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T H EP R O C E S SQ U A L I F Y I N GS T E P S T OT A K E N O WC O S T ST Y P E S O FM O R T G A G E Smortgage 101a home buyer's guide through the basics of a mortgage approval.

mortgage/ˈmôrɡij/nounA mortgage is simply a loan that is used to buy yourhome.Unless you can pay for your home upfront in an all cashoffer, you'll need to take a loan from the bank to paythe home off gradually. Just like any loan, you'll need to apply for it. If you're"approved" you will be able to borrow a certainamount of money from a lender. Each month you'll paya portion of the loan (plus interest) for a period of time.The requirements to secure a mortgage may seemoverwhelming - but by understanding basic lendingterminology and requirements, you'll be able to avoidcommon roadblocks. Use this guide to learn how to prepare before applyingfor a mortgage, and what to watch for during theprocess to keep your mortgage application as simple aspossible.

CHOOSE YOUR LENDERWhat is your process for preapproval and closing?How do you communicate with homebuyers?What will be my down payment requirement?What are the fees?Shop around to find the best mortgage for yourfinancial situation. Make sure to ask plenty ofquestions, such as:HOUSE HUNTING & OFFERFind your ideal home and present your offer. You mayneed to negotiate the price with the seller, and bothparties will sign a purchase agreement.UNDERWRITING,APPROVAL & CLOSINGThe underwriter analyzes the loan file to determine if itcan be approved. You may be asked for moreinformation, but don't be frustrated -this is normal! Theunderwriter will issue an approval, and you're ready toattend the closing to finalize your home purchase. GET PRE-APPROVED FOR A MORTGAGEBe taken seriously as a buyerKnow how much you can affordHave negotiating powerSpeed up loan processing time for a quicker,smoother closingThe lender will review your financial situation todetermine how much they are willing to lend.Pre-approval helps you:LOAN APPLICATION &PROCESSINGYou'll fill out a loan application with the info aboutthe home being purchased. The loan processor willcreate your file and request your documentation.Once your home inspection is complete, the lenderwill order an appraisal for your home.01STEP02STEP03STEP04STEP05STEPthe process

Determine theapproximate amount ofmortgage you may qualifyfor by takingyour grossmonthly income andmultiply by 25%. This isthe maximum that manylenders would like to seefor your monthlymortgage payment.Stable income and incomeverification are bothnecessary. Make sure tostick with your employerwhile going through thehome buying process, as ajob switch will forcelenders to reevaluate yourfinances.Find out your currentcredit history and score.Credit scores rangebetween 200 and 860. Acredit score above 620 isbest for trying to obtain amortgage. You canimprove your credit scoreby paying down credit cardbills and not chargingcredit cards to the max. Ifpossible, wait 12 monthsafter credit difficulties toapply for a mortgage. Andonce you're ready to shopfor a mortgage, don't openany new credit cardaccounts.QUALIFYFOR AMORTGAGEIN TODAY'SMARKET.

types offinancingCONVENTIONAL LOANThis is the "standard" mortgage -most home buyers use aconventional mortgage loan. Withat least a 20% down payment,you'll qualify for the best rateswithout required mortgageinsurance. Conventional mortgagesare not guaranteed or issued bythe federal government.FHA LOANThis is a government backedloan, sponsored by the FederalHousing Administration. If yourcredit score is too low to qualifyfor a conventional loan, you'lllikely use a FHA Loan with aminimum down payment of 3.5%and required mortgageinsurance.VETERAN'S LOANThis type of loan is for active dutymilitary or veterans. The U.S.Department of Veterans Affairsbacks this loan instead of atraditional bank. Most VA loans donot require a down payment andoffer several other advantages.

costsT O C O N S I D E R W H E N B U Y I N G EARNEST MONEYTypically 1-2% of thepurchase price, this is adeposit paid by the buyer.This is held by the escrowcompany as a good faith fromthe buyer to the seller. Atclosing, the earnest moneywill be transferred to theseller as a portion of theoriginal purchase amount.DOWN PAYMENTThis is the portion of thepurchase price that you'll bepaying in cash. The rest ofthe payment to the sellercomes from your mortgage. Down payments aregenerally between 5- 20% ofthe purchase price. A downpayment of at least 20%allows you to avoid privatemortgage insurance.CLOSING COSTSClosing costs are associatedwith your mortgage, thetransaction, or any paymentrequired by the lender (suchas taxes, insurance and titlefees.) These costs are notpart of the purchase amount,and are collected separatelyby the escrow company atclosing. As a buyer, you canexpect to pay 1-5% of thepurchase price in closingcosts.

what'sin amortgagepayment?PRINCIPAL OF THE LOANThis is the amount you borrowed, and isalso referred to as the "amountfinanced."INTEREST OF THE LOANThe amount the lender charges you toborrow the money.PROPERTY TAXESA portion of your payment will be usedfor property taxes to your local city/ municipality.HOMEOWNER'S INSURANCEThe amount you pay to insure your homefrom damages (fire, natural disasters,etc.) Also consider for your payment -PRIVATE MORTGAGE INSURANCEUsually required on loans if your downpayment is less than 20%.

T E R M S T OK N O W0 2Adjustable-rate mortgage -The interest rate is flexible and subject toadjustments, usually offering a lower rate thatwill rise as the market rates increase. Thesetypes of mortgages may be a good choice whenfixed interest rates are high. Rates adjust onpre-determined dates (i.e. annual, 3, 5 or 7 yearterms.) 0 4Mortgage Points - Also known as discount points, these are feespaid to the lender at closing in exchange for areduced interest rate. One point costs 1percent of your mortgage amount (or $1,000for every $100,000.) Paying points is oftenreferred to as "buying down the rate."0 1Fixed rate mortgage -The interest rate remains the same, allowingyou to lock in the rate for the life of the loan.This type of mortgage provides a stable andpredictable monthly payment.0 3APR (Annual Percentage Rate) - This is your interest rate stated as a yearly rate.Your Annual Percentage Rate is typically higherthan your interest rate because it includes fees,such as lender and mortgage broker fees.

$$$$$Total Rent/ MortgageChild Support/ AlimonyHealth InsuranceLife InsuranceOther InsuranceVehicle PaymentsVehicle InsuranceOther LoansUtilitiesCredit Card PaymentsGroceriesClothes/ PersonalMedical/ DentalPrescriptionsHousehold GoodsChild CareEducationEating OutEntertainment$$$$$$$$$$$$$$$$$$$$Total Take Home Pension/ SocialDisabilityInterest/ DividendsOtherT O T A L I N C O M E- T O T A L E X P E N S E S= D I S P O S A B L E I N C O M EE X P E N S E S$monthly budgetT R A C K Y O U RT O T A L E X P E N S E SI N C O M ET O T A L I N C O M E$$$When you apply for a mortgage, yourlender will approve you for a maximummonthly mortgage payment. Determining - and sticking to - abudget helps ensure you'll be able toafford your new mortgage payment,while staying on top of your otherexpenses.

Before you begin the mortgage process, it's importantto have your financial plan for purchasing in place. Useyour tracked monthly budget to save for a downpayment, reduce debt and increase your credit score.It's also crucial to take the extra time to search for theright lender and the right loan. Check references, shoparound and ask plenty of questions- including anestimate of fixed costs for the mortgage.Your lender will inform you on the documentation youwill need. However, you can begin preparing standarddocuments now, such as:- 1 month of recent pay stubs- Most recent 2 years of tax filings- 3 months of bank account statements And finally, make sure to respond quickly to thepaperwork your lender requests to keep the mortgageprocess on schedule. Now that you have the basics down, you're off to a greatstart for a seamless mortgage approval! steps totake now

M O R T G A G E C O N T A C T SWilliam Calzadilla- Branch Manager, NMLS# 139809908-296-1621 cell# * william.calzadilla@rate.com"Even though it seems I am always working, I actually love totravel with my wife and kids. When not working and traveling,I love playing basketball with my kids and playing with ourDog Kloe"21 years of experience he has work through alot of scenarios Guaranteed Rate 4 Century Drive Suite 150 Parsippany, NJ 07054A F E W E X P E R I E N C E D Q U A L I F I E D L E N D E R S Corinne Wallace - Sales Manager,NMLS# 1531585732-809-2600 cell# * corinnewallace@loandepot.com"Along with mortgages I love to watch my daughter at herdance competitions and my son playing baseball. We can'tforget enjoying time with my lab mix while trying new recipesand going to concerts"20 years of experience is so helpful specially with the uniqueLoan Depot products. Loan Depot65 Madison Ave. Suite 210 Morristown, NJ 07960George Ferreira- Vice President, Sales NMLS# 217111973-207-3186 direct# * info@theloanplanner.com"Outside of doing loans I love being a father. I enjoy travelingand creating new memories that will last a lifetime.20 years of experience as a loan originator specializing in many types of mortgage products. Greenway Mortgage Funding Corp.107 Tindall Rd. Middletown, NJ 07748

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