Mortgage Pre-Approval Checklist

Before you even start looking for a home, I always advise buyers to get Pre-Approved by a loan officer. What this helps to do is not only give us a price limit as to what homes you can afford, but also helps us to better negotiate with the sellers when we do find your dream home. Sellers are more agreeable to negotiate with a Pre-Approved buyer than one that isn’t.

What is the difference in Pre-Qualified and Pre-Approval?

  Pre-Qualification is normally issued by a loan officer, who, after interviewing you, determines the dollar value of a loan you can be approved for. However, loan officers do not make the final approval, so a pre-qualification is not a commitment to lend. After the loan officer determines that you pre-qualify, he/she then issues you a pre-qualification letter which then is used when you are making an offer on a property. The pre-qualification letter indicates to the seller that you are qualified to purchase the house you are making an offer on.

Pre-Approval is a step above pre-qualification. Pre-approval involves verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. If your loan is pre-approved, you are then issued a pre-approval certificate. Getting your loan pre-approved allows you to close very quickly when you do find a house. A pre-approval can help you negotiate a better price with the seller, since being pre-approved is very close to having cash in the bank to pay for the house!

What Do I need to get Pre-Approved?

1. A copy of the Purchase Contract(if you are getting Pre-Approved before we have the contract, I will fax the necessary paperwork to the Lender)
2. Your checkbook for the application fee (contact the Lender for the amount you will need to bring.)
3. Social Security Numbers for each borrower along with your Driver’s License or Photo ID.
4. Most 3 recent pay stubs.
5. If you receive Social Security or Disability income, bring a copy of a typical monthly check.
6. Past 2 years of W-2’s with completed Federal Income Tax.
7. Any 401-K or Retirement Accounts.
8. Past 3 Months of Bank Statements.
9. Names and Addresses of ALL Employers for the past 2 years.
10. If renting, bring the Landlord’s name,address, and phone number. Include the monthly rent amount and past 3 cancelled checks paid for the rent.
11. A copy of all stocks and bonds along with 3  Savings Accounts statements.
12. A complete list of all monthly debts, their account numbers, amount owed and monthly payments of each one.
13. If divorced, provide a complete copy of your divorce decree and seperation agreement along with any documented child support.
14. If bankruptcy has been declared within the last 10 years, you will need to provide discharge documents.
15. If applying for a VA loan bring your DD-214 and Certificate of Eligibility. If you are still on active duty, bring a statement of service.
16. If you have a co-signer, they will need to come with you and bring everything stated above.

Being a Pre-Approved buyer is very important, and bringing all necessary documents helps to make the entire process go smoothly. If you need help looking for a home or need a recommended loan officer, call Charlene Fay at 513-602-9000 or email us at CharleneFay@REMAX.net.

We’re only a Click or a Call Away!

 

HUD-1 Settlement Statement Explained

Closing your home should be exciting, and once you understand the process and how it works, it can be!

What I have done below is broken down each line with a detailed description of the HUD-1 Settlement Form. Once a closing date has been established, a HUD will be sent to you for review, and this way it makes it much easier to understand the fees involved in the transaction.

1. Section 700- This section refers only to purchases and describes all commissions paid to Realtors. These commissions are paid by the sellers, are usually a percentage of the home’s selling price, and are according to whatever the buyer and seller agree to in the purchase contract.

. SETTLEMENT CHARGES
700. TOTAL SALES/BROKER’S COMMISSION based on price $ @ %=	PAID FROM BORROWER’S FUNDS AT SETTLEMENT	PAID FROM SELLER’S FUNDS AT SETTLEMENT
Division of Commission (line 700) as follows:
701. $ to
702. $ to
703. Commission paid at Settlement
704.

2. Section 800- Loan Fees

801. Loan Origination: This fee is usually known as a loan origination fee but sometimes is called a “point” or “points.” It covers the lender’s administrative costs in processing the loan. Often expressed as a percentage of the loan, the fee will vary among lenders. Generally, the buyer pays the fee, unless otherwise negotiated.

802. Loan Discount: Also often called “points” or “discount points,” a loan discount is a one-time charge from by the lender or broker to lower the rate at which the lender or broker would otherwise offer the loan to you. Each “point” is equal to one percent of the mortgage amount. For example, if a lender charges two points on a $100,000 loan this amounts to a charge of $2,000.

803. Appraisal Fee: This charge pays for an appraisal report created by a qualified appraiser to estimate fair market value of the property.

804. Credit Report Fee: This fee covers the cost of a credit report, which shows your credit history. The lender uses the information in a credit report to aid in their decision in approving your loan and the amount they to lend you.

805. Lender’s Inspection Fee: This charge covers inspections made by an nspectorto make sure the home is thoroughly finished and ready for occupancy. (Pest or other inspections made by professional companies other than the lender are discussed in line 1302.)

806. Mortgage Insurance Application Fee: This fee covers the processing of an application for mortgage insurance. If the borrower has less than 20% equity in the home, then it is charged on a monthly basis.

807. Assumption Fee: This is a fee which is charged when a buyer “assumes” or takes over the duty to pay the seller’s existing mortgage loan.

808. Mortgage Broker Fee: Fees paid to mortgage brokers would be listed here.

800. ITEMS PAYABLE IN CONNECTION WITH LOAN

801. Loan Origination Fee %

802. Loan Discount %

803. Appraisal Fee to

804. Credit Report to

805. Lender’s Inspection Fee

806. Mortgage Insurance Application Fee to

807. Assumption Fee

808. Mortgage Broker Fee

809.

810.

811.

3. Section 900- Interest and Escrows

900. Items Required by Lender to Be Paid in Advance: You may be required to prepay certain items at the time of settlement, such as accrued interest, mortgage insurance premiums and hazard insurance premiums.

901. Interest: Lenders usually require borrowers to pay the interest that accrues from the date of settlement to the first monthly payment.

902. Mortgage Insurance Premium: The lender may require you to pay your first year’s mortgage insurance premium or a lump sum premium that covers the life of the loan, in advance, at the settlement.

903. Hazard Insurance Premium: Hazard insurance protects you and the lender against loss due to fire, windstorm, and natural hazards. Lenders often require the borrower to bring to the settlement a paid-up first year’s policy or to pay for the first year’s premium at settlement.

904. Flood Insurance: If the lender requires flood insurance, it is usually listed here.

900. ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE

901. Interest from to @$ /day

902. Mortgage Insurance Premium for months to

903. Hazard Insurance Premium for years to

904. years to

905.

4. Section 1000 – 1008. Escrow Account Deposits: These lines identify the payment of taxes and/or insurance and other items that must be made at settlement to set up an escrow account. The lender is not allowed to collect more than a certain amount. The individual item deposits may overstate the amount that can be collected. The aggregate adjustment makes the correction in the amount on line 1008. It will be zero or a negative amount.

1000. RESERVES DEPOSITED WITH LENDER

1001. Hazard Insurance months @ $ per month

1002. Mortgage insurance months @ $ per month

1003. City property taxes months @ $ per month

1004. County property taxes months @ $ per month

1005. Annual assessments months @ $ per month

1006. months @ $ per month

1007. months @ $ per month

1008. Aggregate Adjustment

5. Section 1100-1113- Title and Closing Charges

1100. Title Charges: Title charges may cover a variety of services performed by title companies and others. Your particular settlement may not include all of the items below or may include others not listed.

1101. Settlement or Closing Fee: This fee is paid to the settlement agent or escrow holder. Responsibility for payment of this fee is usually negotiated between the seller and the buyer.

1102-1104. Abstract of Title Search, Title Examination, Title Insurance Binder: The charges on these lines cover the costs of the title search and examination of public records at the courthouse.

1105. Document Preparation: This is a separate fee that some lenders or title companies charge to cover their costs of preparing final legal papers.

1106. Notary Fee: This fee is charged for the cost of having a person who is licensed as a notary public swear to the fact that the persons named in the documents did, in fact, sign them.

1107. Attorney’s Fees: You may be required to pay for legal services provided to the lender, such as an examination of the title binder. Occasionally, the seller will agree in the agreement of sale to pay part of this fee. The cost of your attorney and/or the seller’s attorney may also appear here. If an attorney’s involvement is required by the lender, the fee will appear on this part of the form, or on lines 1111, 1112 or 1113.

1108. Title Insurance: The total cost of owner’s and lender’s title insurance is shown here.

1109. Lender’s Title Insurance: The cost of the lender’s policy is shown here.

1110. Owner’s (Buyer’s) Title Insurance: The cost of the owner’s policy is shown here.

1100. TITLE CHARGES

1101. Settlement or closing fee to

1102. Abstract or title search to

1103. Title examination to

1104. Title insurance binder to

1105. Document preparation to

1106. Notary fees to

1107. Attorney’s fees to

(includes above items numbers; )

1108. Title Insurance to

(includes above items numbers; )

1109. Lender’s coverage $

1110. Owner’s coverage $

1111.

1112.

1113.

 

1200-1203. Recording Fees:These fees are associated with the new Deed and/or Mortgage and are required by the Title Company to be filed with the county recorder.

1200. GOVERNMENT RECORDING AND TRANSFER CHARGES

1201. Recording fees: Deed $ ; Mortgage $ ; Releases $

1202. City/county tax/stamps: Deed $ ; Mortgage $

1203. State tax/stamps: Deed $ ; Mortgage $

1204.

1205.

 1301. Survey: This is a detailed check of the “legal description” of your property from the public records.  This will let the lender be aware of any encroachments that may exist.

1302. Pest and Other Inspections: This fee covers inspections for termites or other pest infestation of your home.

1303-1305. Lead-Based Paint Inspections: This fee covers any lead-based paint inspections.

1300. ADDITIONAL SETTLEMENT CHARGES

1301. Survey to

1302. Pest inspection to

1303.

1304.

1305.

 

1400. Total Settlement Charges: The sum of all fees in the borrower’s column entitled “Paid from Borrower’s Funds at Settlement” is placed here. This figure is then transferred to line 103 of Section J, “Settlement charges to borrower” in the Summary of Borrower’s Transaction on page 1 of the HUD-1 Settlement Statement and added to the purchase price. The sum of all of the settlement fees paid by the seller are transferred to line 502 of Section K, Summary of Seller’s Transaction on page 1 of the HUD-1 Settlement Statement.

1400. TOTAL SETTLEMENT CHARGES (enter on lines 103, Section J and 502, Section K)

 

Paid Outside Of Closing (“POC”): Some fees may be listed on the HUD-1 to the left of the borrower’s column and marked “P.O.C.” Fees such as those for credit reports and appraisals are usually paid by the borrower before closing/settlement and are additional costs to you. Other fees such as those paid by the lender to a mortgage broker or  may be paid after closing/settlement, and are usually included in the interest rate or other settlement charge.  These types of fees will not be added into the total on Line 1400.

Hopefully this information helps you in understanding the cost breakdown of buying or selling a home. If you have any questions I can answer about any real estate topic, please don’t hesitate to call Charlene Fay at 513-602-9000 or email us at CharleneFay@REMAX.net.

We’re only a Click or a Call Away!

  

 

 

 

 

Top 10 Selling Mistakes

Before you decide to sell your home, be sure to review these Top 10 Selling Mistakes that may keep you from getting the most money out of your home.

1. PRICING TOO HIGH: It’s no secret, price is everything. Overpricing does more to discourage buyers than any other single factor. When you overprice, you put your home in competition with homes that may be newer, larger or have more amenities than yours. You help your competition sell their home. This leads to long days on the market, and costs you, the seller, money in the long run. Make sure you get your pricing advice from a professional agent who knows the market.

2. POOR CONDITION: A home that is in ill repair, or otherwise poor condition, does not excite buyers. A home like this is looked at by buyers as a work project and money pit. Having your home in good repair and great showing condition will significantly improve your chances for a sale at top dollar value. .

3. POOR CURB APPEAL:Most buyers today want to drive by. If your home is an attractive drive-by, it will gain more attention and certainly more showings. Doing the little things to help your home’s curb appeal will make a huge difference.

4. DREARY DARK HOMES DON’T SELL: Buyers like updated, light and bright homes. Dark carpets, paint, and curtains are often buyer turn-offs. Go through your home and remove clutter; touch up and update paint, counter tops, and carpets. Open your home up and make sure the sun shines in. Offensive odors from pets and smoking are also huge turn-offs to most buyers. Rid your home of offensive smells by burning scented candles and create a pleasant aroma. The most important rooms to concentrate on are the living room, family room, kitchen and master bedroom. Your entire home’s atmosphere is set off by these rooms.

5. DON’T OVER-IMPROVE: Get your home in good showing condition, but don’t over do it. Huge projects such as complete remodels of kitchens, adding decks, and expanding room sizes may not pay back your investment. Before you jump into a huge improvement project, get some good advice.

6. BE FINANCEABLE: Bad roofs, exterior paint, or structural problems may make your home un-financeable. The wider the scope of financing that your home can qualify for, the higher the overall market value. Remember — government programs like VA and FHA will be the most picky.

7. GET GOOD ADVICE AND GOOD MARKET EXPOSURE: Hiring a professional agent will help you get your home priced right, and will also get you started with the best fix ups. A strong agent will get your home exposed to the largest number of potential buyers. Paying the agent fee is often the least expensive part of selling your home. Trying to sell your home yourself can be costly. Most ‘for sale by owner’ homes close for less than comparable homes listed with an agent, and you have no representation.

8. DON’T BE PRESENT DURING SHOWINGS: When your home is being shown, go for a drive or a walk. Take yourself, your family, and pets and let the agent and their clients have the freedom they need. An agent can always do their best job of showing your home when you are not underfoot. Buyers are more at ease and much more likely to spend time looking at your home’s features and benefits.

9. LET YOUR AGENT DO THE NEGOTIATING: If there is ever a good reason to have a veteran agent working for you, it’s during the negotiation of your home sale. A good negotiator can mean thousands of dollars to you, and will protect your interests. Don’t let your emotions run wild during negotiations. Try to separate your emotions from your business side. Remain cool and calm during this time.

10. ACT FAST WITH OFFERS: When you do get an offer on your home, act quickly and decisively. Letting offers sit around without acting can be a huge mistake. Things can change quickly in the mind of a prospective buyer. Acting quickly while the excitement and interest level are at a high point can be very important. Typically, a buyer’s motivation level decreases with time. Buyers’ remorse can even set in. Acting in a timely manner is essential.

If you would like an experienced agent to help you with the sale of your home, Call Charlene Fay at 602-9000 or email us at CharleneFay@REMAX.net

We’re only a Click or a Call Away!