Qualifying for a San Mateo Mortgage

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Information about Qualifying for a San Mateo Mortgage

Published on January 7, 2010

Author: chrisewilliamson



Chris Williamson, Mortgage Advisor with Mortgage California explains what a lender looks for in a loan application including credit requirements, income requirements, assets, down payment, closing costs and the Good Faith Estimate.

Qualifying for a Mortgage Thanks for joining tonight’s webinar. We will begin shortly. To download the slides, please visit Tonight’s Speaker Chris Williamson Mortgage Advisor - Mortgage California Phone: (650) 520-0915 www.

Chris Williamson Phone: (650) 520-0915 Questions During the Webinar • Financing experts are available to answer questions throughout the presentation • This is an interactive learning environment. You will get the most value from this program by having your specific questions answered. • The only dumb question is the one you don’t ask

Chris Williamson Phone: (650) 520-0915 Questions During the Webinar You may type questions in at any time during the presentation – Question box on your screen

Qualifying for a Mortgage Chris E. Williamson Mortgage Advisor Phone: (650) 520-0915 Email: Blog:

Chris Williamson Phone: (650) 520-0915 Purpose & Goals of the Webinar Purpose • Empower and Educate Home Buyers Goals • Share with you the things we’ve learned about qualifying for a mortgage loan • Leave you more aware and informed about financing

Chris Williamson Phone: (650) 520-0915 Overview • Poison Pill of Home Buying • What is a Pre-Approval • The CIA of Lending • Down Payment • Gift Funds • Closing Costs • Good Faith Estimate • Loan Application

Chris Williamson Phone: (650) 520-0915 Poison Pill of Home Buying • Financial Unpreparedness • Not Putting Your Financial House in Order is Setting Yourself Up for Failure Key: Find a Loan First, then Find a Home

Chris Williamson Phone: (650) 520-0915 Pre-Approval vs. Pre-Qualification Get Pre-Approved, Not Pre-Qualified • Pre-Qualification ▫ An informal estimate of what you can afford • Pre-Approval ▫ A loan commitment from a reputable lender

Chris Williamson Phone: (650) 520-0915 What is a Pre-Approval A Pre-Approval is Verifying your…. • Credit Score and Continuing Liabilities • Income • Asset A Pre-Approval Gives You... • Purchasing Power ▫ A Pre-Approved Buyer is a CASH Buyer • The Upper Limit of What You Can Afford

Chris Williamson Phone: (650) 520-0915 The CIA of Lending • The 3 Most Important Components of Your Pre-Approval ▫ Credit ▫ Income ▫ Assets

Chris Williamson Phone: (650) 520-0915 What is Credit? • Snapshot of How You Handle Debt • Risk Assessment for the Lender • Look at Previous 2 Years of Debt Management • Project 3 Years of Your Ability to Repay Mortgage

Chris Williamson Phone: (650) 520-0915 What Makes Up Your Credit?

Chris Williamson Phone: (650) 520-0915 How is Credit Measured? • Three Credit Bureaus ▫ Experian ▫ Equifax ▫ TransUnion • Median Score

Chris Williamson Phone: (650) 520-0915 Credit • What is Good Credit? ▫ Above 680 • What is Bad Credit? ▫ Below 620 • Credit Score Above 580 to Qualify for a Mortgage

Chris Williamson Phone: (650) 520-0915 Income – W-2 Employees Documentation Needed • 2 Paystubs (Covering 1 Month) and YTD Income • 2007-2008 Tax Returns and W-2s • 2 Year Work History • To Count Overtime and Bonuses in Your Income ▫ 2 year work history with same employer and same position ▫ Letter from employer to show likelihood of continuation

Chris Williamson Phone: (650) 520-0915 Income – Self-Employed Documentation Needed • 2009 Profit and Loss Statement • 2007-2008 Tax Returns • 2 Year Work History as Self-Employed

Chris Williamson Phone: (650) 520-0915 Debt to Income Ratios • Housing Expense = Principal+Interest+Taxes+Insurance • Front End Ratio ▫ Housing Expense Only / Gross Monthly Income ▫ Ideally Should Be Less than 38% • Back End Ratio ▫ (Housing Expense + Continuing Liabilities) / Gross Monthly Income ▫ Ideally Should be Less than 45% ▫ Can Be as High as 55% with Compensating Factors

Chris Williamson Phone: (650) 520-0915 Assets • Your Assets Determine ▫ Down Payment ▫ Closing Costs ▫ 2-6 Months Reserves (depending on loan program) Reserves = Principal, Interest, Taxes and Insurance • Show 2 Months Bank, Investment and Retirement Account Statements • Large Deposits Need to be Sourced and Documented

Chris Williamson Phone: (650) 520-0915 Gift Funds • Money from Family to Go Towards Down Payment • Speak with Your Mortgage Advisor Before You Accept or Deposit Any Money • Gift Letter ▫ States money is a true gift & doesn’t have to be repaid • Show Cancelled Check or Wire from Donor • Show Receipt of Money Into Your Account ▫ Deposit Slip and Bank Statement

Chris Williamson Phone: (650) 520-0915 Down Payment • Loan Programs with Less than 20% Down Payment ▫ 3.5% Down = FHA ▫ 5%-15% Down = Conventional ▫ Require Mortgage Insurance ▫ Impounds Required for Less than 15% • 20% Down is Ideal ▫ Best Interest Rates and Terms ▫ No Impounds ▫ No Mortgage Insurance Req’d

Chris Williamson Phone: (650) 520-0915 Closing Costs What Can I Expect to Pay to Close the Loan? • Closing Costs are Like Thumbprints • Vary from City to City, Program to Program and Borrower to Borrower • Impossible to Pinpoint Exact Numbers Before You Find a Home

Chris Williamson Phone: (650) 520-0915 Closing Costs • Items Payable in Connection with the Loan ▫ Appraisal ▫ Loan Points ▫ Processing Fee ▫ Underwriting Fee ▫ Application Fee ▫ Document Preparation Fee

Chris Williamson Phone: (650) 520-0915 Closing Costs • Escrow and Title Charges ▫ Owner’s Title Policy ▫ Lender’s Title Policy ▫ Courier Fee ▫ Recording Fee ▫ Wire Fee

Chris Williamson Phone: (650) 520-0915 Closing Costs • City Transfer Tax ▫ San Mateo only City in San Mateo County Ex: $5/$1,000 purchase price $500,000 = $2,500 ▫ Customarily Split 50% Buyer/50% Seller • County Transfer Tax ▫ Customarily Paid by Seller

Chris Williamson Phone: (650) 520-0915 Reserves and Prepaid Costs • In Addition to Closing Costs and Down Payment • Prepaid Interest • Mortgage Paid in Arrears ▫ Opposite of Rent • Prepay One Year Homeowner’s Insurance

Chris Williamson Phone: (650) 520-0915 Loan Application • Resume to the Lender • What’s Required? ▫ Name/Date of Birth ▫ Social Security Number ▫ Income ▫ Assets ▫ Address(es) for Last 2 Years ▫ 2 Year Employment History ▫ Continuing Liabilities ▫ All Real Estate Owned

Chris Williamson Phone: (650) 520-0915 Resources You Can Use at Home

Chris Williamson Phone: (650) 520-0915

Chris Williamson Phone: (650) 520-0915 Financing Questions?

Chris Williamson Phone: (650) 520-0915 Upcoming Classes and Webinars

Chris Williamson Phone: (650) 520-0915 Home Buyer 2.0 First Time Home Buyer Class 2.0 Tuesday, January 19th at 7pm Sign up at

Chris Williamson Phone: (650) 520-0915 Condo Buying Class Guide to Buying a Condo – Including New Financing Regulations Thursday, January 21st at 7pm Sign up at

Chris Williamson Phone: (650) 520-0915 Enjoy this Webinar? • Please help us spread the word by telling your friends and family.

Chris Williamson Phone: (650) 520-0915 Apply Online

Chris Williamson Phone: (650) 520-0915 Free Consultation Chris Williamson Phone: (650) 520-0915 Email:

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