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Helpful Hints When Applying For Home Mortgage

  • In order to expedite the processing of your mortgage application, please be prepared to provide the following information to your loan counselor at the time of your meeting:
    • INDICATES ITEMS THAT MUST BE PRESENTED AT TIME OF APPLICATION. BALANCE OF ITEMS ARE REQUIRED ONLY IF APPLICABLE.
    • Social Security Number(s)
    • W-2 forms and/or 1040 forms (1040’s apply if income is bonus’, overtime or commission, or if self-employed.
    • Application Fees (if applicable).
    • Names, addresses (including zip codes) and phone numbers of all employers 24 months prior to application of mortgage.
    • Names, addresses (including zip-codes), account numbers, monthly payments and current balances of ALL installment debts.
    • Names, Bank drawn upon and account numbers of ALL revolving debt, ie: Mastercard, Sears, Gas Charges, etc.
    • Names, addresses and account numbers for all checking accounts, savings accounts, money market accounts, etc.

    Profit and Loss and Balance Sheet for year to date income, IF SELF EMPLOYED.

    If divorced, a copy of the divorce decree.

    If receiving any type of assistance (de: child support, alimony), up to 6 months of verification.

    Social Security benefits, a copy of the award letter, Retirement pay, pension or other suitable verification would apply.

    DIVIDEND AND INTEREST INCOME, copies of the last 2 years 1040 forms, and certificates and/or statements.

    BANKRUPTCY, copies of petition, schedule and discharge. A written explanation as to the reason the bankruptcy occurred, is also required.

    RENTAL PROPERTY, copy of lease agreement.

    COMPANY RELOCATION, copy of relocation package, or name and phone number of the director of relocation of your firm for proper verification.

    COMPANY BUY-OUT, provide a copy of the companies offer and a copy of the contract on the sale of your present home.

    A recent paycheck stub will be necessary if overtime is being used to qualify for your mortgage. The stub should reflect the hourly rate of pay, together with that pay period’s overtime in addition to the year to date earnings.

    • INDICATES ITEMS THAT MUST BE PRESENTED AT TIME OF APPLICATION. BALANCE OF ITEMS ARE REQUIRED ONLY IF APPLICABLE.

    P.S from Bill and Pat

    Call us if there is any questions

WHAT IS ESCROW?

An escrow is created when money and/or documents are deposited by two or more persons with a third party which are to be delivered upon the happening of certain conditions. The third party is known as the escrow agent or escrow holder.

The authority given to an escrow holder is strictly limited by instructions provided by the parties involved. Consequently, an escrow holder acts on mutual instructions deposited into escrow and DOES NOT represent any party. The escrow officer is authorized by instructions to allocate funds for items during the escrow period, such as real estate commissions, title insurance, liens, recording fees and other closing costs. Instructions also specify the method of collecting funds, proration issues, time limitations and all the terms of the transaction. The escrow process protects all parties involved by retaining money and documents until the mutual instructions are met.

The statutory definition of escrow is found in Section 17003 of the California Financial Code and reads as follows: “Escrow” means any transaction wherein one person, for the purpose of effecting the sale, transfer, encumbering, or leasing of real or personal property to another person, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by such third person until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered by such third person to a grantee, grantor, promisee, promisor, obligee, obligor, bailee, bailor, or any agent or employee of any of the latter.

STEPS FOR A SUCCESSFUL ESCROW

  1. Phone an escrow officer and request an escrow number. It will save you and the escrow officer time if you use this number on all future communications.
  2. Read and understand the preliminary report. If an item is not understood, phone our escrow officer or title officer.
  3. COMMUNICATE with your escrow officer. Remember, as an escrow agent, we must be instructed when to order payoffs, releases, etc. It is important that you keep us informed as to loan approval and related issues.
  4. Inform your escrow officer if any changes occur. All changes should be in writing. Remember, with rare exceptions, escrow acts only on MUTUAL instructions.
  5. It is important to understand the fiscal tax year, debits, credits, prepaid interest, impounds and due and delinquent dates in order that this information will be easily understood by your client. Familiarize yourself with “normal” buyer’s and seller’s closing costs.
  6. Check each signature for accuracy as to middle initials and spelling. Have your client sign exactly as shown on the document. Make sure all required documents are signed and notarized when applicable.
  7. Double check all papers and documents before returning them to your escrow officer to verify the following:
    1. They are signed properly. Any and all changes are initialed
    2. The vesting shows as the client has requested
    3. Addresses are supplied for all future correspondence.
    4. Any changes in phone numbers are provided
    5. Any and all addendums are executed
    6. All funds held by the broker are deposited into escrow
    7. Client has noted if they wish their closing statements/funds to be mailed or held for pick up
    8. The notary completes the acknowledgment, signs it and places the seal clearly thereon
    9. Closing funds are by certified/cashiers check or wire

 

Glossary

Adjustable Rate Mortgage (ARM): A mortgage with an interest rate that changes over time in line with movements in the index. ARMs are also referred to as AMLs (adjustable mortgage loans) or VP & (variable rate mortgages).

Adjustment Period: The length of time between interest rate changes on an ARM. For example, a loan with an adjustment period of one year is called a one year ARM, which means that the interest rate can change once a year.

Amortization: Repayment of a loan in equal installments of principal and interest, rather than interest only payments.

Annual Percentage Rate (APR): The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.

Assumption of Mortgage: A buyer’s agreement to assume the liability under an existing note that is secured by a mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower (usually the seller) from liability.

Balloon Payment: A lump sum principal payment due at the end of some mortgages or other long-term loans.

Binder: Sometimes known as an offer to purchase or an earnest money receipt. A binder is the acknowl- edgment of a deposit along with a brief written agreement to enter into a contract for the sale of real estate.

Cap: The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.

CC&R’s: Covenants, conditions and restrictions. A document that controls the use, requirements and restrictions of a property.

Certificate of Reasonable Value (CRV): A document that establishes the maximum value and loan amount for a VA guaranteed mortgage.

Closing Statement: The financial disclosure statement that accounts for all of the funds received and expected at the closing, including deposits for taxes, hazard insurance, and mortgage insurance.

Condominium: A form of’ reel estate ownership where the owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces (walls, floors and ceilings) serve as its boundaries.

Contingency: A condition that must be satisfied before a contract is binding. For instance, a sales agreement may be contingent upon the buyer obtaining financing.

Conversion Clause: A provision in some ARMs that enables you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate is generally set at the prevailing interest rate for fixed-rate mortgages. This conversion feature may cost extra.

Cooperative: A form of multiple ownership in which a corporation or business trust entity holds title to a property and grants occupancy rights to shareholders by means of proprietary leases or similar arrangements.

CRB: Certified Residential Broker. To be certified, a broker must be a member of the National Association of Realtors, have five years experience as a licensed broker and have completed five required Residential Division courses.

Due-On-Sale Clause: An acceleration clause that requires full payment of a mortgage or deed of trust when the secured property changes ownership.

Earnest Money: The portion of the down-payment delivered to the seller or escrow agent by the purchaser with a written offer as evidence of good faith.

Escrow: A procedure in which a third party acts as a stakeholder for both the buyer and the seller, carrying out both parties’ instructions and assumes responsibility for handling all of the paperwork and distribution of funds.

FHA Loan: A loan insured by the Insuring Office of the Department of Housing and Urban Development; the Federal Housing Administration.

Federal National Mortgage Association (FNMA): Popularly known as Fannie Mae. A privately owned corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by the VA, as well as conventional home mortgages.

Fee Simple: An estate in which the owner has unrestricted power to dispose of the property as he wishes, including leaving by will or inheritance. It is the greatest interest a person can have in real estate.

Finance Charge: The total cost a borrower must pay, directly or indirectly, to obtain credit according to Regulation Z.

Graduated Payment Mortgage: A residential mortgage with monthly payments that start at a low level and increase at a predetermined rate.

GRI: Graduate, Realtors Institute. A professional designation granted to a member of the National Association of Realtors. who has successfully completed three courses coveting Law, Finance and Principles of Real Estate.

Home Inspection Report: A qualified inspector’s report on a property’s overall condition. The report usually includes an evaluation of both the structure and mechanical systems.

Home Warranty Plan: Protection against failure of mechanical systems within the property. Usually includes plumbing, electrical, heating systems and installed appliances.

Index: A measure of interest rate changes used to determine changes in an ARM’s interest rate over the term of the loan.

Joint Tenancy: An equal undivided ownership of property by two or more persons. Upon the death of any owner, the survivors take the decedent’s interest in the property.

Lien: A legal hold or claim on property as security for a debt or charge

Loan Commitment: A written promise to make a loan for a specified amount on specified terms.

Loan-To-Value Ratio: The relationship between the amount of the mortgage and the appraised value of the property, expressed as a percentage of the appraised value.

Margin: The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

Mortgage Life Insurance: A type of term life insurance often bought by mortgagors. The coverage decreases as the mortgage balance declines. If the borrower dies while the policy is in force, the debt is automatically covered by insurance proceeds.

Negative Amortization: Negative amortization occurs when monthly payments fail to cover the interest cost. The interest that isn’t covered is added to the unpaid principal balance, which means that even after several payments you could owe more than you did at the beginning of the loan. Negative Amortization can occur when an ARM has a payment cap that results in monthly payments that aren’t high enough to cover the interest.

Origination Fee: A fee or charge for work involved in evaluating, preparing, and submitting a proposed mortgage loan. The fee is limited to 1 percent for FHA and VA loans.

PITI: Principal, interest, taxes and insurance.

Planned Unit Development (PUD): A zoning designation for property developed at the same or slightly greater overall density than conventional development, sometimes with improvements clustered between open, common areas. Uses may be residential, commercial or industrial.

Point: An amount equal to 1 percent of the principal amount of the investment or note. The lender as- sesses loan discount points at closing to increase the yield on the mortgage to a position competitive with other types of investments.

Prepayment Penalty: A fee charged to a mortgagor who pays a loan before it is due. Not allowed for FHA or VA loans.

Private Mortgage Insurance (PMI): Insurance written by a private company protecting the lender against loss if the borrower defaults on the mortgage.

Purchase Agreement: A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under stated terms and conditions. Also called a sales contract, earnest money contract, or agreement for sale.

Realtor: A real estate broker or associate active in a local real estate board affiliated with the National Association of Realtors..

Regulation Z: The set of rules governing consumer lending issued by the Federal Reserve Board of Governors in accordance with the Consumer Protection Act.

Tenancy in Common: A type of joint ownership of property by two or more persons with no right of survivorship.

Title Insurance Policy: A policy that protects the purchaser, mortgagee or other party against losses.

VA Loan: A loan that is partially guaranteed by the Veterans Administration and made by a private lender.

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