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The Smart Guide to 203(k) Loans

Renovate at a lower rate If you’d like to buy a home in need of repairs, or refinance your current home and get the cash to remodel, an FHA 203(k) or FHA Streamlined K could be the perfect home loan for you. While both loans provide the funds needed to make significant repairs and upgrades, the right 203(k) for you depends upon the scope of your project. This guide will explain both loans. To help you understand which one fits your plans, I can work with you one-on-one.

Contact me today Jane Branch Senior Loan Officer NMLS #: 123456

Tel. 123.123.1234 Ext. 1234

jane.branch@myrfc.com

Tol. 888.123.1234 Ext. 1234

janebranch.myrfc.com

Cel. 123.123.1235

One Easton Oval Suite 400 Columbus, Ohio 43219

Fax. 123.123.2222


Table of Contents About Residential Finance............................................................................................... Page 1 Turn a good house into a great home.............................................................................

Page 2

How a 203(k) loan can save you money............................................................................. Page 3

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Choosing which FHA 203(k) loan fits your plan ................................................................ The FHA 203(k) program FAQs........................................................................................

Page 4-5 Page 6-7

Smart chart: The 203(k) loan process ............................................................................... Page 8

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Renovation checklist ....................................................................................................

Page 10

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Important telephone numbers ......................................................................................

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RESIDENTIAL FINANCE


About Residential Finance Providing excellence in lending since 1997 When you need a home loan, you can count on us. Residential Finance is a nationwide mortgage banker specializing in finding borrowers the ideal loan to fit their homeownership goals, whether buying, refinancing or investing. Founded in 1997 and based in Columbus, Ohio, we operate in 37 states with regional branches nationwide.

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Residential Finance prides itself on the service delivered by our mortgage professionals. Highly trained, they focus on finding the right loan at the right rate, using their skills to make the loan process easy, pleasant and straightforward.

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Fully qualified and industry respected. Residential Finance is “Full Eagle� certified by the U.S. Department of Housing and Urban Development, and has Veterans Administration Automatic Authority. In addition, we are seller-servicer approved by Fannie Mae and Ginnie Mae, with Freddie Mac approval pending. This designation, based on excellent business practices, is a status that few lenders attain.

THE SMART GUIDE TO REFINANCING

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TURN A GOOD HOUSE

into a great home! If you’re like many other homeowners, you may have a “wish list” of repairs and upgrades you’d like to make to your home. With an FHA 203(k) or Streamlined K, the renovation money is part of your home loan, and that puts the cash right in your pocket.

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What is an FHA 203(k) mortgage? A lending program from the Federal Housing Administration (FHA)*—a division of the U.S. Department of Housing and Urban Development (HUD)*—the Section 203(k) program is considered an important tool for expanding homeownership opportunities and for neighborhood revitalization.

Whether you want to buy and renovate a fixer-upper, or simply refinance your existing home and make needed improvements, the right FHA 203(k) can make it possible. The program allows for minimal cosmetic work (as low as $5,000), including replacement of appliances, all the way up to a complete rebuild or renovation of an existing property.

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Two FHA 203(k) loan options The 203(k) program includes two renovation loans available for either purchase or no cash-out refinance of an existing home. Both offer a low-rate mortgage within the same loan amount limits of a traditional FHA loan, and provide the money needed to renovate—all with one set of closing costs.

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We’ll help you determine which loan fits your project and finances: • FHA 203(k): Buy or refinance a home, and finance significant structural renovations, such as a room addition. • Streamlined K: Buy or refinance a home, and finance more moderate repairs and upgrades, such as a kitchen remodel.

*RESIDENTIAL FINANCE IS NOT A PART OF OR AFFILIATED WITH FHA OR HUD.

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RESIDENTIAL FINANCE


HOW A 203(K) LOAN CAN SAVE YOU MONEY

Avoid costly interest rates An FHA 203(k) and Streamlined K loan can save you money because the homebuying and remodeling/repair loan are wrapped into a single mortgage payment, with only one set of closing costs. Without the 203(k) loan, you may be tempted to use credit cards, store financing or personal loans to fund your home’s renovation costs. Because credit cards and store financing carry much higher interest rates than those found in today’s 203(k) loan, you could end up paying thousands of dollars more in interest than you would pay with either an FHA 203(k) or a Streamlined K loan.

Cost Estimate using 203k Loan Sale Price

$ 30,000.00

Renovation

$150,000.00

$147,000.00

$ 250.00

$1,110.00

$120,000.00

Sale Price

$ 30,000.00

Renovation

Adjusted Sale Price

$120,000.00

Adjusted Sale Price

Loan Amount

$117,826.00

Loan Amount

Monthly Payment

$670.00

Monthly Payment

Monthly Taxes, Insurance, MI

$ 236.00

Monthly Taxes, Insurance, MI

$600.00

Est. Credit Card Payments

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$860.00

Cost Estimate without using 203k Loan

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$120,000.00

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With this in mind, the following chart shows how a 203(k) loan could work for you.

Total Est. Monthly Payment

$1,506.00

Total Est. Monthly Payment

$396.50 saved every month!

THE SMART GUIDE TO REFINANCING

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CHOOSING WHICH

FHA 203(k) loan fits your plan

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What is the standard FHA 203(k)? Considered a major rehabilitation or construction loan, the standard FHA 203(k) allows generous flexibility in the repairs and remodeling of a home (limited to using at least a portion of the home's existing foundation).

Features of the standard FHA 203(k) loan

Standard FHA 203(k) allowable work

• Appropriate for more intensive and costly

• • • • • • • • • • •

repairs (i.e., room additions, sill plate

replacement, major landscaping, etc.) • No limit to what can be borrowed for repairs as long as the cost of acquisition and the cost of repairs do not exceed the afterrepair value • HUD consultant required

PAGE 4

New garage New room addition New kitchen and appliances New bathroom and fixtures New carpeting or hardwood floors New roof, gutters and downspouts Finished basement Handicap-accessibly features Security systems Swimming pool repairs Much more! RESIDENTIAL FINANCE


CHOOSING WHICH

FHA 203(k) loan fits your plan

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What is the FHA Streamlined K? Sometimes called “the Baby K,” an FHA Streamlined K is a trimmed-down version of the standard 203(k) loan. The Streamlined K lets you make moderate repairs to your existing home or a house you buy. Both the home loan and renovation loan are wrapped into one loan, so you deal with only one set of closing costs.

Features of the Streamline 203(k) loan

Streamline FHA 203(k) allowable work

• Home improvements up to $35,000

• • • • • • • • • •

• Less paperwork required than with a standard 203(k) loan • Faster turn-around time • No HUD consultant required

THE SMART GUIDE TO REFINANCING

Hardwood floors, tiling and carpeting Roofing, gutters, downspouts Interior or exterior paint Remodel kitchens and baths Update appliances and fixtures Decks and fencing Modernized HVAC system Replace or repair well/septic systems Energy conservation improvements Handicap accessibility improvements

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THE FHA 203(K) PROGRAM

FAQs Q: How is the 203(k) program different from traditional home financing plans? A: Unlike most mortgage plans that include home repairs or rehabilitation, the 203(k) doesn’t require improvements to be finished before a long-term mortgage is made. Normally, when a homebuyer wants to purchase a house in need of repair or modernization, three different kinds of financing need to be obtained: 1. Initial financing to purchase the dwelling

2. Additional financing to perform the rehabilitation construction

3. A permanent mortgage to pay off loans 1 and 2

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With a 203(k) loan, you get all your financing in just one mortgage. With a 203(k) long-term fixed or adjustable-rate mortgage, you can finance both the buying and refurbishing of a property with one simple loan. Your mortgage amount is based on the projected value of the property once the work is completed,

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taking into account the cost of the work.

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Q: How is the loan amount determined?

A: How much you can borrow is based on a percentage (97.75% Refinance/96.5% Purchase) of the lesser of as-is value plus improvements or 110% of after-improved value.

Q: What are eligible improvements? A: You can use the 203(k) loan to finance such items as painting, room additions, decks and other items, even if the home does not need any other improvements. However, luxury items are not eligible, such as adding a swimming pool or hot tub. And keep in mind that all health, safety and energy conservation items must be addressed prior to completing general home improvements.

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RESIDENTIAL FINANCE


THE FHA 203(K) PROGRAM

FAQs Q: Are there building code or energy conservation requirements? A: Yes, any repair or construction financed with 203(k) mortgage funds need to comply with local codes and with HUD cost-effective energy conservation standards. This includes improvements such as weather stripping doors and windows, insulating openings in exterior walls and HVAC components, and adding smoke

Q: What properties are eligible?

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detectors. You can find out more by visiting www.hud.gov and search under 203(k).

A: To be eligible for a 203(k) loan, the property must meet at least one of these requirements:

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• One- to four-family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to local zoning requirements, and all newly constructed units must be attached to the existing home.

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• Home that has been demolished, or will be razed as part of the rehabilitation work, provided some of the existing foundation system remains in place. • Home to be converted from a one-family dwelling into a two-, three-, or four-family dwelling. An existing multi-unit dwelling could be decreased to a one- to four-family unit. • Home (or modular unit) to be moved onto the mortgaged property. • "Mixed use" residential property that meets guidelines for the percentage of residential and commercial use. • Condominium with individual units for owner/occupant and qualified nonprofit borrowers only; no investments.

THE SMART GUIDE TO REFINANCING

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SMART CHART

The 203(k) loan process 10 EASY STEPS TO ACQUIRING A 203(K) LOAN

3

Work with your Residential Finance loan officer to determine what you can afford, which 203(k) works best for you, and get pre-qualified.

An appraisal is conducted incorporating the repairs requested.

Choose your home (if buying) and determine the allowable repairs that might make it even better.

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Property selected and identified

6

Underwriter approval

7

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2

Appraisal update

Loan closes

Schedule a home inspection and/ or licensed contractor evaluation to determine the extent of the repairs.

Your loan closes with Residential Finance.

8

Contractor bids

4

5 PAGE 8

Our underwriting team determines a loan based on the information you provided.

Home inspection

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1

Pre-qualification Pre-qualification

Obtain a fixed-price bid from an approved contractor for the work that needs to be completed.

Renovation begins

9

The rehab account is funded, and contractors are paid as work is inspected and completed.

Pre-qualification update

Upgrades are complete

Provide your Residential Finance loan officer with required information to update the pre-qualification using the information gathered.

Enjoy your “new� home!

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RESIDENTIAL FINANCE


RENOVATION

Checklist About This Home Make copies of this page and use it to keep track of all the homes you have seen and the repairs that might need to be made. Home Address (including City, State & Zip) Considering: Top Feature #2

No

Top Feature #3

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Top Feature #1

Yes

I love this house because: ______________________________________________________________________________ ___________________________________________________________________________________________________ ___________________________________________________________________________________________________

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Concerns I have about this home: ________________________________________________________________________ ___________________________________________________________________________________________________ ___________________________________________________________________________________________________

Other Repairs & Improvements

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FHA Repairs

Appliances Working

Kitchen Remodel

Doors

Water Heater Working

Bathroom Remodel

Windows

HVAC Working

Electrical

Appliances

Roof - Leak Free

Roof

Interior Paint

Plumbing - In Working Order

Plumbing

Exterior Paint

Carpentry- Hazard Free

HVAC

Flooring

Property - Hazard Free

Deck/Patio

_______________

Note: _________________

Fencing

_______________

Notes: ____________________________________________________________________ _________________________________________________________________________________________________ _________________________________________________________________________________________________ ____

THE SMART GUIDE TO REFINANCING

PAGE 9


IMPORTANT

Telephone Numbers USE THIS WORKSHEET FOR QUICK REFERENCE

_____________________________________________

TITLE COMPANY

____________________________________________

CLOSING AGENT

_____________________________________________

HOUSE INSPECTOR

_____________________________________________

CONTRACTOR

____________________________________________

OTHER

____________________________________________

OTHER

_____________________________________________

OTHER

_____________________________________________

OTHER

_____________________________________________

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PROCESSOR

RESIDENTIAL FINANCE CORP (RFC) 1 EASTON OVAL, STE 400 COLUMBUS, OH 43219. NOT AFFILIATED WITH RESIDENTIAL FUNDING CORP. CONDUCTS BUSINESS AS RFC MORTGAGE I/L/T/N RESIDENTIAL FINANCE CORPORATION IN NY. NOT AN OFFER OF CREDIT OR COMMITMENT TO MAKE A LOAN; NOT AVAILABLE IN ALL AREAS; SUBJECT TO UNDERWRITING GUIDELINES. NMLS #1652; VA LENDER ID #2595540000; AK #AK1652; AL #21483 AND MBL#21025; AR #101062; AZ #BK-0905843; CA FINANCE LENDERS LAW LICENSE #6039726; CO MORTGAGE BROKER LICENSE #100029775 CHECK LICENSE STATUS AT WWW.DORA.STATE.CO.US/REAL-ESTATE/INDEX.HTM; CT #12900; DE CHP 22 LICENSED LENDER #011831; DC #NMLS1652; FL #MLD167; GA #19399; HI #HI-1652; IL #MB 0005562; IN DFI #16242; KY #MC82945; LA #1652; MA MORTGAGE LENDER #ML1652; MD #11143; ME SUPERVISED LENDER # SLM12522; MI 1ST & 2ND FL4201 & SR 0010569; MN #MN-MO-02049502; MS #1652 LICENSED BY THE MS DEPT OF BANKING & CONSUMER FINANCE; NJ LICENSED BY NJ DEPT OF BANKING & INSURANCE NJ CORRESPONDENT MORTGAGE BANKER & SECONDARY MORTGAGE LOAN LICENSEE #9945825; NM #03691; NY LICENSED MORTGAGE BANKER-NYS BANKING DEPT #B500784; NC #L-139845; OH #MB802662.000; OR #ML-5063; PA LICENSED BY THE PA DEPT OF BANKING PA MORTGAGE LENDER LICENSE #22135; RI #20102825LL; SC #MLS-1652; TN #109200; TX SML #45235 (17330 PRESTON ROAD, SUITE 160B, DALLAS TX 75252); VA LICENSED BY VA STATE CORP COMMISSION MC 3003; UT DRE MTG ENTITY #8404312, WA CONSUMER LOAN COMPANY CL-1652 WA MASTER BUSINESS LICENSE #602403652; WI #21906BA AND #1625BR. RESIDENTIALFINANCE.COM/LEGAL

Smart Guide to 203(k) Loans_updated6.6.13

Rev: 9/3/13 ©


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The Smart Guide to Homebuying

Helpful steps leading to your new front door The Smart Guide to Homebuying is provided to you as a tool to clarify the loan process. Use this easyto-follow guidebook to write down your goals, understand your options and keep track of your progress. When you choose Residential Finance for homebuying, you gain a team of mortgage professionals who are dedicated to finding the right mortgage loan with the best rates and terms to meet your financial objectives.

Contact me today Jane Branch Senior Loan Officer NMLS #: 123456

Tel. 123.123.1234 Ext. 1234

jane.branch@myrfc.com

Tol. 888.123.1234 Ext. 1234

janebranch.myrfc.com

Cel. 123.123.1235

One Easton Oval Suite 400 Columbus, Ohio 43219

Fax. 123.123.2222


About Residential Finance YOUR PARTNER: RESIDENTIAL FINANCE Residential Finance makes your transaction as firm as a handshake. With us, you get the advantages of a big lender with the personal attention and sound advice of a personal banker. Our dedicated mortgage professionals offer guidance about the lending options that best suit your homeownership goals. Some of the loan products we offer include: FHA (Federal Housing Administration) VA (U.S. Department of Veterans Affairs) USDA (U.S. Department of Agriculture) Section 203(k) (Department of Housing and Urban Development) Conventional Jumbo And more...

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• • • • • • •

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As mortgage professionals, we're here to explain the benefits of each of these programs in relation to your lifestyle and aspirations. Through our deep industry expertise and commitment to excellence, you can count on Residential Finance to provide you with the knowledge you need to help make smart homebuying decisions.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE


Table of Contents Customer Feedback: In Their Own Words ....................................................................... Page 1 About the Pre-Approval Process ..................................................................................... Page 2 Home Financing FAQs ................................................................................................... Page 3 Resource: Loan Documents Checklist ............................................................................. Page 4

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Smart Chart: The Loan Process ....................................................................................... Page 5 Step 1: Pre-approval ...................................................................................................... Page 7 Step 2: Contract ........................................................................................................... Page 8

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Step 3: Review and Rate Lock ........................................................................................ Page 9 Step 4: Requesting an Appraisal ...................................................................................... Page 10

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Step 5: Underwriting Conditions .................................................................................... Page 11 Step 6: Quality Assurance .............................................................................................. Page 12 Step 7: Closing ............................................................................................................. Page 13 What Happens Next? ................................................................................................... Page 14 Important Numbers ...................................................................................................

Page 15

Do Your Homework ..................................................................................................... Page 16

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE


CUSTOMER FEEDBACK

In Their Own Words Award Winning

“We must share our wonderful experience with our Residential Finance loan broker. Everything went as smooth as silk. No surprises, no hidden fees. His knowledge of the industry and the superior commitment to service were outstanding!” — William B., Reston, VA

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"Both our real estate agent and the seller's agent were impressed by how quickly and seamlessly the transaction went. Our agent told us after the closing that she would enjoy working with Residential Finance again—anytime (as would we)!" — The De La Rosas, St. Petersburg, FL

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"Residential Finance is truly an American company that cares about their product, employees and customers." — Matt H., Payson, AZ

“My Residential Finance loan officer was very helpful and efficient. By far, this was THE BEST experience I have ever had dealing with a loan officer for any loan I have ever taken out. It truly was a pleasure working with her.” — Robert S., Evergreen Park, IL

"I am writing this because this is my biggest life‑changing event and it went perfectly. I recently closed on mine and my wife's dream house with Residential Finance." — Rick P., Tampa, FL

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 1


ABOUT THE

Pre-Approval Process Don't go shopping without your wallet! Shopping for a house before you have a pre-approval letter from a lender is like going shopping without a form of payment. We will work with you to determine what you can afford and get you pre-approved to shop with knowledge and confidence.

Here are

6

reasons that pre-approval prior to home shopping is essential:

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Know what you can afford. Looking for a new home can be exciting, but if you start out not knowing what you can realistically afford, you could encounter disappointment and frustration.

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Make an immediate offer. With today’s low lending rates and home prices, you need to be ready to make an immediate offer on a home—or risk losing it to someone who is prepared to do so.

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Shop with confidence. House hunting takes on a whole new meaning when you are pre-approved for financing. Being armed with your pre-approval details can make you a shrewd home shopper.

Stay on budget. By knowing what you can afford and using projected monthly payments and down-payment options and terms, you can better stick to your resolve to stay within your means.

Narrow your search. Why spend time looking at homes that are out of your price range? Your time is valuable. A pre-approval will guide your real estate agent to show you homes that fit your budget.

Save time, close the deal. Once you’ve made an offer, pre-approval saves time during the application process. After all, the sooner you close the loan, the sooner you can move into your new home.

Get started now! Call me.

You can get your pre-approval right away.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

Und er Rev writer iewe d Be

tter tha a pre- standar n qual d ifica tion!

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HOME FINANCING

FAQs If you have a question, please feel free to call me. I’m here to make sure you understand the homebuying process and address any concerns you may have. As a start, here are answers to some frequently asked questions: How long does it take for you to process and close my loan? For a home purchase, the time it takes between submitting your loan application to sitting at the closing table averages about 30 days.

What do I need to qualify for a home loan?

Does it cost anything to get pre-approval?

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Guidelines vary from one loan to another, but to qualify, you must have a stable income and meet the minimum credit requirements. While some situations require a down payment, we have many options that require zero down or a very low down payment.

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Obtaining pre-approval is free. I will review and explain your options with you, and will provide you with a pre-approval letter at no charge. Also, there is no obligation to proceed if you change your mind.

Why is it better to finance with Residential Finance than my bank?

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Although you may have banked with the same institution for years, you need something tailored to your unique needs when seeking a home loan. You may be surprised to learn that larger banks often have fewer lending options. We offer many options that other lenders don't.

What if I have already been pre-qualified by my bank and just want another option? Is that OK? Yes! You need to feel good about your lending decision. If you have already spoken with another bank or lender, feel free to seek other options and opinions. Give me a call and I will look over your information and make sure you understand all options available to you. At Residential Finance, we want you to be as happy with your loan as you are with your home.

How do I decide if a 15-year mortgage is better for me than a 30-year mortgage? That’s where I can help. We’ll sit down together or talk over the phone and review your financial situation and objectives. Then we’ll “crunch the numbers” to see which option best suits your needs and comfortably fits within your budget. My ultimate goal is to make sure you feel great about your loan decision.

I’m ready to apply. What should I expect? First, you’ll need to gather several documents, including personal and financial information. Then we will complete the application together. By having all the documents on hand at this meeting, the process can be fast and efficient. To help you, there’s a handy document checklist on the next page.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

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RESOURCE

Document Worksheet ORGANIZE YOUR DOCUMENTATION A variety of personal and financial documents are needed to complete the loan application. To help you compile them, here’s a checklist of what you’ll need:

ADDITIONAL DOCUMENTS:

(Required for every application)

(Required for some situations only)

 W2s:

 ________________________________

For each job you’ve held over the last 2 years

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KEY DOCUMENTS:

 ________________________________

 1099s: For the last 2 years (Social Security, pension, etc.)

 Personal and business tax returns:

 Award letter:

 ________________________________

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For the last 2 years (all pages and schedules). Be sure to sign page 2 of Form 1040.

 ________________________________

Most recent (Social Security, pension, etc.)

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 Pay stubs:

 ________________________________

For the last 30 days

 Bank statements:

 ________________________________

For the last 2 months (all pages)

 Brokerage statements:

 ________________________________

Most recent (all pages)

 Driver's license: An enlarged copy for borrower and co-borrower

 Mortage statements: For all loans*

 Declarations page: Of your homeowners insurance* *If purchasing a second home.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 4


SMART CHART

The Loan Process 7 EASY STEPS

1 Pre-Approval You can do this over the phone or in person with me. I’ll ask questions that help me determine how much you may be eligible to borrow.

Start to Finish Buying your new home

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doesn’t have to be stressful and confusing.

2

To help you understand the process and feel

Contract

decisions you make, follow these seven steps and see how we create

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a smooth, efficient

In this step you sign the loan application and contract, and disclose information about your financial situation. Please be sure to share everything up front to ensure your loan gets processed as smoothly as possible.

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comfortable with the

experience.

Your

al pre-approv

letter helps

expedite

cess.

the loan pro

3 Review and Rate Lock By now, all your documents should be submitted, so when the appraisal comes in we can review everything, lock in your loan rate when the time is right, and submit a complete package to the underwriter.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 5


SMART CHART

The Loan Process 4 Appraisal A professional appraiser will visit your home, evaluate its condition and assets, compare it to other home sales in your area, then determine its market value.

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5

Underwriting

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An underwriter is the person responsible for comparing your documents with the guidelines of the loan you wish to obtain, and determining if you qualify for the loan.

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6

Quality Assurance

After reviewing your loan package, the underwriter may ask for additional or updated documents such as pay stubs or re-verification of employment.

7 Closing Once the paperwork is complete and your loan is approved, I’ll communicate with the closing agent to ensure the documents are recorded and funds are disbursed properly.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 6


Step 1 Your Tasks:

We can do the loan pre-approval process over the phone or in person. First, we’ll review your financial situation and objectives. Next, we’ll go over questions about your employment, earnings, savings and other such information to help pre-approve you. In addition, you’ll need to provide documents such as W-2 forms, income tax returns and bank statements. I’ll also check your credit report. Rest assured that all your information is kept confidential.

situation so we can help you buy the home that’s right for you.  Get Prepared: Gather the items on the

Documents Worksheet, and get phone numbers for your human resources department and homeinsurance agent, plus anything else you think would be helpful to process your application. In this situation, more information is better than less.  Questions: Jot down any concerns you have

and ask as many questions as you need to feel comfortable with the loan process.

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I’ll use this information to see if you qualify for a mortgage and determine which loan options best suit your homebuying plans.

 Apply: Give us a clear picture of your financial

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Pre-Approval

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Please conduct a thorough double-check of your paperwork for accuracy and legibility. Missing or incorrect information may delay the loan process.

Do's and Don'ts

Don’t open or close new credit accounts or change

Our Tasks:  Listen: We need to learn about your financial

situation, and your homebuying plans and goals.  The Details: We’ll take time to carefully

banks in the months prior to applying for your loan. Although you may be eager to purchase new furniture or accessories for your new home, please hold off. Account changes can affect your credit rating.

complete your application and ensure we have the most up-to-date and accurate information for your situation.

Do tell me, or ask me, about anything that may affect

discuss it with you. Let’s make certain the credit bureau has accurate information.

your loan.

 Review Credit: We’ll look at your credit and

 Timeline: We'll review all the steps in the

application process and estimate when it will be complete.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 7


Step 2 Your Tasks:

In this step, you sign your loan application and contract, and provide information that verifies your income and other assets. Please disclose everything at the beginning. Being up front from the start helps your loan process as quickly and smoothly as possible. You’ll receive a Good Faith Estimate statement that outlines the total cost of your loan. This is an opportunity for you to ask questions to make sure you understand how much you will pay for the loan you wish to obtain.

want you to have a clear understanding of all the paperwork you're signing, so let's cover everything.  Return documents: The documents we

covered in Step 1 should be returned as soon as you can gather them to ensure an accurate pre-approval.

Our Tasks:

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The initial paperwork does not finalize your loan. Rather, it is used to comply with government lending requirements. If anything on the application is not accurate, such as your work telephone number, just let us know and we will fix the inaccuracy before the closing.

 Phone appointment: Ask questions. We

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Contract

Do's and Don'ts

Don’t spend the money you have in the bank. Many mortgages are approved on the condition that you have a certain amount of money in reserve after closing.

Don't take on new debt. We’ve got to mention this again! Sure, you may be tempted to take out more credit for new home purchases, but it’s very important that you wait until the loan is closed and funded.

 Be available: Our most important duty in this

step is to be ready and available to review all paperwork with you and provide answers to any questions you may have.  Double-check: Once your income documents are received, we will review and update all information to ensure your application can be approved.  Timeline: Now you’ll receive more details from

us on the full homebuying process, timelines and what we need from you.

Don’t change jobs. Try not to make a career move until after your loan has closed. You want to demonstrate income stability.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 8


Step 3 By now, all of your documents should be submitted. Once the appraisal comes in, we can review everything, lock in your loan rate when the time is right, and submit a complete package to the underwriter.

A rate lock is a guarantee to “lock in” the interest rate at which you will pay back your home loan. This protects you from rate fluctuations in the market during the mortgage review period.

any stage after application. Feel free to consult with me on when is the right time to lock in your loan.  Discussion and finalization: Now that

the appraisal is complete, we want to address any additional wants or needs you identify.  Review: Perform a final review of all options and

make the most favorable decision. As always, I am available to answer your questions and offer advice.

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If mortgage rates climb after the rate lock is in place, you benefit by getting the lower interest rate once your loan is approved.

 Lock: Locking in a loan rate can be completed at

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Review and Rate Lock

Your Tasks:

Do's and Don'ts

Our Tasks:  Be available: We want to answer your questions,

address your concerns, and be made aware of anything else that pertains to your loan.  Document: We will properly document

Don’t worry. Even if the appraisal comes in less than

everything that goes into your loan file to ensure full transparency and an efficient approval process.

your estimate, we have options that may still work for you.

 Review credit: We'll take a look at your credit

Do be prepared to respond quickly and provide

and review it with you. Let’s make sure the credit bureau has accurate information.

additional information or documents, if requested.

 Copy of the appraisal: We'll send you a copy of

your appraisal report for your records and review.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 9


Step 4

Your Tasks:

Requesting An Appraisal

 Be patient: As a potential buyer, you are not

present when the appraisal is conducted. However, you may find it helpful to know it takes about an hour for the appraiser to conduct a full analysis. The report is sent to Residential Finance as soon as it is completed by the appraiser, which can take anywhere from three days to two weeks.

The home’s value is calculated by reviewing factors that include:

 Be aware: It’s important to know what the home

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The home appraisal is a key component of the loan process. Residential Finance hires a certified professional appraiser to establish the market value of the property you’re interested in purchasing. The appraiser is licensed by the state with no financial or personal connection to you or the seller.

is worth. Think of the appraisal as an investment in

• The home's size

• The home's condition, inside and out • The home's structural integrity

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• The home's location

• The home's proximity to neighborhood amenities

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• Sale and listing prices for comparable area homes

Do's and Don'ts

Do consider having a professional home inspection performed. You need to learn as much as you can about the home, and a home inspection can help identify the need for major repairs, maintenance issues or walk-through oversights.

Do ensure that the person you hire to conduct the

Our Tasks:  Arrange appraisal: Our team will coordinate

with the appraisal company to set up the appraisal inspection of the home you are interested in buying.  Follow up: The appraisal management company

and the loan officer will discuss the expected timeline to receive your appraisal back.  Finishing touches: We will communicate with your title company, realtor and insurance company to fine-tune your application and prepare it for processing.

home inspection is reputable and certified. You can access a list of inspectors certified by the American

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 10


Step 5 After the loan processor has compiled all your paperwork, it is handed over to the underwriter. An underwriter is responsible for comparing your documents with the guidelines of the loan you wish to obtain. The underwriter determines whether or not you meet all the conditions for the loan. It’s the underwriter’s job to double-check the processor’s work and compare your files to the guidelines of the loan program to ensure that everything is in order.

 Make any and all payments: Missed or late

payments may affect your credit rating and lead to delays in approval.

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In some cases, the underwriter may approve your loan, but make the approval conditional upon you meeting additional criteria.

 Be ready for potential last-minute needs: During this part of the process, both you and your loan officer are eagerly awaiting the underwriting review. You can help the review proceed smoothly by quickly compiling any other information and documents requested by the underwriter.

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Underwriting Conditions

Your Tasks:

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Our Tasks:

Do's and Don'ts

Don’t stop making your payments. Continue to make your mortgage payments until told otherwise.

Do continue to collect pertinent information. Your most recent pay stubs may be needed, so have this information at the ready.

 Working with the loan processor: We'll meet

with the loan processor at the time of submission to underwriting for guidance as to what may be needed moving forward.  Income verification: Our processing staff will

reach out to your employer and/or other entities as needed to verify your employment and income.  Help with homeownership resources: Along

with your real estate agent, I’m happy to help you find a home insurance provider, reputable mover or lawn service—any such servicer to help you be ready to move into your new home.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 11


Step 6 After reviewing your loan package, the underwriter may ask for updated documents, which you’ll need to submit at this time.

 Prepare for settlement: Let us know days and

times that work best to schedule the closing.

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For instance, you may be asked to provide additional pay stubs or reverification of employment. We’ll go over the conditions so you know exactly what is needed from you.

 Approve final disclosure: We strongly suggest you look over the final set of loan disclosures with your loan officer. Once you’ve had a chance to review and sign these documents, we will need them returned for compliance purposes.

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Quality Assurance

Your Tasks:

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Our Tasks:

Do's and Don'ts

Don’t incur more debt! We cannot emphasize this enough. Hold off on that new car, boat or credit card. Any new debt could result in additional delays in the loan process.

Do ask questions. Turn to us to gain a better understanding of every detail and to get answers to your questions as they come up.

 Double-check the final documents: We will

thoroughly review all the final documents for accuracy and go over them with you.  Communicate to involved parties: We'll ensure

that the parties involved are prepared for your closing.  Await the final "Clear to Close": You've now

passed underwriting with flying colors, and we await verification that all documents are compliant.  Schedule the closing: Once we have the "Clear

to Close," we will call you and celebrate the great news. Then we will verify the best time and location for settlement.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 12


Step 7 Your Tasks:

Closing

 Settlement: Attend the closing at the assigned

You’ll be asked to sign closing documents, which can be done at the title company, the real estate agent’s office, or various other locations.

 I.D. and payment: Please be sure to bring a valid

form of photo identification (driver's license) and a certified bank check for the amount due.  Performance review: After your loan has closed,

you will receive a survey in the mail. Feedback is essential as we continually strive to improve our service. We truly care what you think; please take a few minutes to tell us how we did.

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Once complete, I’ll communicate with the closing agent to ensure your documents are recorded and funds are disbursed properly. The loan will close and the funds will be disbursed on the same day.

time and place.

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This is exciting! The conditions of the loan have been met. The loan is approved by the underwriter and now proceeds to the closing table.

Our Tasks:

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Do's and Don'ts

Do a happy dance! When your loan closes, it’s time to celebrate and enjoy your new home! Do refer me, please. Our business is built on providing high-quality service and satisfaction. If we did an excellent job for you, we’d be happy to assist any friends, family or colleagues who you think could benefit from our loan products.

 Gather all parties: We will confirm that all

necessary parties — you, the seller, real estate agent and any lawyers — can sign the documents at an agreed-upon time and place. (Long-distance sellers may sign at another authorized location.)  Answer closing questions: We remain ready

and available to answer all questions you may have, either during closing or after.  Return copies of documents: If you submitted

any original documents, rest assured that we will return these documents to you now that the loan is complete.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 13


MY LOAN IS CLOSED

What Happens Next? YOUR LOAN HAS CLOSED, BUT WE'RE STILL HERE FOR YOU You can expect to receive a letter from our Customer Service Manager a few days after closing. The letter includes information about your new loan, including your payment amount and where to send the payments. FAQs are also answered.

Helpful Tip: Keep your Customer Service letter in a safe and accessible place.

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It is a great reference tool and contains contact information for your Customer Service Manager, who will be happy to answer any concerns you may have.

Let's do it again!

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When the time comes, we’d love to work with you again. Whether you’d like our help with a home refinance or you’re ready to buy another home, we’ll assist you in every way possible.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 14


IMPORTANT

Telephone Numbers USE THIS WORKSHEET FOR QUICK REFERENCE ____________________________________________

REAL ESTATE AGENT

_____________________________________________

PROCESSOR

_____________________________________________

TITLE COMPANY

____________________________________________

CLOSING AGENT

____________________________________________ ____________________________________________

_____________________________________________

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OTHER

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HOUSE INSPECTOR

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LOAN OFFICER

OTHER

_____________________________________________

OTHER

_____________________________________________

OTHER

_____________________________________________

OTHER

_____________________________________________

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 15


DO YOUR

Homework DON’T WAIT UNTIL THE LAST MINUTE TO PREPARE TO MOVE INTO YOUR NEW HOME. HERE ARE TIPS TO HELP YOU PLAN AHEAD.

 Schedule utilities stop/start: Create a list of all the utilities and services you will need to turn off and on so you will have power on your first day in your new home—gas, electric, cable, phone, alarm system, etc. Some services will transfer. Find utility providers at moving.com.

and newspaper providers know, too.

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 Change address: Make sure your mail delivery isn’t interrupted by visiting moversguide.usps.com. Let your magazine

 Hire a mover: Get recommendations from friends, colleagues and real estate agents. Check reputations at the Better

Business Bureau’s site: bbb.org. Obtain an in-person, written estimate of how much your move will cost from at least three potential movers before you choose one.

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 Transfer schools: If you have children, collect the necessary paperwork from the district you’re leaving, and then

visit the new school(s) to enroll each child. Ask about bus routes, lunch costs, dress codes, and any immunizations

 Source services: To find recommended dry cleaners, lawn service providers, roofers, remodelers or furnace

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technicians, check out angieslist.com or homeadvisor.com.

 Choose caregivers: You can review the bios of housekeepers, babysitters, pet-care providers, elder-care providers and tutors at care.com or sittercity.com.

 Discover best routes: Try different ways to get from your new house to your job, sitter, church, gas stations, grocery stores and other frequently visited locations to learn the best routes.

 Find great food: Don’t fret about cooking the first night in your new house! Visit yelp.com or zagat.com to find popular pizza shops and dining destinations in your new neighborhood.

THE SMART GUIDE TO HOMEBUYING - RESIDENTIAL FINANCE

PAGE 16


on ly pl e sa m RESIDENTIAL FINANCE CORP (RFC) 1 EASTON OVAL, STE 400 COLUMBUS, OH 43219. NOT AFFILIATED WITH RESIDENTIAL FUNDING CORP. CONDUCTS BUSINESS AS RFC MORTGAGE I/L/T/N RESIDENTIAL FINANCE CORPORATION IN NY. NOT AN OFFER OF CREDIT OR COMMITMENT TO MAKE A LOAN; NOT AVAILABLE IN ALL AREAS; SUBJECT TO UNDERWRITING GUIDELINES. NMLS #1652; VA LENDER ID #2595540000; AK #AK1652; AL #21483 AND MBL#21025; AR #101062; AZ #BK-0905843; CA FINANCE LENDERS LAW LICENSE #6039726; CO MORTGAGE BROKER LICENSE #100029775 CHECK LICENSE STATUS AT WWW.DORA.STATE.CO.US/REAL-ESTATE/INDEX.HTM; CT #12900; DE CHP 22 LICENSED LENDER #011831; DC #NMLS1652; FL #MLD167; GA #19399; HI #HI-1652; IL #MB 0005562; IN DFI #16242; KY #MC82945; LA #1652; MA MORTGAGE LENDER #ML1652; MD #11143; ME SUPERVISED LENDER # SLM12522; MI 1ST & 2ND FL4201 & SR 0010569; MN #MN-MO-02049502; MS #1652 LICENSED BY THE MS DEPT OF BANKING & CONSUMER FINANCE; NJ LICENSED BY NJ DEPT OF BANKING & INSURANCE NJ CORRESPONDENT MORTGAGE BANKER & SECONDARY MORTGAGE LOAN LICENSEE #9945825; NM #03691; NY LICENSED MORTGAGE BANKER-NYS BANKING DEPT #B500784; NC #L-139845; OH #MB802662.000; OR #ML-5063; PA LICENSED BY THE PA DEPT OF BANKING PA MORTGAGE LENDER LICENSE #22135; SC #MLS-1652; TN #109200; TX SML #45235 (17330 PRESTON ROAD, SUITE 160B, DALLAS TX 75252); VA LICENSED BY VA STATE CORP COMMISSION MC 3003; UT DRE MTG ENTITY #8404312, WA CONSUMER LOAN COMPANY CL-1652 WA MASTER BUSINESS LICENSE #602403652; WI #21906BA AND #1625BR.

Smart Guide to Homebuying

August 28, 2013 2:15 PM


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The Smart Guide to Refinancing

We're here to walk you through the process The Smart Guide to Refinancing is provided to you as a tool to clarify the loan process. Use this easyto-follow guidebook to write down your goals, understand your options and keep track of your progress. When you choose Residential Finance for your refinancing, you gain a team of mortgage professionals dedicated to finding the right mortgage loan with the best rate and terms to meet your financial objectives.

Contact me today Jane Branch Senior Loan Officer NMLS #: 123456

Tel. 123.123.1234 Ext. 1234

jane.branch@myrfc.com

Tol. 888.123.1234 Ext. 1234

janebranch.myrfc.com

Cel. 123.123.1235

One Easton Oval Suite 400 Columbus, Ohio 43219

Fax. 123.123.2222


Table of Contents About Residential Finance............................................................................................... Page 1 Introduction To Mortgage Refinancing ............................................................................ Page 2 Quick Guide To Refinancing Options .............................................................................. Page 3 7 Facts About Refinancing You May Not Know ................................................................ Page 4

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Refinancing FAQs.......................................................................................................... Page 5 Customer Feedback: In Their Own Words ....................................................................... Page 6 Benefits Example: Monthly Savings ................................................................................. Page 7 Resource: Debt Worksheet ............................................................................................ Page 8

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Resource: My New Loan Worksheet ............................................................................... Page 9 Resource: Documents Worksheet .................................................................................. Page 10

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Resource: My Goals Worksheet ..................................................................................... Page 11 Smart Chart: The Loan Process ...................................................................................... Page 12-13 Step 1: Applying For Your Loan ....................................................................................... Page 14 Step 2: Disclosures .......................................................................................................

Page 15

Step 3: Requesting An Appraisal ...................................................................................

Page 16

Step 4: Review and Rate Lock ........................................................................................ Page 17 Step 5: Underwriting Conditions ................................................................................... Page 18 Step 6: Quality Assurance .............................................................................................

Page 19

Step 7: Closing ............................................................................................................. Page 20 My Loan is Closed: What Happens Next?........................................................................

Page 21

RESIDENTIAL FINANCE


About Residential Finance YOUR PARTNER: RESIDENTIAL FINANCE

• • • • • • •

FHA (Federal Housing Administration) VA (U.S. Department of Veterans Affairs) USDA (U.S. Department of Agriculture) Conforming Jumbo Reverse morgages And more

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Residential Finance makes your transaction as firm as a handshake. With us, you get the advantages of a big lender with the personal attention and sound advice of a personal banker. Our dedicated mortgage professionals offer guidance about the options that best suit your financial goals with a diverse range of loan options that include:

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With customers in more than 38 states across the country, the team at Residential Finance is where we are needed. Delivering the highest level of customer service, we have the knowledge and expertise to guide you along the way, answer your questions promptly, and get your loan approved at the most competitive rates and terms.

THE SMART GUIDE TO REFINANCING

PAGE 1


INTRODUCTION TO

Mortgage Refinancing Whether you took on a 15- or 30-year mortgage, with interest rates at all-time lows, you don’t have to keep your existing loan. Take a look at today’s loan rates and another look at your financial goals, and discover how refinancing your existing mortgage can save you money.

HERE ARE SIX REASONS REFINANCING MAY BE THE PERFECT OPTION FOR YOU:

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Reduce your monthly payments. You work hard. With today’s lower interest rates, keep more of those hard-earned dollars in your pocket. Start saving money again.

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Get extra cash for any reason. Take advantage of your home’s equity to access cash for home improvements such as a bathroom remodel or that garage you’ve been wanting.

Pay off your mortgage sooner than you expected. Shorten the term of your loan and get that mortgage paid off while building up your home equity.

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Live a debt-free life. Whether you’re paying off credit cards, personal loans or other debt, they all have interest. The only debt that is tax deductible is your home mortgage. Therefore, consolidate your debt by rolling all of your monthly bills into one convenient payment and focus on getting your home paid off quicker.

Take advantage of a loan that fits your current situation. Perhaps your financial situation has improved since you obtained your current loan. Get into the right loan program that best meets your needs today.

Plan for life-changing events. Have a child who is applying for college or getting married? Refinancing can help you with the finances you need for life events – from braces for your kids to making room for a new baby!

PAGE 2

RESIDENTIAL FINANCE


QUICK GUIDE TO

Refinancing Options There are many different options when it comes to refinancing. The best way to determine which loan program works best for you is to talk with me about your goals. I’m here to help you understand your choices and make your financial transaction easier.

HERE IS A BRIEF OVERVIEW OF THE LOAN PROGRAMS AVAILABLE TO YOU:

EASY QUALIFICATION

30-YEAR FIXED

15-YEAR FIXED

RATE SECURITY

LOWER MONEY DOWN

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FHA LOAN

LOAN FLEXIBILITY

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LOAN PRODUCT

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VA LOAN

JUMBO LOAN

REVERSE LOAN

ADJUSTABLE RATE LOAN

Helpful Tip: Did you know that millions of homeowners qualify for VA, FHA and USDA programs, but not all lenders offer them? Many times these loans provide better terms and conditions than what is offered at your local bank. Ask me about your options.

THE SMART GUIDE TO REFINANCING

PAGE 3


7 FACTS ABOUT REFINANCING

You May Not Know 1)

Lowering your interest rate isn’t the only way to save money. Even if you

2)

refinance at the same rate as your first mortgage, it’s possible for you to lower your monthly payment. Let’s discuss how that can work in your favor.

You can get a mortgage customized to your needs. When you think about

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refinancing, you probably think about a 15-year or 30-year loan. However, Residential Finance can customize a loan to match the years that are left on your existing loan.

3)

Access a better interest rate by improving your debt-to-income ratio. If you

pay down debt, even if it’s just months before you apply for a refinance, you may qualify for a better interest rate & save more money over time.

4)

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There's a difference between a mortgage broker and a direct lender. A

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mortgage broker may represent several different lenders and serves as the liaison between you and the lender. Working with a direct lender simplifies the loan process while eliminating some of the additional fees associated with a broker.

5)

The lowest rate may not be the best option. Rate is only one component to consider. You should also look at the advantages of lowering your monthly payments, cashing out, increasing your tax benefits or decreasing the term of your mortgage.

6)

Some of the costs associated with refinancing are tax deductible. Ask your

financial advisor or tax professional for more details.

7)

If you’re a veteran, you won’t need down payment money. Unlike FHA loans, VA

loans typically do not require a down payment or private mortgage insurance (PMI). They do require owner occupancy and, of course, VA eligibility.

PAGE 4

RESIDENTIAL FINANCE


REFINANCING

FAQs If you have a question, feel free to pick up the phone and call me. I’m here to make sure you understand the process and clarify any concerns you may have. However, here are some answers to frequently asked questions that you may be thinking about:

How long does it take for you to process my loan request? The time it takes between submitting your loan application to sitting at the closing table usually averages 2-3 weeks.

What do I need to qualify for a refinance?

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Guidelines vary from one loan to another, but to qualify you must have equity in your home, have a stable income and meet the minimum credit requirements.

What will it cost to refinance my loan?

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The total cost for refinancing your first mortgage depends on your interest rate, the number of points, and other costs required to obtain the loan. I’ll review this with you when we go over your financial goals so you’ll have a clear idea of what to expect.

How do I decide if a 15-year mortgage is better for me than a 30-year mortgage?

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I’ll sit down with you and review your financial goals and objectives. Then, we’ll “crunch the numbers” to see which option best suits your needs and comfortably works within your budget.

Why should I consider an adjustable rate mortgage (ARM)? In some cases, ARMs have lower interest rates. According to the chief economist for the Mortgage Bankers Association of America, the average life of a mortgage is just 3-5 years. Yet, 83% of borrowers get loans that guarantee a fixed rate for 15 years or more.

How does an appraiser determine what my home is worth? An appraiser looks at your home and compares it to other homes that have sold in your area recently. Factors that are taken into consideration include the structure of your home, its location and proximity to neighborhood amenities, and its overall appeal inside and out.

I’m ready to apply. What should I expect? From personal to financial information, you’ll need to gather several documents before getting started. It’s best to have the necessary paperwork gathered together before you sit down to meet with me. This way, everything you need will be in front of you and easy to access. There’s a handy document checklist on Page 12 to help you along the way.

THE SMART GUIDE TO REFINANCING

PAGE 5


CUSTOMER FEEDBACK

In Their Own Words Award Winning

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“Handling of all aspects of my loan was impeccable. I have had to refinance many times in the past so I ought to know! I had spoken to many loan officers all denying any hope of refinancing … Thanks to my loan officer for his good work!” — Darlyne D., Dublin, CA

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“RFC was wonderful, warm and professional. I was denied twice by other banks and they thought outside of the box and were able to approve us for a refinance on our home and save a lot of money and jumpstarting us out of debt. Thank you so very much, this has changed our lives tremendously!” — Brian D., Buchanan, MI

“RFC more than exceeded my expectations. I was somewhat reluctant to apply for a refinance, but after receiving a card in the mail from RFC I made a phone call and was connected. From the 1st call they gave me confidence in our situation and were sure they could help. Things had changed drastically for my wife and I over the last couple of years, and that’s exactly what we needed, a little help. I never once felt like just another number, and finally someone was there for us and our unique situation. I feel that thanks to RFC that we are now in a much better financial position. Thank you RFC.” — Peter R., Hadley, NY

PAGE 6

RESIDENTIAL FINANCE


BENEFITS EXAMPLE

Monthly Savings HOW DOES REFINANCING SAVE ME MONEY? Whether you’re changing the terms of your existing loan or lowering your interest rate, refinancing can save you hundreds of dollars a month – that’s thousands of dollars per year.

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Take a look at the example below and discover what a difference refinancing can make to your financial future.

CURRENT

REFINANCED

Mortgage

$1,265.00

$1,525.00

Car Loan

$ 488.00

$0

Credit Card

$ 159.00

$0

$ 128.00

$0

$ 95.00

$0

Credit Card

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Credit Card

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DEBT TYPE

Total Monthly Debt

$2,135.00

$1,525.00

Monthly Savings

0

$610.00

Annual Savings

0

$7,320.00 Sample information only.

Helpful Tip: Every cent counts! Did you know that by paying as little as an extra $90 per month on a $200,000 loan (at 4.5%), you can reduce your term by 4.5+ years (that’s 25.49 years instead of 30)?

THE SMART GUIDE TO REFINANCING

PAGE 7


RESOURCE

Debt Sheet ORGANIZE YOUR DEBT Here is a helpful worksheet designed to assist you in outlining your current debt(s) and what you’d like to pay off. Have a question? Don’t hesitate to call me and we can review this together.

ple Card Sam _____________

Total Owed 2563.00 $_________

Pay Off

152.00 $_________

 X Yes

 No

$_________

 Yes

 No

$_________

 Yes

 No

$_________

_____________

$_________

_____________

$_________

$_________

 Yes

 No

_____________

$_________

$_________

 Yes

 No

_____________

$_________

$_________

 Yes

 No

_____________

$_________

$_________

 Yes

 No

_____________

$_________

$_________

 Yes

 No

TOTAL: $_________

$_________

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_____________

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PAGE 8

Monthly Payment

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Creditor

RESIDENTIAL FINANCE


RESOURCE

My New Loan Worksheet WHICH OPTION IS BEST FOR ME? Here’s a simple worksheet we can review together. Fill in the blanks below. Then, once you see how much you’ll save with each option, you’ll be better equipped to select the loan program that’s best suited for you.

Debt

Current

New

$_________

$_________

$_________

$_________

$_________

$_________

$_________

$_________

$_________

$_________

$_________

$_________

$_________

$_________

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$_________

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$_________

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$_________

$_________

Option 1:

_________

$ ________

Option 2:

_________

$ ________

Option 3:

_________

$ ________

THE SMART GUIDE TO REFINANCING

PAGE 9


RESOURCE

Documents Worksheet ORGANIZE YOUR DOCUMENTATION There are a variety of documents – personal & financial – that you’ll need to compile. To help you prepare and ensure that the process flows smoothly, here’s a checklist of the items you’ll need:

ADDITIONAL DOCUMENTS:

(Required for every application)

(Required for some situations only)

 W2s:

 ________________________________

For each job you’ve held over the last 2 years

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KEY DOCUMENTS:

 ________________________________

 1099s: For the last 2 years (Social Security, pension, etc.)

 Personal and business tax returns:

 Award letter:

 ________________________________

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For the last 2 years (all pages and schedules). Be sure to sign page 2 of Form 1040.

 ________________________________

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Most recent (Social Security, pension, etc.)

 Pay stubs:

 ________________________________

For the last 30 days

 Bank statements:

 ________________________________

For the last 2 months (all pages)

 Brokerage statements:

 ________________________________

Most recent (all pages)

 Driver's license: An enlarged copy for borrower and co-borrower

 Mortage statements: For all loans

 Declarations page: Of your homeowners insurance

PAGE 10

RESIDENTIAL FINANCE


RESOURCE

My Goals Worksheet WHAT AM I DREAMING ABOUT? Once you’ve refinanced your loan, you’ll be saving money. So, what would you like to do with those savings? Are you ready to take that long-awaited vacation, remodel your kitchen, or send your kids to college? Write down your goals below.

HOME

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________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

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TRAVEL

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________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

EDUCATION

________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

OTHER ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

THE SMART GUIDE TO REFINANCING

PAGE 11


SMART CHART

The Loan Process 7 EASY STEPS

1 Pre-Approval You can do this over the phone or in person with me. I’ll ask you questions that will help me determine how much you may borrow.

Start to Finish

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Refinancing your home doesn’t have to be stressful and confusing.

2

To help you understand the process and feel decision you make, here’s a list of the 7 steps to

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make your experience

Disclosure

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comfortable with the

Disclose everything at the beginning. Being up front from the start ensures that your loan gets processed as quickly and smoothly as possible.

hassle-free:

Your

al

pre-approv

letter helps

expedite

cess

the loan pro

PAGE 12

3 Appraisal A professional appraiser will visit your home, compare it to other home sales in your area, and determine its market value.

RESIDENTIAL FINANCE


SMART CHART

The Loan Process 4 Review and Rate Lock By now, all your documents should be submitted, so when the appraisal comes in we can review everything, lock in your loan rate, and submit a complete package to the underwriter.

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5

Underwriting

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An underwriter is the person responsible for comparing your documents with the guidelines of the loan you wish to obtain, and determining that all conditions are being favorably met.

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6

Quality Assurance

After reviewing your loan package, the underwriter may ask for additional or updated documents such as pay stubs or re-verification of employment.

7 Closing Once the paperwork is complete and your loan is approved, I’ll communicate with the closing agent to ensure the documents are recorded and funds are disbursed properly.

THE SMART GUIDE TO REFINANCING

PAGE 13


Step 1 You can do the loan pre-approval process over the phone, online or in person with me. First, we’ll review your financial goals and objectives. Then, to help prequalify you, I’ll ask for information about employment, earnings, savings, etc. You’ll be asked to provide documentation such as W-2s, recent pay stubs, income tax returns. And, I’ll check your credit report. All your information is kept confidential. I’ll use this information to see if you qualify for a mortgage and determine which loan options best suit your financial objectives.

goals you would like accomplished.  Get Prepared: Gather your W-2 forms, pay

stubs, phone numbers for your human resources department, contact info for insurance agent, your property tax bill. More information is always better than less.  Questions: Ask any and all questions you would

like answered, if we don't know the answer right away we will find it.

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Be sure your paperwork is correct, complete and legible. Missing or incorrect information may delay the loan process.

 Apply: Give us a clear picture of all financial

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Applying for your loan

Your Tasks:

Do's and Don'ts

Don’t open or close any new credit accounts in the months prior to applying for your refinance, this can effect your credit rating.

Our Tasks:  Listen: We want to know all about your goals and objectives and how it will change your life for the better once accomplished.  The Details: We must take time to cover your full application and ensure we have the most upto-date and accurate information for your situation  Review Credit: We will be taking a look at your

Do tell me, or ask me, about anything that may affect your loan.

credit and discussing it with you. Let's take time to review it to ensure the credit bureau has accurate info.  Timeline: During this step we will go over all the

steps in this process and estimating exactly when it will be complete.

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RESIDENTIAL FINANCE


Step 2 Your Tasks:

Disclosure (Signing)

 Phone appointment: Ask any questions

Disclose everything at the beginning. Being up front from the start ensures that your loan gets processed quickly and as smoothly as possible.

you may have. We want you to have a clear understanding of all the paperwork your signing so let's cover everything.

You’ll receive a Truth-in-Lending Disclosure statement that outlines the total cost of your loan. This is an opportunity for you to ask questions to ensure you understand how much you’re going to pay for the loan program you wish to obtain.

 Return documents: The documents we covered

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 Appraisal: Let us know of a good time and day

for the inspection of your property.

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The initial paperwork is not the finalization of your loan. It is used for compliance purposes as required by the government. If anything on the application is incorrect, such as the year your home was built or work phone number, just let us know and we will get it fixed prior to the final closing.

in step one should be returned with your loan application papers.

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Our Tasks:

Do's and Don'ts Don’t

spend the money you have in the bank. Many mortgages are approved on the condition that you have a certain amount of money on reserve after closing.

Don't take on new debt. This can be tempting as your new loan will be giving you tremendous financial benefits. Just wait till it's closed and funded. Don’t

change jobs. Try not to make a career change until after the loan has closed, if possible. You want to demonstrate income stability.

THE SMART GUIDE TO REFINANCING

 Be available: Our most important duty in

this step is to be ready and available to cover all paperwork with you and provide answers to any questions you may have.  Arrange appraisal: Our mortgage team will be coordinating with the appraisal company to set up your appraisal inspection.  Double-check: Once your income documents are received, we will be reviewing and updating all information to ensure your application is approvable.  Timeline: We will go into more detail on the full

process, timelines and what we need from you.

PAGE 15


Step 3

Your Tasks:

Requesting An Appraisal

 Be ready: The appraisal will take around 45

Residential Finance Corporation retains the services of a professional appraiser. The appraiser is hired to visit your home and determine its value (known as the fair-market value).

minutes to an hour. Please make sure you have set enough time in your schedule for the appraiser to do their full analysis.

This figure is calculated by reviewing such factors as:

additions or upgrades you've made since your last inspection. If you know of any recent or pending sales in the neighborhood be sure to mention it to the appraiser.

• The condition of your home – inside and out. • The size of your home. • The location of your home.

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• How your home compares to other local home sales.

 Speak up: Let the appraiser know of any new

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• Your home's proximity to neighborhood amenties.

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Our Tasks:

Do's and Don'ts

Don't renovate: If you're planning to fix up a room

 Finishing touches: We will be communicating with

your tax assessor, insurance company and the credit bureaus to fine-tune your application and prepare it for processing.  Follow up: The appraisal management company

or remodel the bathroom be sure to wait till the loan is complete to do so. This can effect your qualification.

and the loan officer will be discussing the expected timeline to receive your appraisal back. (Typically 3-4 days in most areas)

Do provide your past appraisal: Have a copy of your

 Branch Manager: The Branch Manager will be

last appraisal? If so, this may assist with your inspection. Provide a copy to your appraiser.

much more involved in reviewing the application for any additional items that may be needed.  Wait: There is a down period in the process as

we await the final estimate, but we are prepped and ready to move forward once we get it back.

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RESIDENTIAL FINANCE


Step 4 Review and Rate Lock

Your Tasks:  Lock: Locking in a loan rate can be completed at

By now, all of your documents should be submitted. Once the appraisal comes in, we can review everything, lock in your loan rate and submit a complete package to the underwriter.

any stage after application, but if you have chosen to wait at this point we must firmly lock in the rate at this time.

A rate lock is a guarantee to “lock in” the interest rate at which you will pay back your home loan. This protects you from rate fluctuations in the market during the mortgage review period. If mortgage rates climb after the rate lock is in place, you benefit by getting the lower interest rate once your loan is approved. However, should rates fall after the lockin period, you may have to pay the higher rate.

appraisal is complete we want to finalize any additional wants or needs that you would like accomplished.

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 Discussion and finalization: Now that the

 Choose: Do a final review of all options and

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make the most advisable financial decision with my help.

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Our Tasks:

Do's and Don'ts

Don’t panic. Even if the appraisal comes in less than

your estimate, we have many programs that may still be able to help you out.

Do relax. You've done your part. Now allow us to take

over and complete the loan process.

 Be available: We want to know all your

questions, concerns, anything else we should be aware of.  Forward process: We do our best to outline the

finalization of the processing of your file and give full transparency on how a mortgage application is completed.  Review credit: We will be taking a look at your credit and covering it with you. Let's take time to review it to ensure the credit bureau has accurate info.  Copy of the appraisal: During this time we will

send you a copy of your appraisal report for your records and review.

THE SMART GUIDE TO REFINANCING

PAGE 17


Step 5 An underwriter is the person responsible for comparing your documents with the guidelines of the loan you’re applying for. He/she determines whether or not you’re meeting all the conditions favorably. After the loan processor has compiled all of your paperwork, it is handed over to the underwriter. It’s the underwriter’s job to double -check the processor’s work and compare your file to the guidelines of the loan program to ensure that everything is in order.

 Make any and all payments: It's common for

borrower's to think it's OK to stop making payments while in the final stages of the process.

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In some cases, the underwriter may approve your loan, but make it conditional upon you meeting additional criteria.

 Be patient: During this step, both the loan originator and the borrower are eagerly awaiting the underwriting decision. It does take some time, but as long as the underwriter has all the information they need, it will go smoothly.

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Underwriting Conditions

Your Tasks:

Do's and Don'ts

Don’t stop making your payments. Continue to make

Our Tasks:  Working with the Loan Processor: We will meet

with the processor at the time of underwriting submission to get guidance as to what may be needed moving forward.

your mortgage payments until told otherwise.

 Title Work: At this point we will obtain a copy of

Do continue to collect pertinent information. Most recent pay stubs may be needed, so keep updated information at the ready.

 Mortgage Payoffs & Credit Bureau Updates:

your title report, review it and ensure it is accurate.

We will be obtaining a payoff statement on your mortgage and also work with the credit bureaus to ensure your credit report is fully updated and accurate.  Income Verification:At this time our processing

staff will be reaching out to your employer, C.P.A., or government to verify your employment and income.

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RESIDENTIAL FINANCE


Step 6 After reviewing your loan package, the underwriter asks for updated documents, which you’ll need to submit at this time.

 Prepare for settlement: We typically close the

loan at your home, but we have alternative options available. Just let us know when and where to be.

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For instance, you may be asked to provide additional pay stubs or re-verification of employment. We’ll go over the conditions so you know exactly what is expected of you.

 Final disclosure: At this point, there will be a final set of loan disclosures for your review and signatures. We will need these items returned for compliance purposes.

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Quality Assurance

Your Tasks:

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Our Tasks:

Do's and Don'ts

 Double-check the final documents: We will

thoroughly review all the final documents for accuracy and review with you.

Don’t incur more debt, yet! Please remember to hold

 Communicate to involved parties: We will

off on that new car, boat or credit card. Any new debts could result in additional delays to the loan process.

ensure that the parties involved are prepared for your closing.

Do ask questions. We are available to go over

 Await the final "Clear to Close": Now that

everything in detail and answer any and all questions you may have.

you've passed underwriting with flying colors, we are simply awaiting verification that all documents are compliant.  Schedule the closing: Once we have the "Clear

to Close," we will call you and celebrate the great news. Then we verify the best time and location for settlement.

THE SMART GUIDE TO REFINANCING

PAGE 19


Step 7 Your Tasks:

Closing

 Settlement: We will send a notary to your

You’ll be asked to sign closing documents, which may be done at your home, our office, or at a location chosen by a notary or attorney in your area.

 Performance review: After your loan has closed,

you will receive a survey in the mail. Feedback is essential to us as we continually strive to improve our service. Please take a few minutes to let us know how we did.

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Once complete, I’ll communicate with the closing agent to ensure your documents are recorded and funds are disbursed properly. Approximately four days after the loan funds, you’ll receive a check(s) via overnight mail carrier.

location and obtain final official signatures on your loan paperwork. Simply provide a copy of your driver's license to the notary, sign the final documents, and the process is done.

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The conditions of the loan have been met. Your loan is approved by the underwriter and it proceeds to the closing table.

Our Tasks:

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Do's and Don'ts

Do celebrate! Your loan is now closed, it's time to celebrate and enjoy the benefits of your refinance. Do refer me to friends and family. Our business is built on providing high-quality service and satisfaction. If we did an excellent job for you, we would be happy to assist any friends or family who may benefit from our loan products.

 Funding questions: On a purchase transaction,

your loan will fund the same day as signing. On a refinance, funding is typically four business days after settlement due to federal compliance.  Closing questions: If you're at settlement or

just finished up signing, we are ready and available to answer any questions you may have.  Copies of any documents: If you submitted

any original documents, rest assured that we will return these documents to you now that the loan is complete.

PAGE 20

RESIDENTIAL FINANCE


MY LOAN IS CLOSED

What Happens Next? YOUR LOAN HAS CLOSED, BUT WE'RE STILL HERE FOR YOU We want to be your banker窶馬ow and in the future. If you want a new analysis in six months, one year or five years from now, we will be here and ready to assist in every way possible. You will receive a letter from our Customer Service Manager in a few days that will cover FAQs along with specifics on your payment amount and where to send your new mortgage payments.

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Helpful Tip: Keep your Customer Service letter in a safe and acccessible

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place. It is a great reference tool, and contains contact information for your Customer Service Manager, who will be happy to answer any concerns you may have.

THE SMART GUIDE TO REFINANCING

PAGE 21


IMPORTANT

Telephone Numbers USE THIS WORKSHEET FOR QUICK REFERENCE _____________________________________________

PROCESSOR

____________________________________________

TITLE COMPANY

_____________________________________________

CLOSING AGENT

_____________________________________________

HOUSE INSPECTOR

____________________________________________ ____________________________________________

_____________________________________________

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OTHER

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OTHER

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LOAN OFFICER

OTHER

_____________________________________________

OTHER

_____________________________________________

RESIDENTIAL FINANCE CORP (RFC) 1 EASTON OVAL, STE 400 COLUMBUS, OH 43219. NOT AFFILIATED WITH RESIDENTIAL FUNDING CORP. CONDUCTS BUSINESS AS RFC MORTGAGE I/L/T/N RESIDENTIAL FINANCE CORPORATION IN NY. NOT AN OFFER OF CREDIT OR COMMITMENT TO MAKE A LOAN; NOT AVAILABLE IN ALL AREAS; SUBJECT TO UNDERWRITING GUIDELINES. NMLS #1652; VA LENDER ID #2595540000; AK #AK1652; AL #21483 AND MBL#21025; AR #101062; AZ #BK-0905843; CA FINANCE LENDERS LAW LICENSE #6039726; CO MORTGAGE BROKER LICENSE #100029775 CHECK LICENSE STATUS AT WWW.DORA.STATE.CO.US/REAL-ESTATE/INDEX.HTM; CT #ML-1652; DE CHP 22 LICENSED LENDER #011831; DC #NMLS1652; FL #MLD167; GA #19399; HI #HI-1652; IL #MB 0005562; IN DFI #16242; KY #MC82945; LA #1652; MA MORTGAGE LENDER #ML1652; MD #11143; ME SUPERVISED LENDER # SLM12522; MI 1ST & 2ND FL4201 & SR 0010569; MN #MN-MO-02049502; MS #1652 LICENSED BY THE MS DEPT OF BANKING & CONSUMER FINANCE; NJ LICENSED BY NJ DEPT OF BANKING & INSURANCE NJ CORRESPONDENT MORTGAGE BANKER & SECONDARY MORTGAGE LOAN LICENSEE #9945825; NM #03691; NY LICENSED MORTGAGE BANKER-NYS BANKING DEPT #B500784; NC #L-139845; OH #MB802662.000; OR #ML-5063; PA LICENSED BY THE PA DEPT OF BANKING PA MORTGAGE LENDER LICENSE #22135; RI #20102825LL; SC #MLS-1652; TN #109200; TX SML #45235 (17330 PRESTON ROAD, SUITE 160B, DALLAS TX 75252); VA LICENSED BY VA STATE CORP COMMISSION MC 3003; UT DRE MTG ENTITY #8404312, WA CONSUMER LOAN COMPANY CL-1652 WA MASTER BUSINESS LICENSE #602403652; WI #21906BA AND #1625BR. RESIDENTIALFINANCE.COM/LEGAL

Smart Guide to Refinancing

Rev: 7/19/13 ©

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All information is for sample use only and is the property of the party for which it was created.

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