, your
20:38
Speaker 1: real to your attorney or you the buyer, are gonna
20:41
Speaker 1: now email that contract to your lender. The lender is
20:44
Speaker 1: now going to finish the loan application and they're going
20:47
Speaker 1: to disclose the loan to you, meaning when they disclosed
20:50
Speaker 1: a loan to you, they're going to provide you all
20:52
Speaker 1: the documentation, all that initial documentation, it's like one hundred pages,
20:57
Speaker 1: and you're going to have to sign your life await basically,
21:00
Speaker 1: and within that documentation, you're going to have what's called
21:02
Speaker 1: the loan estimate, and the loan estimate, the loan estimate
21:06
Speaker 1: or l E is going to break down or your cost,
21:11
Speaker 1: your terms what type of loan, you have, your mortgage payment,
21:15
Speaker 1: et cetera, et cetera. Right, and I'm going to break
21:17
Speaker 1: down more towards the end. I'm going to break down
21:20
Speaker 1: the CD, which is the closing disclosure, and that's one
21:23
Speaker 1: of the most that's the most important thing you need
21:25
Speaker 1: to see, all right. So after we disclose to you,
21:28
Speaker 1: you aside all of the documents, then you have to
21:31
Speaker 1: pay for your appraisal so that the lender can order
21:34
Speaker 1: the appraisal. Appraisal fees varies from different states. Single families
21:38
Speaker 1: can be anywhere from four to fifty to five to fifty.
21:41
Speaker 1: Duplexus can be anywhere from six fifty to eight hundred.
21:44
Speaker 1: It just all depends on the sales price in your location.
21:48
Speaker 1: And then the settlement agent or the attorney will order
21:52
Speaker 1: the title report. Now, the title report consists of so
21:55
Speaker 1: many documents, is just basically given the report of the house.
21:59
Speaker 1: If it's a new construction home, then it's the tide
22:02
Speaker 1: report is not going to contain too much information, but
22:05
Speaker 1: the settlement company or the attorney will order that tide
22:07
Speaker 1: of report. All right. So after you do all of this,
22:13
Speaker 1: you choose your loan program with the lender you just
22:16
Speaker 1: discuss the loan estimate. You eat sign Like I just said,
22:19
Speaker 1: you discuss your rate locks now right now, guys, Like
22:23
Speaker 1: I said earlier, interest rates are right now at the
22:26
Speaker 1: lowest that I've ever seen it in my career. If
22:29
Speaker 1: you are looking to purchase a home, you need to
22:33
Speaker 1: step on it right now. Tax money is about to
22:35
Speaker 1: start coming in. You guys need to get serious with this.
22:38
Speaker 1: Because I have, and I've been doing this almost eighteen years,
22:41
Speaker 1: I have never seen interest rates this low. The money
22:43
Speaker 1: is the cheapest that has ever been Take advantage. Do
22:47
Speaker 1: not waste time. You don't have time. Don't be waiting
22:49
Speaker 1: for the bottom to come. No one has a crystal ball.
22:53
Speaker 1: No one knows when the bottom is going to come. Right,
22:56
Speaker 1: So kick it into gear and lock in right. You
23:01
Speaker 1: pay for your pre titles ordered. Now, your loan goes
23:04
Speaker 1: into underwriting for initial approval. Underwriting, let's talk about the underwriter.
23:10
Speaker 1: The role of the mortgage underwriter. They are responsible for
23:13
Speaker 1: analyzing your risk to determine if the terms of your
23:17
Speaker 1: loan are acceptable. This required mortgage underwriters to look closely
23:21
Speaker 1: out of applicants employment and financial history before approving alone. Now,
23:27
Speaker 1: the role in an underwriter. Right, they're looking at your
23:30
Speaker 1: income documentation and verifying everything to make a decision. Underwriting
23:35
Speaker 1: decisions that they can make us either approved with conditions denied,
23:39
Speaker 1: suspended or final approve equal CTC, which we love, all right.
23:46
Speaker 1: They review appraisals to make sure the appraisals are clean.
23:49
Speaker 1: They're reviewing the titles to make sure the title reports
23:52
Speaker 1: are claim that there's no issues, there's no permits, there's
23:56
Speaker 1: nothing that can hinder their investment. So I want to really,
24:01
Speaker 1: I really want to dig deep into this right now,
24:05
Speaker 1: right when you're talking about the underwriter. Your underwriter can
24:10
Speaker 1: make or break you, all right if if and it's
24:16
Speaker 1: all based off how you put in the loan. See
24:19
Speaker 1: the underwriters. They don't know you, guys. A loan officer's
24:23
Speaker 1: job is to get you approved. And I tell people
24:26
Speaker 1: this all the time. My job is to get you approved.
24:29
Speaker 1: An underwriter's job is to decline you, so to speak.
24:33
Speaker 1: They have to sign off on your loan. If you
24:37
Speaker 1: guys follow me, you've probably heard me say pre approval
24:40
Speaker 1: letters are garbage. And the reason why I say it
24:42
Speaker 1: is because a loan officer is actually giving you a
24:46
Speaker 1: pre approval, not the underwriter up front, that pre approval
24:50
Speaker 1: letter doesn't mean anything, right, It's really honestly not worth
24:55
Speaker 1: the paper that is printing on all right, because that
25:00
Speaker 1: loan officer can't make an underwriting decision. Okay, So when
25:07
Speaker 1: your file goes just because you are pre approved, it
25:10
Speaker 1: does not mean that the underwriter, the underwriter cannot decline you. Right,
25:16
Speaker 1: And y'all see, this is live. I'm in my office.
25:18
Speaker 1: I got my man, Manny Baccid throwing out the garbage
25:21
Speaker 1: right now as we speak. So this is how we
25:23
Speaker 1: do it at university. Is live? Right? Money distracting me?
25:34
Speaker 1: All right? I had to get a laugh out of that.
25:36
Speaker 1: I'm too serious. I couldn't hold it no more. All right,
25:42
Speaker 1: let me give out the business. So the underwriter, right,
25:45
Speaker 1: they don't have to approve that loan. Just because your
25:49
Speaker 1: loan officer gave you that letter doesn't mean anything. So
25:52
Speaker 1: it's very important. That's why I scroll from the beginning
25:55
Speaker 1: of the process. I said, don't pick a lender just
25:58
Speaker 1: because you bank them. That doesn't mean anything. That loan
26:02
Speaker 1: office is the person that you are working with, and
26:05
Speaker 1: that person is the one who's telling you, yes, you
26:07
Speaker 1: can go buy this home. But if they're not experienced,
26:10
Speaker 1: if they don't know what they're doing, they can mess
26:12
Speaker 1: things up, like calculate your income wrong. The whole store
26:16
Speaker 1: of things that I'm not going to get into, and
26:18
Speaker 1: that's what can cause the underwriter to decline you. Another
26:23
Speaker 1: thing is that underwriters pretty much do a background check.
26:27
Speaker 1: And I tell people this all the time, was done
26:30
Speaker 1: in the dark, will come out in a light, right,
26:33
Speaker 1: don't hide nothing from your loan officer. Your loan officer,
26:38
Speaker 1: we don't have the technology up front on a sales
26:41
Speaker 1: capacity to do that background check or that that that
26:45
Speaker 1: forendsic diagnosis of you like the underwriting department does. So
26:49
Speaker 1: they're going to know if you had pre if you
26:51
Speaker 1: don't disclose on your loan application that you own the
26:54
Speaker 1: property and it's been you had a foreclosure or a
26:56
Speaker 1: short sell or bankruptcy, or you have the faulted student loans.
27:02
Speaker 1: We're going to find that out once it gets the underwriter,
27:05
Speaker 1: and the only thing you're going to do is kind
27:08
Speaker 1: of delay your own process here, all right, So very
27:12
Speaker 1: important if you had any derogatory credit events in the past,
27:16
Speaker 1: any of the things I just named, make sure you're
27:19
Speaker 1: very clear and upfront with upfront about it with your
27:22
Speaker 1: loan officer, so that way they can tell you what
27:25
Speaker 1: to do, because ultimately it's going to come out anyway,
27:29
Speaker 1: and it could honestly put you behind the eight ball
27:32
Speaker 1: and get your loan decline. So that's really the role
27:37
Speaker 1: of the underwriter is to make sure that if they're
27:40
Speaker 1: issuing issuing what's called a loan commitment, that that commitment
27:46
Speaker 1: is valid and the bank won't suffer any losses behind
27:51
Speaker 1: improving your loan. I hope that makes sense, all right,
27:55
Speaker 1: So what does the underwriter look for. They're looking at
27:58
Speaker 1: your credit score. They're looking at your credit history. Large deposits,
28:02
Speaker 1: So your credit score again, we went through the minimum
28:06
Speaker 1: credit for score for FAHA and VA five to eighty
28:09
Speaker 1: six four conventional. Your credit history very important. Do you
28:15
Speaker 1: have collections accounts? Do you have charge offs? Do you
28:17
Speaker 1: have repossessions? Do you have the fault of student loans?
28:20
Speaker 1: Are you paying your student loans on time? Are your
28:22
Speaker 1: student loans deferred or not? You know, we're looking at
28:25
Speaker 1: all of that information, all right. Large deposits into your
28:29
Speaker 1: bank account, this is a big thing. People. You can't
28:32
Speaker 1: be moving mattress money into your account day after you go,
28:37
Speaker 1: you try to sign a contract that doesn't work. If
28:40
Speaker 1: you have Mattress money, it needs to be seasoned in
28:42
Speaker 1: your bank account for at least two months, all right.
28:45
Speaker 1: You can't just be making large deposits large withdrawals. Underwriters
28:49
Speaker 1: going and connect that. If you have a lot of
28:52
Speaker 1: what they call it overdrafts, right, underwriting will look at
28:56
Speaker 1: that and they will say, why are you negative? Remember,
29:01
Speaker 1: if you can't manage your personal finances, if you can't
29:04
Speaker 1: manage like a cell phone bill, a cable bill, a
29:07
Speaker 1: car note, what makes you think an underwriter wants to
29:10
Speaker 1: approve you for a two hundred three hundred, four hundred
29:13
Speaker 1: thousand You know what I'm saying. An underwriter uses discretion
29:17
Speaker 1: just because you meet the guidelines. If they're not comfortable
29:20
Speaker 1: with your loan, if they feel like you're a risk
29:22
Speaker 1: because of your history, they will decline you period. Just
29:28
Speaker 1: want to be clear about that, all right. Another thing
29:32
Speaker 1: I wish I knew how to highlight on this. For
29:33
Speaker 1: those who know me know I'm not good with this
29:35
Speaker 1: PowerPoint stuff, but I highlight it there. I hope you
29:38
Speaker 1: guys see that I can pacie fraud. They looking for
29:41
Speaker 1: this stuff. Guys, don't call me and tell me, Hey,
29:45
Speaker 1: I want to buy this fah loan. I want to
29:48
Speaker 1: buy this house use the fah loan. But I live
29:51
Speaker 1: in New York and I'm buying it in Kansas. Like,
29:54
Speaker 1: what are you talking about? That's an investment property. You
29:56
Speaker 1: can't you can't do that, right, I can see fraud.
30:00
Speaker 1: They are looking for that. Trust me. You don't want
30:02
Speaker 1: the FAHA police knocking at your door. Appraisal meeting, meeting
30:06
Speaker 1: the program guidelines. Every program has different guidelines of what
30:10
Speaker 1: they see their want to see in their appraisals. Underwriters
30:13
Speaker 1: looking for child support very important. If you are have
30:18
Speaker 1: child support on your credit report, and I've seen it
30:21
Speaker 1: so many times where folks are behind eightpril on child
30:25
Speaker 1: support now showing up as a collection, They're not going
30:29
Speaker 1: to lend to you until that child support is either
30:32
Speaker 1: in good standing or paid off. So very important, folks.
30:37
Speaker 1: If you have also IRS debt, that's not the indoor
30:41
Speaker 1: b or. As long as you are in the payment
30:44
Speaker 1: arrangement and you can document your payment arrangement with the
30:47
Speaker 1: payment arrangement from the I r S and you can
30:50
Speaker 1: show on time payments, then no worries. It's just that
30:56
Speaker 1: money it's just going to be included nta debt to
30:58
Speaker 1: income racial. The same with child support. If you pay
31:00
Speaker 1: child support alimony, that will be included into your debt
31:04
Speaker 1: to income racial ratio. All right, here's a big thing.
31:12
Speaker 1: Verification of employment. Man, this should be so self explanatory,
31:17
Speaker 1: but I gotta keep always saying this. Don't quit your
31:22
Speaker 1: job the day before closing. We meaning lenders, will do
31:28
Speaker 1: a verification of employment three within ten days of closing.
31:35
Speaker 1: I have had verifications of employments done the day of closing.
31:39
Speaker 1: And guess what, mister Jones doesn't no longer works here.
31:43
Speaker 1: They quit a week ago. You call, mister Jones, why
31:46
Speaker 1: you quit? Because I hate my job. I just wanted
31:49
Speaker 1: to use it for the house. Well, guess what, you
31:53
Speaker 1: can't get a house now you have no job. Don't
31:56
Speaker 1: quit your job. It just doesn't make any sense. Discrepancies
32:01
Speaker 1: and address Again, that goes to occupacy fraud. You're using
32:04
Speaker 1: all these different addresses. They're gonna look up these addresses
32:06
Speaker 1: and see who owns these homes. Right, I've seen it
32:09
Speaker 1: happen when people don't disclose on a loan application. But
32:12
Speaker 1: we see you on a credit report. Come to find
32:14
Speaker 1: out you own six properties. They're gonna look for that
32:17
Speaker 1: stuff was done in the dark, will come on a light,
32:21
Speaker 1: all right. So now once you pass the underwriting stage,
32:25
Speaker 1: you got your loan commitment, all right, you know what
32:29
Speaker 1: conditions you need. Conditions are just basically you know the
32:32
Speaker 1: underwriting mate wants, I want to let an explanation. Maybe
32:36
Speaker 1: because you've got a lot of different addresses. If you
32:39
Speaker 1: got large deposits, they're gonna want you to source those deposits.
32:43
Speaker 1: Another common condition is if you're getting gift funds, you
32:49
Speaker 1: need to show the gift money coming in coming from
32:52
Speaker 1: your donut and coming to you. So once you meet
32:55
Speaker 1: all the conditions that the underwriter needs on that loan commitment,
32:58
Speaker 1: then we go into my favorite thing, which is clear
33:03
Speaker 1: to close. Hallelujah. We are cleared to close. We are
33:07
Speaker 1: through the underwriting process. Life is good, all right. Now
33:13
Speaker 1: you sign the next steps. After you get that clear
33:15
Speaker 1: to close, you sign a closing disclosure the CD, You
33:19
Speaker 1: set the closing date and time, and then you do
33:22
Speaker 1: your final walkthrough of the house. Right, So your closing disclosure.
33:29
Speaker 1: Let me bring this up for you guys. All right,
33:33
Speaker 1: So now your closing disclosure is very very important. Now
33:42
Speaker 1: on the left hand side, it gives you let me see,
33:45
Speaker 1: can I can I zoom this's in now, I won't
33:47
Speaker 1: let me zoom in. Well, I hope you guys can
33:49
Speaker 1: see it's good on my end. So you have the
33:50
Speaker 1: closing disclosure. This is kind of what it looks like
33:53
Speaker 1: on the first page. It breaks down your loan them
33:56
Speaker 1: out right here and in the slides you'll have this
33:59
Speaker 1: link also, so that way you guys can see this
34:03
Speaker 1: on your own if you can't see it right here.
34:06
Speaker 1: So it shows your interest rate, it breaks down your
34:08
Speaker 1: monthly payment. But let's go to page due, page two,
34:12
Speaker 1: because this is where the meat and potatoes. The top
34:14
Speaker 1: part is where you have all your bank fees. Now,
34:17
Speaker 1: when people are shopping around for a mortgage, they always
34:20
Speaker 1: act and what's your closing costs? What's your closing costs?
34:22
Speaker 1: What's your closing costs? If you're going to shop around
34:24
Speaker 1: for a mortgage, you have to understand the bank only
34:28
Speaker 1: controls the bank fees and the interest rate. So when
34:31
Speaker 1: you shop in one liner to another lender, those are
34:33
Speaker 1: the two things you need to know. What's your interest
34:35
Speaker 1: rate and what are your bank origination fees? Because everything
34:39
Speaker 1: else title course, state taxes, title insurance, all of that
34:46
Speaker 1: stuff is all third party. The bank does not control that,
34:50
Speaker 1: all right. And those fees are should be set no
34:54
Speaker 1: matter where you go. So no matter if you go
34:57
Speaker 1: to bank A or Bank B or bank C, those
35:00
Speaker 1: third party fees should all line up to be the same.
35:03
Speaker 1: But the main thing that you guys want to go
35:05
Speaker 1: through and want to learn and know from your lender
35:09
Speaker 1: is what are your fees and what is your interest rate?
35:12
Speaker 1: All right? So again I'm not gonna go through this
35:16
Speaker 1: entire closing disclosure just for just because of the effort
35:19
Speaker 1: of time,