Home Finance Seminar
Presented by
Then
Any employee could provide
mortgage loan information
100% financing was an option
Now
Mortgage questions can only be
answered by registered employees
100% financing is no longer offered
Strict disclosure rules
SAFE Act
What is it?
How does it change the Mortgage industry?
What is a Mortgage Loan Originator (MLO)
Nationwide Mortgage Licensing System (NMLS)
Can I Really Afford a House?
Total Gross Monthly Income x .28 will
give you a maximum mortgage
payment that you can afford.
Maximum Mortgage Payment
Example
$1,500 Borrower monthly gross income
$1,800 Co-Borrower monthly gross income $3,300 Total monthly gross income
$3,300 x .28 = $924
$924 is the maximum mortgage payment affordable
Other Expenses
Unexpected Repairs Higher utility costs Upkeep
Taxes & Insurance Premiums Down payment & closing costs
Where will the down payment come from? What about Closing Costs? What is PMI? What is an Escrow Account?
Escrow Accounts
An escrow account will be established for your new loan. Escrow is required on all loans over 80% LTV (loan to value). A
portion of the payment that you make each month will be placed into this account.
When your annual insurance premium is due, Commonwealth Credit Union will
disburse these funds to your insurance
Closing Costs
There are certain fees and costs
associated with mortgage loans. These
may be paid by the buyer or the seller.
These can include:
Flood Determination
Credit Report/Electronic Underwriting
Appraisal Fee & Title Examination / Title Insurance
Tax Service Fee
Prepaid Items
Prepaid interest
Escrows for taxes & insurance
Down Payment
Can come from checking / savings
account
Can be a gift from a family member
Can come from a qualified 401K Plan
If you finance more than 80% of the
purchase price, PMI (Private Mortgage
Insurance) is required.
*Closing costs/down payment must be on deposit for
What Is PMI
Private Mortgage Insurance is a type
of financial guarantee that helps
What Kind of House Should I
Look For?
You should look for:
A home in average to excellent
condition on 20 acres of land or less.
A traditional home may be a single
family detached house, condominium,
townhouse, or manufactured home
What Should I Stay Away From?
Some homes are more difficult for appraisers to find an accurate value because they are considered
non-traditional. These would include burm homes (underground), log homes, etc.
Doublewide mobile or modular homes must be on a permanent foundation & require
10% down payment. Commonwealth Credit Union only finances existing
I’ve Found My Dream Home…
You are ready to begin….
You will need to provide your mortgage loan originator
Completed Mortgage Application Three forms in application packet $20 for credit report
Property address Loan amount
Good Faith Estimate (GFE)
Will be mailed within 3 business days
of acceptance of a complete
application or if applying online, the
GFE will be delivered electronically at
time of application
The next step will be to provide…
1 most current consecutive paycheck stub Last 2 years W-2’s
Name / address of Landlord if renting
If self-employed or have rental income you will need the last 2 years tax returns
Copy of divorce decree, property settlement & child support order (if applicable)
$480 application fee
Appraisal and Title Exam
An appraisal will be completed by a
licensed appraiser that will visit the
home you are buying or refinancing
and determine the market value using
other homes in that area that have
What is a Title Examination
We order the Title Examination from
an attorney that researches the legal
ownership on the property you are
purchasing. The attorney will check
for existing liens, or judgments
against the property other than those
of which we are aware (i.e. the
What is Title Insurance?
Insurance against loss resulting from
Do I need Homeowners Insurance?
Now What?
Once the appraisal and title examination are completed, an underwriter will
Closing The Loan
Your Mortgage Loan Originator will call
and confirm the closing date and discuss payment options as well as closing
requirements
The closing will take place in an
All Policies and Procedures
are subject to
Questions You Should Ask
It is important to look at all of your
options when choosing a mortgage
lender. However, be sure you are
Are there Late Fees associated
with this loan, and if so, what are
Do the quoted closing costs
contain all cash to close
including escrow for taxes &
insurance as well as prepaid
Does this loan have a
pre-payment penalty?
Are there rate caps on your
adjustable rate products?
Reasons Loans May be Denied
Insufficient job timeInsufficient cash to close Excessive obligations
Insufficient collateral
Poor credit history, unpaid collections/judgments Application denied by PMI company
Insufficient reserves (PMI companies require 2 months PITI (Principal & Interest, Taxes &
Insurance) in reserve (savings) in some instances.
