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Mortgage Information


Conventional Loan 

 

Documentation from the buyer:

  1. Most recent tax return and W-2.
  2. Most recent pay stub.
  3. Bank account information with balances.
  4. Debt-Income ratio: maximum 36:100
  5. Stocks, bonds, 401K/403B, etc. if using as available reserve funds.
  6. Driver’s License 

Lending (Fixed 1st Mortgage):

  1. 80/20: 80 percent first mortgage with up to 3 percent of the loan amount available to be financed in to cover the buyer’s closing costs, prepaids and reserves (103 percent). 20 percent down. No Mortgage Insurance.
  2. 80/10/10: 80 percent first mortgage with up to 3 percent of the loan amount available to be financed in to cover the buyer’s closing costs, prepaids and reserves (103 percent). 10 percent “second” mortgage, usually at a greater rate than first mortgage, usually adjustable rate to procure better initial interest rate. 10 percent down (.824 1st/.103 2nd). Mortgage insurance at 1 percent.
  3. 80/15/5: 80 percent first mortgage with up to 3 percent of the loan amount available to be financed in to cover the buyer’s closing costs, prepaids and reserves (103 percent). 15 percent “second” mortgage, usually at a greater rate than first mortgage, usually adjustable rate to procure better initial interest rate. 5 percent down (.824 1st/.1545 2nd). Mortgage insurance at 1 percent.
  4. 80/20/0: 80 percent first mortgage with up to 3 percent of the loan amount available to be financed in to cover the buyer’s closing costs, prepaids and reserves (103 percent). 20 percent “second” mortgage, usually  at a greater rate than first mortgage, usually adjustable rate to procure better initial interest rate. 0 percent down (.824 1st/.206 2nd). Mortgage insurance at 1 percent. 

Costs that can be shared between Buyer and Seller:

  1. Lender Doc Prep Fee
  2. Home Warranty
  3. Recording Fee
  4. Escrow Closing Fee

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VA Loan 

 

Documentation from the buyer: 

  1. Credit of Eligibility (often the lender can pull this online).
  2. Statement of Service (active military)/DD214 ( inactive).
  3. LES (Leave and Earnings Statement – pay stub equivalent).
  4. Driver’s license/Military ID 

Lending: 

  1. 100 percent first mortgage with all buyer costs, including VA Funding Fee financed into the mortgage. Mortgage Insurance.
  2. VA Funding Fee: 1.5 percent initial/3.3 percent all subsequent VA loans. Only one VA loan open at anytime (can do simultaneous closings).
  3. 0/0/0 down: Seller pays all closing costs, prepaids, reserves and VA Funding Fee. 

EM Contract: 

The buyer is prohibited from paying:

  1. Any Doc Prep Fees
  2. Tax registration
  3. Assignment Recording Fee
  4. Escrow Closing Fee

Veterans (VMP):

Veterans who entered active duty prior to 1/1/1977 and who have not been discharged more than 30 years may be eligible for a lower interest rate through AHFC's Veteran Mortgage Program (VMP).  This may be combined with FHA, VA, Conventional or rural Development Loan.

 

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FHA Loan 

 

Documentation from the buyer: 

  1. Most recent two years tax return, W-2 and 1099.
  2. Most recent pay stub.
  3. Most recent three complete bank statements.
  4. Total debt-income ratio: maximum 41:100.
  5. Most recent statement(s) for stocks, bonds, 401K/403B, etc.
  6. Most recent statement for bills indicating minimum payments.
  7. Landlord information or 12 months of cancelled rent checks./ If you have no credit history: Most recent utility bills./ Bankruptcy and Discharge Papers.
  8. Driver’s License/ SS Card/ Divorce and/or Alimony Papers. 

Lending (higher debt-to-income ratio: FHA 41%/VA 36%): 

203b: finance up to 97 percent of purchase price. 100 percent of closing costs can be gifted. Mortgage Insurance is ½ percent of loan amount (conventional is 1 percent).

 

Qualifications: 

  1. Two years of steady employment.
  2. Two year income the same or increasing.
  3. Maximum of two 30 day late notices in past two years on credit report.
  4. Bankruptcy a minimum of two years old with “good” credit since filing.
  5. Minimum of three years since any foreclosure with “good” credit since. 

Costs that can be shared between Buyer and Seller: 

  1. Recording Fee.
  2. Escrow Closing Fee. 

Mandatory Seller paid costs: 

Lender Doc Prep Fee.

 

The above financing information is provided as a reference only to help you to better understand some of the available loan programs and the language that you may here your own lender use. There are many other loan packages offered by various lenders. Please direct all specific financing questions to your lender. If you need help selecting a participating lender for any of the above loan programs, please contact me. I'll be happy to provide you with a list of lenders who are qualified to provide these type of loans as well as many other loans that may be available to you.

 

Mark Frentzel
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