This event is hosted and presented by four local industry professionals to help you understand the steps involved in buying your first home. 

This event takes place on Wednesday, February 22, 2012.  Presentation from approximately 7:00- 8:15 with Q&A to follow.

SKYVIEW LODGE
336 PEARL ROAD
BRUNSWICK, OHIO

Presentation by: 

 Hosted by

Jessica Frazier
Account representative
Liberty Title

Topics covered will include:

The role of the real estate agent

Determining what is most important in selecting your first home

Establishing a budget

The loan approval process
Prequalification and pre-approval, appraisal, Obtaining a loan commitment, clearing conditions, receiving the clear to close, closing, filing and funding

Loan programs, required down payment, minimum credit scores
Conventional, FHA, FHA 203k, VA, OHFA, USDA

Credit topics
Minimum credit scores, tradelines and rent history, past credit issues, major derogatory credit.  Credit repair

Rates and closing costs
Typical closing costs and description, factors affecting rates and fees, financing closing costs/ minimum out of pocket, escrows

RSVP here with attendee name(s) and phone.

• Borrower who currently has an interest rate over 4.75%.
• Borrower who hopes or plans to move within the next 1-5 years.
• Borrower who is unsure when you may move next.
• Borrower who wants to improve household cash flow by re-amortizing to a new 30 year fixed rate mortgage.
• Borrower who wants to build equity faster by switching to a shorter term.
• Borrower who is unwilling to lose equity by “rolling in” unneccessary closing costs

FAQ

Are there really no closing costs?

In most cases you will be required to pay an application fee of $400 to pay for an appraisal up front.  This $400 will be reimbursed at closing.  Since the appraisal is a necessary part of most refinances*, and they are a 3^rd party (not affiliated with American Midwest Mortgage Corporation) we do have to pay them prior to receiving the appraisal. So I lied, but I didn’t.  There are actually many other closing costs involved in the transaction, but are paid for by my company.

What terms, types, and loan amounts can be done without closing costs?

FHA, VA, and Conventional loans over $150,000.  30, 20, and 15 year no closing cost loan can be done with FHA and VA loans.  For conventional no closing cost loans with terms of 30, 25, 20, 15, or 10 years are available.

How are my taxes and insurance handled on a no closing cost loan?

If your property taxes and home owners insurance are paid in conjunction (escrowed) with your mortgage payment, (escrowing these payments are required for FHA, VA loans, and also required for conventional loans over 80% loan to value) a new escrow account will need to be established when refinancing.

The amount required to establish the new escrow account depends upon when the next payments are due (to the county you live in for property taxes, and to your insurance company for home owners insurance).  The new escrow account will be set up so there are between 7-8 months worth of property tax payments in the account when the half year tax bill is due.  The extra 1-2 months is required to account for future shortages due to tax increases.  The escrow account is also set up so there will be a full year premium to disperse when the next insurance bill comes.

What happens to my current escrow account?

The amount in your current escrow account will be sent to you typically within 2 weeks of the current loan being paid off.  You can use that money as you wish.

What if my loan is not over $150,000, can I get a no cost refinance?

I can try, but the closer to $150,000 the lower the closing costs will be.  For lower loan amounts, title costs, filing fees, and appraisal fees may apply.  I would be happy to provide a custom quote for loans below $150k. 

What kind of borrowers or mortgages might not be able to be offered a no closing cost option?

• Cash out conventional refinances above 70% loan to value (FHA cash out is ok).
• Investment properties
• 2-4 unit properties
• Conventional refinances with credit scores below 740 (FHA minimum 640)
• Conventional refinances with subordinate financing (2^nd mortgages/ home equity loans)

Additional information about closing costs

Additional information about no closing cost loans

If you would like to know what rate can be offered with no closing costs please contact me.

*Streamline FHA refinances and some Making Home Affordable (HARP) loans do not require appraisals.

The FHA streamline refinance allows a borrower to refinance their existing FHA regardless of the current value of the house.  In order to qualify for an FHA streamline your current loan must be on time, with no more than one 30 day late in the past 12 months on the current mortgage.

FHA to FHA streamline refinances will require you to come to closing with some money.   The only closing cost that can be financed is the up-front PMI insurance which is required to be paid to HUD.  Closing costs and  new escrow account must be paid at the closing.   Closing costs on an FHA streamline can be zero with by taking a slightly higher than average interest rate.  A new escrow account, properly timed, can be as little as 3 months of property taxes and home owners insurance.   Closing on an FHA streamline is best done 1 week before the end of the month, right before county property taxes are due.  In doing so, you will usually be coming to your refinance closing with less than your monthly mortgage payment.  Closing late December and late June are the best times in most Ohio counties.

Generally speaking,  any type of residential mortgage can be refinanced with an FHA loan, keeping in mind there are limits to FHA loan size.   The maximum loan to value on an FHA refinance is is 97.75%.    Thats about as close to a no equity refinance as it gets.    For borrowers who are underwater, due to having a 2nd mortgage (home equity loan or line) FHA can allows the 2nd mortgage to stay in place, provided the combined loan to value (CLTV)  remains below 125%.

If you have any questions or are interested in an FHA refinance please contact me.  

VA and USDA loans are available with no money down in Ohio.   Both programs have unique restrictions, and most will not qualify for obvious reasons.

VA Loans are, hands down, the best finance option in the country today.  If you are eligible for VA benefits, first I would like to thank you for serving our country, and I would be honored to help you with the purchase of a home.  If you are eligible for a VA loan, please visit my VA loans page, and contact me if I can be of any service to you.

The USDA loan program also requires no down payment.  USDA loans in Ohio are restricted by location, income and loan size.   For this reason, many people will need to look towards other low money down options to purchase a home.  For more information about the USDA loan program, please visit my USDA loan page, and contact me here.

The next closest option for zero down is the Ohio Housing Finance Agency (OHFA) first time homebuyer program. A 3.5% down payment is required, however 2.5% of the down payment can come from a 2.5% grant.  The 2.5% grant is only repaid under circumstances that you sell the home within 5 years. Only 1% down is required to purchase your first home with the OHFA program.

FHA is one of the most popular loan programs in the US today.  FHA requires 3.5% down, all of which is allowed to come from a family gift, if necessary.  Many people are unaware that FHA is NOT exclusively a first time homebuyer program.  Any qualifying borrower can purchase a primary residence, regardless of home many homes you have purchased in the past, and regardless of income.

If you are interested in any of these programs or have questions about them please call me at 440-666-6069, or contact me here.

You may already know that FHA loans are assumable.  If you don’t know what this means, you might want to read on.  If you already know what an assumable loan entails, you might want to see the numbers that follow. In essence, if someone sells a home that is financed with an FHA mortgage, they can transfer the outstanding loan (it’s rate, balance, and remaining term) to the new buyer, provided they qualify for the loan, of course.  If they don’t qualify, they probably won’t be buying your house, or another one like it. 

THIS IS A BIG DEAL

Let’s assume (no pun intended) that a borrower refinances their  $155,000 house today  with a $150,000 FHA mortgage on a 30 year fixed at 4.25%, today, with virtually no closing costs ( aside from a $400 appraisal).  This was possible today, with a loan amount of 150k or greater.   

The mortgage payment, excluding property taxes and home owners insurance, associated with the above terms (150k @ 4.25% on a 30 year FHA) would be $880/ month.

$738/month Principle and interest payment
$142/ month PMI

Please note property taxes and insurance have been left out, as “they are what they are”.   I should point out that FHA loans do require borrowers to escrow taxes and insurance along with the mortgage payment.

(Fast forward 5 years)

After making the regular, minimum monthly payment of $880 on the $150,000 mortgage for 60 months, the borrowers current mortgage balance is $136,211.  The owner of the home is ready to make a move, on top bigger and better things.  Lo and behold, there is a potential buyer who is considering making a $150,000 offer (sorry about the number, we hope home is going to go for $200k, but in my jaded example, it’s 150k).   The  mortgage consultant (let’s name him Todd… why not?), who made the FHA refinance recommendation five years earlier, reminded you every year or so, to strongly leverage the benefit of the 4.25% assumable FHA loan which they fortuitously obtained back in August of 2011. 

$738/ month (25 years remaining)
$132/ month PMI (PMI goes down about $2 a year on this size loan)

Just for the purpose of making a point we will say that prevailing 30 year FHA fixed rates are 6% in 5 years.  Jeez,  I don’t know, maybe 30 year FHA rates will be 4% in 60 months.  But, then again, maybe rates are 11%, PMI on new FHA loans has tripled, our unit of currency is the Yuan, our children are learning Mandarin ever since Uncle Sam defaulted on “our” interest-only payments.  I digress…ok, where was I…  Oh yes, it’s 2016, rates are only 6%, we all speak English, and gas just dipped to $8.49 a gallon, and someone is considering buying your home for 150k!  

The buyer is considering another house (House A) for $150,000 with a 30 year FHA fixed rates at 6%,  or  our sellers home (House B) which offers the assumable FHA loan at 4.25% with a $136,211 balance and 25 years remaining. 

At this point I have one question:
How do you feel about making some more assumptions? Lets do it, after all, we are talking about assumptions.  Not just because it’s fun,  we need to.

So let’s assume that FHA down payment guidelines and PMI are the same.  Assuming things are going to be no worse is really stretching reality, but lets just pretend.   After all PMI just keeps going up, and they (“they” are the same people that decided in the early 90s’ that everyone should be a home owner, regardless of credit or ability to pay) are talking about raising the FHA downpayments.

House A : The house without an assumable mortgage.

The mortgage payment on the $150,000 house on an FHA with 3.5% down at 6% is $1000/month.
$876/month principle and interest on a $146,197 loan amount, plus  $124/month PMI.  The PMI figure is arrived at by averaging the decreasing PMI over 136 months.  (As a rule PMI falls off naturally on month 137 when not making extra principle payments.)
So
$1000/month for the first 136 months (at which time the PMI falls off)
then
$876/month for the remaining 224 months.

Which equals
$136,000 in total payments over 136 months 
and
$196,224 over the last 224 payments
for a total of 
$332,224 in P+I  payments over 30 years

House A: Cash to close
3.5% down = $5250
Estimated closing costs of = $4,000. In the real world, they will ask the seller to pay it, but don’t worry, I’m not going there.
1% upfront PMI to HUD = $1,447
Cash to close to buy House A = $10,697

House B: Has the assumable FHA rate @ 4.25%.

This house involves a variable that must be discussed.  The buyer must come up with the difference ($13,789) of the $150,000 sales price plus the mortgage they are assuming ($136,211).  This can be handled a few ways:

1)      The seller has the cash to make up the difference – let’s not assume that, it would screw up all of  these numbers I am working on.

2)      Seller provides buyer a second mortgage in the amount of $13,789.  Seller and buyer would have to agree to the terms, and have a mortgage written up and filed.  If you want to play banker, more power to you.   

3)      Buyer secures a loan to make up the difference.

The most likely scenario is option 3, so let’s go with that.  Although most people aren’t aware of it, there are many credit unions and banks that that will do this type of subordinate loan.  For the sake of producing numbers, let’s say the borrower gets a loan for $13,789 @ 8% on a 15 year amortization = monthly payment of $132.  FHA will allow this, and they will actually allow the loan to be either mortgage or a personal loan. 

The mortgage payment on a $150,000 house on House B is $992
$738/month principle and interest on a $136,211 loan amount, plus  $132/month for the second mortgage, plus $122/month PMI  (averaged) over the first 76 months (after which time it would cease, as the seller already had  paid PMI on the loan for the first 60 months).

Payments would be :
$992/month for the first 76 months (at which time the PMI falls off)
$870/month for the next 104 months (at which time then the 2nd mortgage is paid off) 
$738/ month for the last 120 months (at which time the mortgage is paid off)

$75,392 ($992 x 76 months)
$90,480 ($870 x 104 months)
$88,560 ($738 x 120 months)
=
$254,432 in P+I  payments over 25 years

House B: Cash to close
$0 DOWN
Closing costs of = $1,800 ($500 FHA assumption fee <max>, title fees of $1500)
Loan amounts = $150,000  ($137,573 assumed mortgage, $12,427 second mortgage)
Cash to close = $1800

Summary:

Out of pocket for potential buyer
Out of pocket and closing costs to close on House A = $10,697
Out of pocket and closing costs to close on House B = $1,800
Costs $8897 less for the buyer to acquire House B.

Total of payments and out of pocket expenses
Total of mortgage payments on House A = $332,224 + $10,697 at close = $342,921
Total of mortgage payments on House B = $254,432 + $1800 at close = $256,232
House B could save a buyer up to $86,689

Mortgage debt payments by month*
Months 1-76:
House A: $1,000
House B: $992

Months 77 – 136:
House A: $1,000
House B: $870

Months 137 – 180:
House A: $876
House B: $870

Months 181 – 300:
House A: $876
House B: $738

Months 301 – 360:
House A: $876
House B $0

*Do not misunderstand these numbers; it does not take 25 years for the buyer to realize the majority of the savings House B offers (months 301-360).  What is happening is that the assumable FHA loan is building equity faster, as a greater percentage of your monthly mortgage payment is going to principle, rather than interest.

It is fair and correct to average the savings / equity built by taking $86,689 and dividing it by 30 years.  House B is building nearly $3000 more equity each year compared to the other house in this scenario.   

Things to consider:

• Would you like to be able to offer Option B when you go to sell?
• How much could Option B impact the value of a home?
• 30 year fixed FHA loans must have PMI for 5 years.  After 5 years if you are at 20% equity or greater it will be removed. How might this change your numbers?
• FHA loan servicers are required to offer a 12 month forbearance period for borrowers who have lost their jobs.  What value might this have to a family with a lost income?
• Point : If rates take off with inflation not too far down the road, do you really want to be paying off 4% tax deductible interest at a faster pace than you need to?  Counter-point: There sure is nothing wrong with becoming debt free, ASAP.
• Would you overpay to have an FHA loan (because of the PMI) for 5 years, just to have the ability to offer Option B, when it’s time to sell?
• FHA maximum loan sizes in Ohio vary from $271,050 to $432,500.
• County limits can be found here https://entp.hud.gov/idapp/html/hicost1.cfm
• FHA loan limits may decrease in the near future.

Todd Lipps
www.OhioMortgageadvisor.com

Scenario: 190k Ohio FHA purchase mortgage, limited assets, 2006 bankruptcy, 660 credit score, retaining current (negative equity) home as a rental property, 49% debt to income, planning to stay long term in the residence.  Solution: Re-allocation of household debts to non-borrowing spouse.  Refinance and re-amortize auto and student loans into more favorable terms. FHA 30 year fixed rate at 4.25%, 3.5% down-payment (family gift), and $1900 in origination fees, all closing costs financed into the new loan. 

Scenario: Ohio mortgage refinance, A+ borrower with excellent credit and less than 20% equity due to declining home values.  2006 purchase price $300,000.  Current home value $240,000, mortgage balance $220,000. Current rate 6%. Current loan to value = 91.6%.  Solution:   Making Home Affordable refinance. No lender fees and no appraisal required! Interest rate 4.375% no PMI.  Monthly savings of $340. Total closing costs (title and filing fees only) $1700, all financed into the new mortgage loan.

Scenario: 134k Ohio FHA purchase mortgage, limited liquid assets, and 690 credit score. First time homebuyer.  Solution: FHA 30 year fixed.  Initial interest rate locked in at 4.5%, re-negotiated to 4.25% (4.62% apr) at no cost to the customer.  Down payment came from 401k loan, repayable to self at zero interest. Seller paid all closing costs, appraisal refunded after closing.

Scenario: Ohio Investment property refinance.  Current Rate =  7.125%. 710 credit score.  Original loan 20% down.  Current appraisal 123k, current loan payoff 115k.  93% loan to value.  Solution: 30 year fixed Making Homes Affordable at 5% Appraisal refunded at close.  No other money out of pocket. $225/ month savings.  $3100 in total closing costs. NO PMI.

Scenario: Ohio mortgage refinance, A+ credit score , current interest rate 5.5%, 340k appraisal, 300k loan amount 88.8% loan to value.   Solution: No closing cost 15 year fixed rate of 4.25%, appraisal refunded at closing. No PMI.  Eliminated 3+ years of mortgage payments, potentially saving customer $83,000, and saving unnecessary interest expense.  No closing costs.

Scenario: Ohio refinance mortgage 305k, 720 credit score, current rate 5.625%,  appraised value 340k, 89% loan to value.  Solution:  30 year fixed rate at 4.375% (4.536% apr), No monthly PMI.   Monthly savings of $215.

Scenario: Ohio mortgage refinance, current interest rate of 5.625%, A+ credit, 226k loan amount, existing home equity line of credit, 80% LTV/ 90% CLTV.  Solution: 30 year fixed 3.99%/ 4.121% apr. $4,400 in total closing costs.  Monthly mortgage payment reduced by $393.  Home equity line retained.

Scenario:  Ohio refinance mortgage, current mortgage rate 5.625% on a 30 yr fixed.  Returning customer, last refinanced 8 months ago, with no lender fees.  Self pay taxes and insurance.  Solution: No closing cost 30 year fixed refinance. No appraisal fee, no closing costs. Current loan payoff = new loan amount. No escrow account required.  Reduced interest rate to 4.5%/ 4.5% apr.

After reviewing the last 200 “keyword” internet searches (Google, Yahoo, Bing, etc.) that drew visitors to this site I can estimate that 5% definitely, without question, found what they were looking for (searches for “Todd Lipps mortgage”, it’s a pretty safe assumption) and about 35% probably found exactly what they were looking for.

But as far as I can tell, about 60% might still have questions.

For those who found this site via online search there is really good chance you that still have some questions. If you fall into this majority, please send me an email or call at 440-666-6069 if I can answer anything for you.

Some of the queries that brought folks to this site follow below. Although they didn’t ask me directly, I have decided to address their searches, by adding my comments below the “searched terms”.

Mortgage questions related to assets

“Mortgage approval and recent checking deposits”
Anything that is not a normal, recurring deposit into your checking account will need to be documented. The underwriter must provide indisputable proof of what the source of the money is, in order for the loan to be saleable to the investor.

“Are checking account details necessary for mortgage loan approval?”
Yes, the two most recent asset statements will be required to obtain a loan commitment.

“5% assets in bank account for mortgage approval”
Conventional loans can be approved with as little as 5% down. It is necessary for a borrower to have at least 5% of your own verified funds in an account for the past 60 days.

“Acceptable proof of assets for mortgage approval”
Generally speaking, acceptable proof of assets requires all pages of your two most recent asset statements. All deposits are required to be sourced, which means that you have to prove that it came from acceptable source.

“How to properly document assets for loan approval”
You will need to provide your 2 most recent asset account statements, ALL PAGES. Be ready to explain and document any deposits that aren’t part of your normal income or activity. Cash deposited generally will be omitted.

“Do bank underwriters accept a letter of explanation for sourcing?”
If you are required to source assets deposited into an account you will need to document proof of where the funds came from. Cash on hand is, in nature, impossible to document. You can write a letter to explain the deposit, but it will not “count” as verified funds.

Questions about mortgage rates, lending fees and other closing costs 

“How do you calculate closing costs involved in an Ohio mortgage?”
I recommend that you have a couple different lenders do it for you. The best way to do that is to request a custom quote, by sharing the details of your transaction. Your closing costs could vary anywhere from $0 to $10,000. Mortgage closing costs for loans over 125k can be zero. .. or they could be up to $7,000, and the corresponding interest rates between those 2 options would vary by as much as 1 percent… for example $0 closing costs for a 5% rate, and $7,000 for a 4% rate. There are over 10 factors that will determine your rate and costs associated with that rate.

“How to get help with closing costs in Ohio?”
Write your purchase offer with a seller contribution. I can help with this.

“Mortgage filing fees Ohio”
These vary from lender to lender, and are paid to your county courthouse. Usually filing fees are around $200, but the title company over-charges and returns the actual cost after the deed and mortgage are filed.

“Mortgage lender fees in Ohio / How much are closing costs in Ohio in 2011?”
My company’s fees are anywhere from $0 (PLUS a credit to pay the third party fees) up to $996 plus 1% of the loan amount. The cost is dictated by the rate you choose. Every loan I do is structured to your specific plans, preferences, and financial goals.
Total closing costs will depend greatly on your loan size, and the interest rate you want. If your loan is greater than $140,000 your closing costs can be zero. Every loan I do is a la carte. The average I have found online is $4,200, but this number is increasing every month due to government involvement in the mortgage process, licensing requirements, increased asset requirements, increased documentation, increased turn times, and the increased number of declined loans.

“Mortgage companies in Ohio with no closing costs or points”
Generally speaking, owner occupied mortgage loans in excess of 140k can be executed without any closing costs. Loans amounts between 75k and 140k can be done with no lender fees, and some credit towards a majority of the closing costs. The higher the loan amount the easier a no closing cost loan will be to complete.

“Who pays for the deed preparation and title fees in Ohio?”
It is standard practice for the buyer to pay this closing cost, however this and all other closing costs can be paid by the seller if it is negotiated and written into a purchase contract.

“Standard Ohio closing costs”
If a buyer does not request a seller contribution towards closing costs within their written purchase contract, they will be paying closing costs. Certain title fees are split by the buyer and seller, some paid by the seller, and others are paid by the buyer. In Ohio, it is standard practice, and it is part of boiler plate contracts that the seller pays for the title exam and the county conveyance fee (transfer tax). It is standard practice in Ohio for the buyer and seller to both pay an escrow fee (normally $350), and the seller and buyer split the owners title insurance policy.

“What is the average appraisal fee in Ohio?”
This depends on quite a few factors, but a single family home is right around $400. Luxury homes valued over 1 million carry higher fees, as do investment properties and multi-family properties.

“Paying closing cost for making home affordable mortgages in Ohio”
With Fannie Mae loans closing costs can be rolled into the new loan, provided you remain within any loan-to-value restrictions. Freddie Mac’s program allows a maximum increase of $5000 from the current loan payoff.

“Paying points on an Ohio FHA loan”
This is an option which I rarely recommend. Life is usually too unpredictable to pay excessive costs for a lower rate, which could easily end up wasting the money spent to get a lower rate.

“Survey required on FHA in Ohio”
Yes every home with a mortgage will require a survey.

“Typical title company closing costs Ohio and who pays?”
Escrow /closing $350 – both buyer and seller
Title insurance binder- $100 buyer
Title exam – $350 typically seller
Owners title insurance policy $575 on the first 150k, and reduced amounts after 150k. Split equally between buyer and seller.
Endorsements to title policy $275 – buyer
Lenders title policy -$100 – buyer
Misc. – wire, title update, courier, doc prep -$175 – buyer

“What are current Ohio mortgage lender fees in 2011?”
Typical are fees $926 plus 1% origination, or $926 with .25% higher rate.

“What are the current average closing costs on an FHA loan in Ohio?”
The average closing costs early in 2011 were approximately $3740. In addition, for FHA loans HUD charges a 1% upfront mortgage insurance fee which is financed into your loan.

“Who pays mortgage closing costs in Ohio?”
Buyers and sellers both pay closing costs. Unless you write in your purchase contract that seller is paying all of them (if that is possible, there are maximums that the seller can pay FHA 6% of purchase price, Conventional 3%-9%, depending upon the amount of your down payment).

“Who pays lender closing protection?”
The $35 closing protection coverage is charged to the buyer of the house.

Credit Questions

“Ohio FHA minimum credit scores”
As low as a 600 middle credit score can be used to approve a borrower with me and my employer, American Midwest Mortgage Corporation. Per HUD, the lowest possible score to obtain an FHA loan is 500 with 10% down, 500 – 580 with 5% down, and 3.5% down for scores above 580. The only problem is that very few lenders allow approvals below 640. We are one of the few lenders that can arrange loans for borrowers at 600. I am very well informed about credit and credit repair issues.

“Bad credit home equity loans in Ohio with bad credit.”
It is very unlikely you will find a bank to do this. It probably depends upon your definition of “bad”, the reasons for the bad credit. The most likely answer to your search is to consider reading up on my credit section here, and visiting www.crr760.com

“Will credit be pulled after clear to close is issued?”
Typically no, but if the credit bureau is more than 120 days old prior to closing, it would be required.

Questions about mortgage documentation

“Documents needed for a mortgage approval in 2011 for someone with a new job”
Most lenders will require at least 30 days worth of earnings on a new job before they will issue an approval and sign off on your wages.

“Why bank statements are necessary for mortgage approval?”
Because you have to prove that the money in your account was earned by you or given as a gift from someone. They are looking to see if you have borrowed money from somewhere. You are not allowed to borrow money to buy a house, with the exception (with FHA) of a loan being secured by an asset.

“Documents needed for an Ohio mortgage quote”
No documents should be needed to quote. Just details of your transaction and your accurate credit score.

“Mortgage broker in Ohio requiring minimal documentation for approval”
With the exception of private investors all loans are underwritten with full documentation at this time. Government and conventional loan do not offer any reduced document, low doc, or no doc loans. If you find an investor that does a no doc or low doc loan, I highly advise the expertise of a real estate attorney before entering any contracts with such a lender.

Questions about the mortgage loan approval process

“Ohio mortgage pre-approval”
I offer these without costs and without any commitment on your part.

“What is the processing stage of FHA mortgage loan?”
Well, pretty much the entire process is a process… From the moment you sign your application and submit all of the documentation to your loan officer until the day the loan closes it is in some stage of processing.

“What happens once you have met all conditions for a mortgage loan?”
That depends on how your lender operates. If all conditions have been met and signed off on…you are ready to sign!

“When does verbal employment verification take place during the mortgage approval process?”
Verbal verification of employment occurs within 48 hours of closing.

“How do you clear final conditions on a mortgage?”
Ask your loan officer to go over the conditions with you. Make sure you know which ones are your responsibilities, and see if any of the conditions could be held up by a third party.

“Firm approval for the house loan, what now?”
Your lender/ loan officer should tell you exactly what needs to happen.
“I have a conditional loan approval, how long before I get a clear to close?”
Ask your loan officer. It will depend on what the conditions are, but generally speaking you should be signing within a week.

“How long does it take to clear to close on an Ohio mortgage loan 2011?”
FHA and conventional loans should take approximately 30 days. Your lender should let you know if it will take any longer than that.

“Loan approval vs. clear to close”
Loan commitment or loan approval means that an underwriter has issued a commitment to lend a borrower the money they applied for. A clear to close does not occur until all conditions have been collected and cleared.

Underwriting

“If a borrower is self employed and he has mortgages in the business name under an LLC and he guarantees them do you have to count the payment against him for mortgage underwriting?”
In short yes, however the length of time you have owned the LLC will likely need to be 2 years.
LLC tax returns for the last 2 years, lease agreements, cancelled checks of your mortgage payments,
and will need to be provided to determine the debt to income on your personal return. In essence, profit or loss from the LLC will be used for (or against) any other income you have.

“Mortgage approval k-1”
Underwriters will require k-1 forms if they are filed with your s-corp or partnership.
The s-corp files an 1120S with a schedule K-1 for each shareholder. A partnership files a 1065 with a schedule K-1 for each partner. An LLC doesn’t have a special tax form. It’s a disregarded entity and files as a sole proprietor, partnership, s-corp or c-corp. A sole proprietorship does not file a K-1, and a c-corp files an 1120 and distributes income via dividends.

“On day of close does the underwriter check bank statement?”
My company would not, unless we were waiting to see something as a final condition. If this were the case, you would know that it is going to be happening.

“Parents buy house because daughter needs a separation agreement to qualify for mortgage loan.”
If she will be on the loan, you could be a co-signor on an FHA loan. If you want to buy the house for her, then it would be considered investment property.

“2011 underwriting for OHFA loan”
OHFA does not underwrite these loans. They are underwritten under the same guidelines as a non OHFA loan. OHFA simply validates 3 years tax returns, and that the borrower qualifies as a first time home buyer.

Appraisal value below purchase agreement
Your loan will be approved by determining the lower of the purchase price or appraised value. If you agree to move forward with the purchase you may be required to put down more money to get the same terms, you were quoted. If the appraisal comes in low, it is a great opportunity to negotiate getting the house for a lower price.

FHA 203k loans

“FHA 203k rehab loan guidelines length of time to close”
These loans should be complete within 45 days. If you have met with your contractor and you know everything that needs to be done and you have had it priced out, and you provide your lender with all of the documentation needed at the time of application, there is no reason that the loan wouldn’t close within 45 days.

“Proper FHA 203k contactor bid format”
Obtain written bids and estimates with all costs broken down by labor and materials, on company letterhead, signed and dated by the contractor.

“Ohio FHA 203k rehab contractor minimum liability coverage”
The minimum liability coverage for contractors is $1,000,000

“FHA 203k rehab guidelines for general contractors”
• Copy of contractor’s liability Insurance
• Copy of contractor’s license
• Copy of business card
• Copy of detailed bids, signed by homeowner and contractor
• Signed homeowner/contractor agreement (borrower will be provided with by lender)
• Completed Contractor profile sheet (provided by borrower from lender)
• Completed W-9
For more information about the contractor requirements visit the 203k tab on the home page

“FHA 203k rehab home loan material payout”
A draw for materials can be requested immediately after loan closing. The process of a contractor receiving the funds can take up to 30 days after close. For this reason, it is a demanded that you work with contractors who are reputable, financially stable and credit worthy.

“FHA 203k rehab homeowner contractor agreement form”
A sample of this form can be found on the 203k tab on the home page

“FHA 203k rehab loan 10% contingency”
There is a mandatory 10% contingency required on all 203K Streamline loans, and 15% no utilities or HUD properties. The purpose of the contingency is to help account for over-runs in the project, but can be used to make additional improvements after all work has been completed at the agreed price. This contingency is held until final disbursement. If the contingency is not used it will be applied to the principal mortgage balance.

For additional information about the 10% contingency, visit the 203k tab on the home page

“FHA 203k rehab loan change order guidelines”
Changes in the Contract – The owner may order changes, additions or modifications (using HUD form HUD-92577) without invalidating the contract. Such changes must be In writing, Signed by the owner, and accepted by the lender. Not all change order requests may be accepted by the lender; therefore, the contractor proceeds at his/her own risk if work is completed without an accepted change order. If a change is approved, a corresponding item in the repair category must be deleted. The new repair item must also be included in the allowable repair items.

“FHA 203k rehab loan unused contingency funds”
Can be used to make further improvements after all initial work has been completed, or is applied to the loan’s principle balance.

“Ohio FHA 203k rehab loan bid breakdown”
A quote from a contractor should be broken down by material cost and labor cost.

“Appraisal guidelines for FHA 203k rehab loans in Ohio”
Appraisals for the 203k loan are completed based on the “after repair value” of the property. This should be about $550. It is approximately $400 for initial appraisal, and $150 for the final inspection once the work is complete. The appraiser is supplied with contractor bids for the work that is being done.

“Are FHA 203k rehab loan funds included in 417k maximum?”
If that is your county’s FHA loan limit, then yes. The maximum FHA 203k loan is determined by county limits. To find out what the maximum FHA loan is in your county, you can visit this link, https://entp.hud.gov/idapp/html/hicostlook.cfm . 417k is the maximum loan amount for Fannie Mae and Freddie Mac conventional loans, not FHA loans.

“FHA 203k rehab loan rates in Ohio”
The interest rate for FHA 203k in Ohio loans varies from lender to lender. For my current FHA 203k rate, add .25% to the posted “regular” FHA rate.

“Ohio FHA 203k rehab loan with self help”
My company and the lenders we use do not allow self help. It is likely there are lenders who permit this, but at this time I cannot recommend any.

“Ohio FHA 203k rehab loan down payment”
Your minimum down payment is 3.5% of the purchase price plus 3.5% of the rehabilitation costs.

“What is the minimum credit required for approval of a FHA 203k rehab loan in Ohio?”
The minimum score required varies from lender to lender. I can offer approvals for borrowers who are above a 600 score.

“Why title updates are required on FHA 203k rehab loans?”
Title updates are required to assure that there are no mechanics liens placed on the property, during the rehabilitation process.

Miscellaneous

“Need an Ohio fast mortgage application approval.”
I can help you get pre-approved by spending about 15 minutes on the phone on the phone with you and pulling a credit bureau. Please give me a call at 440-666-6069.

“Escrow account with more than 20% equity in the house in Ohio”
This is allowed. Lenders will normally charge a ¼ point fee (.0025% of your loan amount) to waive escrows, which is paid one time at closing.

“Can you transfer an FHA mortgage to a family member?”
Yes an FHA loan is assumable between family members, for the loan to be assumed, the borrower must qualify for the loan. Contact your current mortgage servicer for additional details.

“How will a mortgage loan originator get paid by broker after April 1st?”
They will be paid a fixed amount per loan, as a percentage of the loan amount (basis points), or a straight salary.

If there is anything I can do to help you, please contact me .

A pre-qualification analysis is typically the result of information shared between a mortgage lender and a potential mortgage borrower that does not involve credit analysis and verification of your financial details.  The end product for a pre-qualification analysis will be a “ballpark” estimate of the maximum loan amount you may want to consider. Variables which will change the estimate include property taxes, homeowners insurance, and changes in rates. There is no cost or obligation for pre-qualification.  Please note, a pre-qualification does not indicate that you are pre-approved or will be approved. 

 Pre-approval

A mortgage loan pre-approval is a written loan decision following a complete mortgage application. You can typically apply for a preapproved mortgage prior to signing a purchase agreement for a home. Pre-approval requires your credit report being pulled, asset, employment, and income information.  A preapproval can also add to your negotiating strength when you are ready to make an offer on a home. Pre-approvals are not a commitment to lend money, they are simply an indication that you will be approved if all of the information you provide can be accurately documented at the time your loan application is submitted for underwriting.

Documents required for mortgage approval

Loan commitment

A conditional commitment letter states that a lender will offer the loan as long as certain conditions are fulfilled. Loans are always conditional in the early stages, but the conditions are cleared progressively as the loan moves through underwriting and processing. Conditional commitments are problematic when the requirements aren’t met in a timely manner, so it is always important to supply information needed as soon as possible.   There may be numerous conditions to be satisfied prior to final loan approval/ clear to close.

 Clearing conditions

Once you have received a loan commitment, the underwriter will supply a list of items to the loan officer or loan processor which need to be satisfied to obtain a clear to close. Items required at this stage of the loan may include, but are not limited to, receipt and review of the appraisal, re-issuing missing or illegible documents, letters of explanation, verbal employment verification, receipt of your homeowners insurance policy binder, and resolving title issues.  Quite often third party documentation is required to clear the loan for closing, and when third parties do not act in a timely manner delays may occur.

 Clear to close

A clear to close mortgage loan status indicates that you have met all of the lenders guidelines and conditions.  If you have reached this point you have a now have a firm loan commitment or final loan approval, and you are ready to sign.  “So when can I sign” you ask? That depends on the current volume of a lender’s closing department and the title company’s schedule.  It is usually going to take place 48 hours after clear to close.  You may be thinking “Why not right now?”  Unfortunately, there is still a good amount of work to do to prepare the loan for escrow.

 Escrow/ Documents/ Signing

Once the clear to close has been issued, the lender will schedule the delivery of loan documents, with closing conditions and fees for the title company to input into the HUD settlement statement.  When the escrow agent (often also the title company) receives these documents and instructions they put the dollars into the right places on for the seller and buyer.  They apply credits and debits where they are due, and generate the final cost to close.  Make no mistake, with RESPA disclosures and tolerance rules, along with legal considerations, this is no simple task.  Getting the right names, correct charges, and collecting invoices is a lot of work.  Once the lender, loan officer, and title company assure that all is correct, a final dollar amount is generated for the customer.  The amount needed for closing from the borrower comes in the form of a cashier’s check is made out to the escrow company/ title agent.

 Closed and Funded

Bring a copy of your driver’s license to close.  At closing you will review and sign all of the loan documents.  Once you sign the paperwork the lender sends your loan proceeds to the title agent. The escrow agents responsibility is to allocate funds to the appropriate parties.  On purchase transactions funding typically happens the same day you sign. Once you make it to here you finished with the loan process.  If you are buying a home, you ask, “Where are the keys?”  Oh, just one more thing…

Filed and Transferred

For purchase transactions, in most counties you will need to sign prior to 11 am in order for the title company to send a courier to the court house to file the mortgage deed.  Once deed of trust is filed and recorded at the county and the property has legally transferred, a homebuyer can get the keys!  You own the house!  You are all done… now you just have to move in.

If you have any questions about any of these milestones, please contact me .

• Transaction type- Cash out refinances may have a higher cost or rate than no cash out refinance or a purchase.
• Loan amount- Larger loan sizes may have higher title fees on purchases.  Larger loan amounts, however, may allow for better pricing.
• Credit Score- The higher score, the better your pricing will be
• Loan to Value- The lower the ratio of dollars borrowed to home value, the better the pricing
• Property Type –Single family residences may have better pricing than condominiums.
• Number of units – Single family homes will have better pricing than 2-4 unit properties
• Occupancy- Owner occupied properties will have better pricing than 2nd Homes/ vacation homes.  2nd Homes have better pricing than investment properties.
• Presence of a 2nd mortgage- Homes without a 2nd mortgage will have better pricing than those without a 2nd mortgage.  Retaining (subordinating) a 2nd mortgage will have a cost with current lien holder (usually about $200).
• Loan type – Adjustable rate mortgages have lower initial interest rates than fixed rate loans.
• Loan term – Generally speaking, the shorter the term on a fixed rate loan, the better the pricing.
• Points and fees – The higher the fees and points, the lower the rate.
• Debt to income – Some lenders offer better pricing for low debt ratios.
• Length of lock period – The shorter the lock period, the better the pricing.
• Location – Some states offer better pricing than others.Escrowing taxes and insurance – Including your taxes and insurance (escrows) with your monthly payment will allow better pricing than a loan that does not include escrow

Refinancing your Ohio property
Factors affecting rates and fees
Ohio refinance closing costs
Ohio no closing cost loans
Refinancing with little or no equity