Pam Mathewson's Homebuyer Guide

Documents Needed for Pre-Approval

PAY STUBS: MOST RECENT 30 DAYS

FINAL DECEMBER PAY STUB: MOST RECENT 2 YRS, IF AVAILABLE

W-2’S: MOST RECENT 2 YEARS

BANK STATEMENTS: ALL PAGES, EVEN BLANK ONES

ID: FRONT OF DRIVER’S LICENSE OR PASSPORT PHOTO PAGE

IF APPLICABLE TO YOUR SITUATION:

Self employed/1099: 2 yrs business & personal tax returns, all pages & schedules

Pension or Social Security Income: 2 yrs-1099’s, award letters, tax returns

Selling a property: proceeds sheet from real estate agent

Keeping other properties: mortgage, property tax & homeowners insurance statements

College in past 2 years: college transcripts

Married in past 2 years: marriage certificate

Unemployment, leave of absence, maternity leave, income decrease in past 2 yrs: letter explaining the situation & the dates

Divorced: all pages of the divorce decree

Child Support or Spousal Maintenance (received or paid out): documentation or court ordered child support statement along with proof of receiving the funds

Non-US Citizen: Work Visa, Green Card, EAD Card, I-551 Stamp, current I-797

Bankruptcy: all pages of the bankruptcy documents & discharge papers (if applicable). If in Chapter 13: 12 months on time repayment history, 24 month clean mortgage/rental payment

VA: COE or DD-214

*CAN’T FIND YOUR W-2’S OR TAX RETURNS: 800-908-9946 | IRS.GOV (GET TRANSCRIPTS)

Steps to Homeownership

CHECK YOUR CREDIT: Know your credit score. This will help determine if you qualify for a loan. Also, a higher score could earn you a lower interest rate on your mortgage. Keep in mind that scores from credit reporting agency will differ from that of a lender as most do not pull from all three credit bureaus and use a less comprehensive model.

PLAN FOR A DOWN PAYMENT: Your down payment sources need to be “sourced and seasoned” meaning that you can show where the money is coming from and readily accessible.

GET PREAPPROVED: Getting pre-approved will confirm how much home you can afford and help you ensure an on-time close. The listing Realtor will want to know that your offer is backed with strong qualifications, so don’t miss this step!

WORK WITH A REALTOR: A good real estate agent will outline and guide you through the search, purchase offers, negotiation and purchase process. I can recommend a great agent for you!

FIND A HOUSE! The search may be long or short, but your real estate agent can help guide you and provide expertise as you search for the place to call home.

MAKE AN OFFER: When you find your potential home, work with your real estate agent to craft an offer, which should reflect your motivation, the seller’s motivation, market conditions and contingencies (ex: inspections, repairs, etc.)

ATTEND YOUR HOME INSPECTION: This is an opportunity for you to get a clear picture of the condition of the home from roof to foundation. Study the report for defects and needed repairs flagged by the inspector.

AWAIT FINAL LOAN APPROVAL: An appraisal will be ordered to ensure value and condition of the property. Your application will run through processing and underwriting to ensure we have met all guidelines.

SIGN DOCUMENTS: The closing disclosure is sent to you at least 3 days before closing so you can be sure you are informed about all costs related to your loan. The day you sign closing documents, bring your photo ID and any other materials requested by the Title company or notary public.

The Key Players of the Home Purchase

Real Estate Agent

License professionals who represent buyers & sellers in real estate transactions.

Mortgage Processor

Responsible for obtaining conditions requested by underwriting to get the loan ready for closing.

Loan Officer

That’s me! Licensed professional who assists borrowers in originating a mortgage.

Underwriter

Analyzes & verifies credit, in come, appraisal, title, insurance, etc. to determine risk & verify if the loan meets guidelines.

Insurance Agent

You will choose and contact your insurance agent to set up your new policy.

Appraiser

Estimates the market value of the home using comps of similar homes.

Mortgage Funder

Ensures closing documents are correct. Sends closing package to the title closer.

Home Inspector

Looks for potential issues. Roof, foundation, windows, plumbing, electrical, mold, water damage, other items.

Title Closer

Liaison between the title agent and lender. Explains closing disclosures at the closing table.

Interest Rate Factors & Buydowns

Interest rates are driven by a variety of factors - some are driven by you and some are driven by the market. You can affect your interest rate with any of the green factors on the left. For example, if you improve your credit score or choose a shorter term loans, you could get a lower rate. The market-driven factors in orange are out of a buyer’s control and affect every home buyer equally.

BUYER

Global Impact

Bond Investors

Patterns

Policy Housing Market

Rates

CAN I BUY DOWN MY RATE? Yes, your interest rate can be lowered by “buying down” your rate. You can pay points to essentially purchase a lower interest rate. I will help you weigh the cost of the buy down against the cost of the higher rate to ensure you are making the best decision for your financial goals.

Do’s &Dont’s of Homebuying

IT’S SIMPLE: DO NOT GIVE YOUR SOCIAL SECURITY NUMBER OUT UNTIL WE CLOSE YOUR MORTGAGE LOAN.

DO’S DON’TS&

DO educate yourself about the home buying and home financing process, making sure that you meet your short and long-term financial goals.

DO stay in your job so your mortgage lender can verify your current employment status.

DO stay current on all your payments, including payments for your mortgage, automobile, credit cards, student loans and any other debt.

DO make sure to organize key documents, including check stubs, W-2s, tax returns, bank and investment statements, Note or Deed to other properties, etc.

DO document any part of your down payment that’s a gift. Ask for gifted funds as soon as possible with your Loan Officer’s guidance.

DON’T make large deposits, with drawals, transfers or financed purchases. If you must, then save the documentation itemizing these transactions.

DON’T allow your bank accounts to go in the negative, even if you have overdraft protection.

DON’T apply for new credit or give your personal information to anyone else who might run credit, which can hurt your credit score.

DON’T close credit card accounts after you paid them off. This may increase your debt ration and have a negative impact on your credit score.

DON’T keep cash in a safe or an overseas account if it’s for a down payment. Inquire about the best time to put funds into your U.S bank account.

IF YOU ENCOUNTER A SPECIAL SITUATION, PLEASE MENTION IT TO US RIGHT AWAY SO THAT WE CAN HELP YOU DETERMINE THE BEST WAY TO HANDLE IT IN ORDER TO ACHIEVE YOUR FINANCIAL GOALS

Mortgage Terms

EARNEST MONEY

Money paid to confirm a contract, to show that an offer is serious and made in good faith. it is applied towards the down payment.

APPRAISAL

Is a process through which a real estate appraiser determines the fair market value of a home.

DEBT TO INCOME

DTI (Debt-to-income) is the ratio or percentage that results when a borrower’s total monthly payment obligation is divided by their monthly income.

ESCROW

An account managed by the loan servicer to pay taxes and insurance. it is required when putting less than 20% down.

CLOSING COSTS

Closing costs are the expenses over and above the property’s price and may in clude discount points, appraisal fees, title searches, title insurance, mortgage fees, surveys, taxes, deed recording fees and credit report charges.

CASH TO CLOSE

Is the amount a homebuyer needs in cash at the closing of the loan. Typically, this includes down payment and closing costs.

A POINT

A point is 1% of the loan amount. On a $100,000 loan, a point is $1000.

CASH RESERVES

Cash reserves refer to the money a company or individual keeps on hand to meet short-term and emergency funding needs.

ARM

ARM stands for Adjustable Rate Mortgage. It is a mortgage in which the interest rate adjusts periodically based on the market.

PMI

Private Mortgage Insurance is required on all conventional loans where the buyer has less than 20% equity in the home. It protects the lender (not the buyer) if they stop making payments.

Loan Process

TIMELINE & CALENDAR

THIS IS A GENERAL TIMELINE, NOT TRUE TO THE NUMBER OF DAYS EACH STEP MAY TAKE. THE TIME LINE VARIES WITH EVERY BORROWER.

SUN MON TUES WED THURS FRI SAT

Apply for a Loan

Apply at pammathewson.com & provide documentation

Sign Purchase Agreement Home Inspection Lock Rate

After inspection, discuss locking (or not locking) in a rate with Pam

You’re Approved!

Congrats! Your preapproval letter will be emailed to you & your agent

Found it!

You find the perfect home & make an offer!

Appraisal Ordered

by Pam and payment request will be sent via email

Underwriting Final Review Initial Closing Disclosure

sent 3-7 days before closing. Requires e-signatures from all borrowers at least 3 days prior to closing

BRING TO CLOSING:

Home Insurance

Contact a home own ers insurance agent and secure a quote for a premium

Loan Estimate

Updated documentation requested for underwriting

Preliminary numbers are sent to all borrowers for e-signatures Underwriting

Appraisal Received

Final CD

Sent when we get final numbers from the title company. This will have final amount due at closing

Closing Day!

*See list below of needed items to bring to closing!

• Bring Cashier’s check or wire transfer the amount due at closing

• Bring ID or other form of identification, and your personal checkbook, just in case

• Sign closing documents and get the keys to your new home!

Testimonials

Pam and her team are the best! Very informative and helpful. Quick easy responses to any questions. Would definitely recommend to family and friends! - Amanda M. | St. Paul, MN

I appreciate Pam’s responsiveness and commitment! I have already referred two people to Pam for information on mortgages and refinance.

- Denise K. | Falcon Heights, MN

Pam was a great partner in this process. Her spot on advice from the start was the only reason we were able to go from no credit to over 800 credit score in just a few months! She is kind, knowledgeable, helpful and professional. She patiently and quickly answered all our many questions and walked us through to make it a smooth process.

TANK YOU, PAM! - Daniel C. | Lindstrom, MN

As always, prompt and thorough communication from Pam and her team make working with her a joy!

- Lisa L. | Falcon Heights, MN

Pam and Ashley did an amazing job explaining, coordinating, communicating, and making sure we received the best possible option for a mortgage. Exceptional experience working with Pam. - Elyse J. | Chaska, MN

We had a very difficult refinance and Pam and Ashley were on top of things at all times. They handled a all my questions and concerns with a high level of professionalism and proficiency. I would highly recommend them. - David B. | Bemidji, MN

Mortgage Payment Breakdown

Why is it so Hard to Get a Home Loan?

I get it, it’s frusterating... the amount of documents, the details of the documents requested, the back-and-forth, the signing of SO many discloserues...WHY?!

HERE’S WHY

2004-2006 | GREED

The financial crisis was primarily caused by deregulation in the financial industry. That permitted banks to engage in hedge fund trading with derivatives. Banks then demanded more mortgages to support the profitable sale of these derivatives, initiating loosened mortgage approval guidelines. Essentially, anyone could qualify for ANY home loan amount.

2008-2010 |

Collapse/Oh-Crap/President Obama

Home prices drop 34%.. Stock market crashed Sept 2008. President Obama is elected. His #1 job was the economy. Inherited the worst economy since Great Depression. Started with Wall Street reform, the large banks, and mortgage/real estate industries. This began the over-regulation of the mortgage industry.

2010-2016 | Over-regulation/Bail-Outs/Bills/Recovery

In 2010, the Dodd-Frank Act & the Consumer Protection Act was passed. This was the greatest legislation (laws) since the 1930’s! This law placed strict regulations on banks to protect the consumer. Many “bad” mortgage/real estate people left the industry as a result. In 2015, the CFPB *Consumer Financial Protection Bureau) was formed to provide more laws/regulations to protect consumers. Appraisal practices, advertising, rates, and loan disclosures were impacted.

TODAY: ALL of these guidelines are STILL in place.