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Study Hall: FINANCING FOR FIRST TIME HOME BUYERS · Earn Your Leisure

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