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Johnny Horne's Homebuying Process Booklet

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Published by marketinguser, 2021-04-19 16:45:52

Johnny Horne's Homebuying Process Booklet

Johnny Horne's Homebuying Process Booklet



I'm here to lead you through the
Homebuying process step-by-step!


NMLS# 1965230 | CO-MLO# 100517535
[email protected]

7075 Campus Drive, Suite 102, Colorado Springs, CO 80920


We’re here to get
you home.


Buying a home is one of the most important financial decisions you’ll make. We’re here to make the process less
intimidating and more understandable for you. Whether you’re buying your first home, looking for luxury home
financing or building your portfolio through real estate, we’ll guide you through the process to getting your new keys!

Rent vs. Own Comparison 3 Determining Affordability 14
The Pathway to Your New Home 4 Affordability Worksheet 15
Mortgage Documentation 5 Housing Priorty Game 16
The Basics 6 Mortgage Busters 18
Your Homebuying Step-by-Step Checklist 8 Notes 19
What Type of Mortgage is right for me? 11 Prospective Home Worksheet 21
Moving Checklist 12



Mr. & Mrs. Smith Just think about what you could do with the extra money and the equity you will be
building. Plus, it is your home, your yard, your neighborhood. Many exciting things
Based on $1500 average rent come from owning a home.
for a 3 bedroom

Year Annual Rent Annual Federal Tax Estimated Loan Estimated
Mortgage Savings Value Balance Equity
1 $18,000 Payment
2 $18,540 $1,576 $206,000 $192,862 $13,138
3 $19,096 $16,856 $1,554 $212,180 $189,466 $22,714
4 $19,669 $16,856 $1,532 $218,545 $185,919 $32,626
5 $20,259 $16,856 $1,508 $225,102 $182,214 $42,888
6 $20,867 $16,856 $1,483 $231,855 $178,343 $53,512
7 $21,493 $16,856 $1,457 $238,810 $174,299 $64,512
8 $22,138 $16,856 $1,430 $245,975 $170,075 $75,900
9 $22,802 $16,856 $1,402 $253,354 $165,662 $87,692
10 $23,486 $16,856 $1,372 $260,955 $161,052 $99,903
Total $206,350 $16,856 $1,341 $268,783 $156,237 $112,547
$16,856 $14,655 $268,783 $156,237 $112,547

Loan Type


Sales Price Term

$200,000 30 Years

Rate APR

4.375% 6.065%

Down Payment Closing Costs

$7,000 $5,219 These are only estimates. Please consult a CPA or tax advisor.




REHAoLmEeSInTAspTeEcAtioGnEsNT 06FReaeencsdLe, OLSivoeAecnNTkditOIDnleFtise+FcrIelECosssEtcuRRrroeawste 07 LOAN OFFICER APPRAISER
Receive Signed Disclosures Appraise and
05(if required) INSURANCE AGENT
Securing Your 08and Order Appraisal 09Inspect Property

Homeowner’s Insurance

10 11ReGcLaeOtivhAeeNrACOpopFnrFdoIviCtaiEolRnasnd 12SthuebCLmOoimtACNpoleOntedFdiFtiAIoCpnEpsRrwaiistahl LOAN OFFICER LOAN OFFICER
Sign O on and Send Out
LOAN OFFICER Disclosure (CD)
Submission for 13Conditions 14Order

16 RecaDEenSoivdCceuSRLmcOoheWaenndtOuDSlFeoigFcLnIuoCimnaEgneRnts
153-Day Wait Period 21 18Sign Loan Documents 19Fund Loan
RReEcAorLdEDSeTeAdTEofATGruEsNt T– Move into Your
New Home!



You will be notified of the specific document you will need to provide. These are required to approve and underwrite your loan and
can vary depending on program, down payment, credit score and job type. It is important to include all pages of the documents
provided even if a page is blank. You may be required to update documents originally provided before closing. Do not deposit any
money that you cannot document where you received it from.

Income Information Most recent quarterly retirement statements
• 1 quarter ________
Most Current Paystubs • 2 quarters ________
(All jobs/borrowers, showing year to date information.) Terms and conditions of withdrawal for retirement accounts
• 1 month (Full 30 day period) Judicial decree for any obligation due to legal action
• 2 months (Full 60 day period) (ex. child support)
Federal Tax Returns (All pages) Complete bankruptcy discharge papers
• 1 Year ________ Letters of explanation
• 2 Years ________ • Credit inquires
• Business & Personal ________ • Late payments
W2’s • Collections
• 1 Year ________ • ____________________________________
• 2 Years ________ • ____________________________________
• Written explanation if employed less than 2 years
or a 30 day gap in the last two years Documentation for any large deposit outside of
• Self-employed documentation (ex. Business License) payroll deposits or gift funds (typically $200 or more)
• Year to date profit and loss If necessary:
• List of all business debts Payments for utilities, rents, alternative credit
• Evidence business pays debts Verification of another party paying student loans
• 6 months business bank statements • 6 months bank statements
• Pension Award Letter Verification of another party paying auto loan payments
• Social Security Award Letter • 6 months of bank statements
Verification of gift funds source
Additional Property Ownership • Full 30 day transaction history from gift fund
bank account
Latest mortgage statement for all properties you own. Verification of gift fund destination
Property Tax Bill for all properties • Full 30 days transition history
Copy of homeowners insurance for all properties Signed gift letter
Verification of homeowners association dues
Copies of current leases for rented units you own Other Documentation

Credit Information Copy of driver’s license
Copy of Social Security Card
Most Recent checking account statements Contact information for:
(all pages even if blank) Employer
• 1 month ________ Real Estate Agent
• 2 months ________ Attorney
Most Recent savings account statements Accountant
• 1 month ________ Home Owners Insurance Agent
• 2 months ________ Property Management Company
Most recent CD account statements Relocation Coordinator
• 1 month ________ Landlord
• 2 months ________ _____________________________________________
Most recent investment account statements
• 1 month ________ _____________________________________________
• 2 months ________



What is a mortgage? VA Loans - require a funding fee paid directly to the VA
but do not require monthly MI.
A Mortgage is a loan secured by real estate. You borrow
money to buy a home and promise to pay it back over a Conventional Loans - will have MI insurance if your down
specified period, for a specified cost. Repayment typically payment is less than 20% of the home's purchase price.
happens through monthly or bi-monthly mortgage
payments. If you should stop paying your mortgage, the What are closing costs?
lender may take ownership of your property.
The cost of buying a home is more than just the purchase
What does my mortgage payment include? price. Every home buying transaction requires the services
of professionals from a variety of fields. It is common for
Your mortgage payment is typically made up of four parts: these costs to add up to several thousands of dollars and/
principal, interest, taxes and insurance. If you make less or between 3-5% of your total mortgage. You will get
than a 20% down payment, your mortgage payment will a better idea of the amount soon after you apply for a
also include mortgage insurance that is paid to the agency mortgage, when you receive a Good Faith estimate that
providing the insurance. Each month your payment will details the approximate costs you will pay on or before
include a portion of your property taxes and homeowners your loan closes. In some cases the closing costs can be
insurance that will be placed in an escrow account. Your added to your loan, or your agent can negotiate for the
lender will pay those third party fees from the escrow seller to pay a portion. You may also be able to qualify for
account as they come due. down payment assistance.

What does amortization mean? How will I know how much I can borrow to buy
a home?
With each mortgage payment that is made, a portion
of the payment is applied toward reducing the principal Your Bay Equity Loan Officer will work with you to
and the other portion is applied toward the interest on calculate the maximum amount you can borrow. There are
the loan. In the early stages of your mortgage term, the several things needed from you to determine this amount.
payment is mostly interest and a small portion pays The lender will look at the 4 C’s which are Capacity to pay
down the principal. A smaller portion of your payment (Income), Character (Credit History), Capital (Savings),
each year goes to interest and more toward principal and Collateral (Property).
until your loan is repaid.

What is homeowners insurance? What will they look at in regards to Income?

This protects you in the event of loss that is the result Generally Lenders will need the past 2 years tax returns
of fire, wind, natural disaster or other hazards. You are for self-employed and W2 wage earners. They will average
required to have insurance on your property at all times. the income for the past 2 years. If income is declining they
will use the lower amount. If you received an increase
What is mortgage insurance? in pay due to a promotion they may be able to use the
new amount. Part-time or second jobs must also have a
Mortgage Insurance (MI) is required on certain loans to 2 year history to be used. Temporary disability, workers
protect the lender against financial losses if the borrower compensation or any income that will not continue for a
fails to repay the loan. minimum of three years cannot be used.

FHA-insured loans have upfront mortgage insurance
added to the loan amount along with a monthly MI which
is paid regardless of how much your down payment is.



What is a credit score? ELEMENTS OF YOUR CREDIT SCORE

Your credit score could mean the PAYMENT HISTORY 35%
difference between being denied or
approved for a home loan, and a low or LENGTH OF CREDIT HISTORY 15%
a high interest rate. There are 3 major TYPES OF CREDIT USED 10%
credit bureaus: Equifax, Experian, and NUMBER OF INQUIRIES 10%
Transunion. Data from your credit score
goes into 5 major categories to make home or if you refinance, each program is different. Your
up your credit score. For example even Pacific One Loan Officer can help you find out what
if you have paid your outstanding programs are available in your area.
credit on time but every account you
have is used to the maximum amount, How important is the preapproval?
your scores will be lower than someone who has high
maximum credit but lower balances on each. A preapproval is the important first step before you start
Note: Making purchases on a credit card or consumer loan looking for a home. If you are working with a real estate
before or during the home buying process may impact your agent most will not submit an offer on the house until
ability to qualify. Please discuss any purchases with your they have a written preapproval from the lender letting
Loan Officer prior to making them. The Lender can check them know how much you are authorized to borrow.
your credit again throughout the process to see if any new
accounts are opened or if your balances have increases. Now that you know the basics let us tell you a few things
about what types of loans are available and a step-by-step
Can someone give me the money for my down list of what is going to happen during the process.

Some loan programs may allow you to use monetary gifts
from family and friends as part of the down payment.
You will be required to show written proof that the
funds are truly a gift and not a personal loan along with
documentation of their bank account withdrawal.

What if I have cash deposits showing on my bank THIS GUIDE IS A
account do they need to be verified? GREAT PLACE TO START!

Yes, generally all cash deposits must be verified We hope that you can get a basic
regardless of whether you are using the money toward understanding of how mortgages work and
the down payment. For example: If you sell a car on
Craigslist you must provide a bill of sale and trail of the how much they may cost. This way you
funds received. will know what to expect and be better
informed. Please remember you are not
Are there any other down payment sources alone in this. We have a very experienced
I may use? team that is ready to help you through
every step of your financial transaction.
Not-for-profit down payment assistance programs
provide funds to qualified borrowers to help with down
payment and closing costs. These agencies may require
you to take a class first before you are eligible. Most
require the amount to be paid back at the sale of the



As you prepare to purchase a home, it is important to know what to expect along the way. We have outlined some of the general
steps in the home buying process. Most importantly please remember We are all on the same Team and have one goal which is to
make YOU a new Homeowner as quickly and painlessly as possible.

1. Initial Consultation 2. A pply for a PreApproval

 Speak with your Bay Equity Loan Officer about  Real Estate Professionals will require confirmation
your home financing needs, goals and current of your credit worthiness and your ability to
situation to determine your next steps, information purchase for a given price.
needed and what you may qualify for.
 A preapproval is based on our preliminary review of
 Inquiry stage - you will provide information on your credit information only and is not a commit to lend.
income, assets, liabilities and real estate owned.
 When you are ready to apply for a
 Consultation stage - in addition to the information preapproval you will need to provide all the
needed for the above stage, you will also need to requested documentation.
provide written consent to pull your credit.
 Once you have the preapproval you are ready to
 Your Bay Equity Loan officer will then share shop for a home with confidence.
information on loan products based on your needs
and credit profile. 3. P rovide All Requested Documents

 Refer to the checklist provided for a list of
documents you may need to provide. Your
Loan Officer, Loan Officer Assistant or Loan
Processor will advise you of the specific documents
required to underwrite and approve the loan.

 It is important to submit the required documents
as quickly as possible to ensure a smooth process
and on-time closing. All information must be
accurate and submitted at least ten business days
prior to closing.

 You can scan, fax and email the documents
or deliver them in person and we can copy
them for you.

4. F ind Your Home, Make an Offer, Sign the
Purchase Contract

 This can be one of the most exciting steps of the
process. You and your Realtor will visit numerous
homes until you find the place you absolutely love.

 Your real estate agent will then draft up your
purchase and sale agreement after you have
discussed the offer.



What is a Home Inspection?  Many times the seller’s agent will counteroffer
your original offer which is where you and your
A home inspection is an objective examination Realtor will negotiate and either accept the
of the structure and the many systems within terms or counter back until both parties agree
on the terms.
your home. Such as:
 Once all parties have accepted you will be
Structure and Foundation • Electrical Systems
Plumbing Systems • Roofs and Attics required to advance a “good faith deposit” also
Basements and Crawl Spaces
known as “earnest money” when you sign the
Gutters and Drainage • Walls, Floors and Ceilings
Porches and Decks • Property and Site contract. This payment will be considered part
Structural Reports • Pest Inspections
of your down payment and is usually deposited

with the Title/Escrow Company.

 When determining the closing date on your
offer please consult with your Bay Equity
Loan Officer.

5. I nitial Processing

 Once the offer has been accepted your Bay
Equity Loan Officer and his/her Team will begin
processing your file and prepare it to be
submitted to underwriting.

 During this time we WILL request additional items
such as signed loan disclosures and updated
information like paystubs or bank statements.

 Once we receive the information from you
it will take 2-3 days to receive the preliminary
loan approval. This does not mean we are ready
to close.

 Generally the Rate will be locked at this
Step – additional forms will need to be signed
once this occurs.

6. Order a Home Inspection, Appraisal and
Title Search

 You will be required to pay up front for the
Home inspection and the appraisal.

 The Realtor will order the home inspection and
will tell you what the cost will be.

 Estimated costs for the appraisal will usually
be $475 - $600 depending on the size of the
home, location and loan program.



 Bay Equity Employees do not speak directly with
the appraisers but he/she will contact the Realtor to
set up a time to come out and inspect the property.

 Once the appraisal is completed it can take
3-5 business days for us to receive a copy, however,
it is not required to submit the file for underwriting.

7. Underwriting - Conditional Approval/
Final Approval

 The File will now be submitted to the Underwriter
who is a different person from the Processing
team. The approval will most likely come back
with additional items needed.

 Once the remainders of the conditions are in it SOME EXTRA NOTES
will take another 24-48 hours for the underwriter
to check those items and then we will be As everyone’s loan will differ from another, our
clear to close on the loan. goal is to create a story of your credit worthiness
to purchase a home. With that said, please be
8. A Closing Day is Set patient if we ask you for additional documentation.
We try our best to limit the times of collecting
 The Escrow Company will call you and set up items to 2-3 times during the buying process but
an appointment. This will be to come in and sign in some instances we may need to ask for items
the final closing documents. here and there.

 You will be notified of the exact amount you We will do whatever it takes to get you into your
will be required to bring to the closing – this home within 21 days after the purchase contract
can be paid in certified funds or a cashier check. has been signed and initial documents requested
Any other form of payment may result in a delay are in. This is a team effort and we rely heavily on
of funding the final transaction. you getting us the documents in a timely fashion.

 They will go over all documents required to be Last but not least we are always here as a resource
signed – there will be many forms you will need for you. We will keep you posted during every
to sign. You must sign your name the same way stage of the process but you may call us at any
every time. If you sign your name differently this time a question arises whether it is big or small.
can cause a delay. There should be no questions unanswered, that
includes anything after the transaction
9. F inalizing the Transaction is completed.

 Once you sign the final loan documents the It is just as exciting for us as it is for you to see
transaction will be completed and closed the you accomplish your goal of homeownership.
following day where your loan is funded and your We are very dedicated to making this happen
purchase is recorded in the county records. for you. We are always on your side through
the entire process.
HOMEOWNER!! Your Realtor will schedule to get
the keys to your new home the day we fund.



Loan Type Features Who May Benefit

Fixed rate mortgage - the interest rate Predictable monthly payments. This type of loan is chosen when a buyer plans
stays the same for the life of the loan Rate will remain the same over the to remain in the home for a long period of
Adjustable Rate Mortgage (ARM) - entire term. time.
the rate may go up or down on
pre-determined dates reflecting current The initial interest rate is generally lower than This type of loan is chosen by a buyer who
market conditions that of a fixed rate. plans to refinance or sell the home in a few
The initial interest rate is locked in for a fixed years or can make a larger monthly payment
FHA Loan - The Federal Housing period of time. if the rate adjust upward.
Administration designed these Loans There are different introductory periods of For example: maybe a spouse is in school
to meet the needs of low or moderate times to choose from ex. 5yr, 7yr, 10 yr and will be getting a job in a year or two,
incomes After the introductory period the rate can promotion etc.
adjust every year.

Low 3.5% minimum down payment required. This type of loan is often chosen by a buyer
Flexible qualifying guidelines. looking to put less money down.

VA Loans - The Department of Veterans Gift funds can be used for all or a portion of Available to active-duty or veteran miltary
Affairs guarantees loans for qualified the down payment and closing costs. service members.
Un-remarried surviving spouses of veteran
who died from service-connected injuries or
un-remarried surviving spouse of a veteran
who was totally disabled at the time of death
may also qualify.

USDA Loans - Guaranteed by the US Low or no down payment. This type of loan is often chosen by a buyer
Department of Agriculture Flexible qualifying guidelines. looking to put less money down.
Property must be located in qualifying
rural area.
Maximum income based on geographic area.
There is an upfront Mortgage Insurance fee
and a monthly MI fee.

Conventional Loans - Fannie Mae, Freddie Low down payment with mortgage insurance This type of loan is often chosen by a buyer
Mac Conforming & Non Conforming on conforming loan limits. with more money to put down and lower debt
No MI with 20% down. to income ratios.
More strict qualifying guidelines.

Down Payment Assistant Programs - Low down payment first mortgages or stand This type of loan is often chosen by a buyer
funded by private and public partnerships, alone 2nd mortgages. needing assistance with down payment and
organizations either state, county or city closing costs.
sponsored, non-profit entities, etc. Income limitations.

There are many types of mortgages available.
Your Bay Equity Loan Officer will help you understand your options so that you can make an informed decision.



6-8 Weeks Before Move  Electricity
 Gas
 Get estimates for movers or rental truck  Water/sewer
 Schedule movers or rental truck  Telephone/DSL
 Determine furniture layout for new home  Garbage/recycling
 Make inventory of household items-begin to  Cable/satellite
remove clutter  Arrange for transfer of homeowners/
 Arrange for school & veterinary records transfer renters insurance
 Ask for doctor and dental referrals; arrange for  Begin packing seasonal items not needed
transfer of medical and dental records for immediate use
 Clean out all closets and drawers  Make travel arrangements
 Plan a Garage Sale  Request relocation package from chamber
 Start a file for moving paperwork and expenses- of commerce of new town
can be used for tax credits (consult your  Hold a second moving sale - Donate the rest
tax professional) to charity.
 Be sure all personal, family and financial records
are accounted for 2-3 Weeks Before Move

4-6 Weeks Before Move  Set aside critical documents and items you will
keep with you
 Get packing supplies: boxes, packing paper,  Transfer prescriptions
tape, markers  Change address:
 Use up or dispose of food, cleaning supplies,  Family and friends
and hazardous materials  Newspaper
 Have garage sale/donate unwanted items  Magazines
 Arrange for carpet and drapery cleaning  Bank accounts
 Arrange for house cleaning  Health, life, and auto insurance policies
 Arrange for move of pets  Credit card bills
 Arrange for move of plants  Employer
 Arrange for utilities (cancel old; start new)  Have a going away party for your children and
their friends
 Plan meals to use up food

1-5 Days Before Move

 Defrost freezer
 Empty ice maker and ice cube trays in case
of power shutdown
 Clean refrigerator, stove, and oven
 Disconnect and drain appliances for move
 Drain fuel from power equipment
 Close out safe deposit box



1-5 Days Before Move Continued Notes

 Confirm travel arrangements
 Confirm arrival time of movers/pick-up time
of rental truck
 Have payment and snacks ready for movers
 Gather and clean outdoor furniture
 Return cable box, cable modem,
DSL modem if necessary
 Organize keys
 Clean house
 Finish packing
 Prepare food for moving day
 Unplug All electronic appliances 24 hours in
advance except Plasma Tv's
 Pack an essentials box to keep with you during
your move

Moving Day

 Disassemble beds
 Double-check that all cupboards, closets,
dishwasher and other appliances are empty
 Give movers tour and instructions for what is
being moved
 Shut off furnace and A/C - make note of utility
meter readings
 Windows shut and locked
 Keys surrendered
 Have lunch ready for family and friends helping
(order pizza)

Within 30 Days of Move

 Change address:
 Update driver's license
 Update auto registration
 Update voter registration

 Re-establish safe deposit box
 Consider having locks re-keyed
 Install new batteries in smoke & carbon
monoxide detectors
 Enjoy your new home!



Now that we’ve covered all the basic information you need to know to calculate affordability, you’re ready to help the Murphy family figure out how
much house they can afford. Read the following information and determine their affordability by using the prequalifying worksheet and the factor table.
Any information herein including, but not limited to, property descriptions, rates, pricing, payment amounts, payment terms, locations and
availability are general approximations only, and provided solely for informational and educational purposes to demonstrate concepts in
affordability. The information herein is not to be construed as advice and is not guaranteed or warranted by Bay Equity LLC. It does not
constitute as an actual offer or a solicitation to lend any money. This information is not intended to be used as the primary basis for investment
decisions, and not specifically designed to meet the needs any particular individual prospective buyer. Decisions you make based on information
contained in this brochure are your sole responsibility. Home purchase, procuring loans and transactions involved in the process come with
benefits as well as risks. Please consult your own independent professional advisor when assessing your risks and benefits and particular needs.

Personal Information

Terrance and Wilma Murphy currently live in a three-bedroom apartment in a large complex. The complex is crowded,
noisy, and the children don’t have a place to play. Last year they established the goal of being in a house within two
years. They have been sticking to their budget, and have managed to save $1,200.00 to go toward a down payment.
They have had several past credit problems, and have been working to clean up their credit record before they begin
the purchase process.

Recently, Terrance and Wilma have been spending their weekends driving around looking at houses for sale. When they
see the prices of homes these days, they usually go back to the apartment feeling discouraged. They really want to buy
a house but they don’t’ know where to begin.

Perhaps you can help them get started by calculating their affordability. The Murphy's check their local paper for mortgage
rates and terms offered by lenders in their area. They found a mortgage company that offers an 8.0 percent interest rate for a
30-year fixed-rate loan. The housing ratio for this product is 29 percent and the debt-to-income ratio is 41 percent.

Prospective buyers: Terrance and Wilma Murphy Factor Table (Based on a $1,000 Loan)
Children: Anita and Jerome
Terrance: mechanic at a car Sample Factor Table
Occupations: dealership for seven years
Wilma: full-time teacher’s aide Interest 15 Year 20 Year 30 Year
Combined gross monthly income: $2890.00 Rate Mortgage Mortgage Mortgage
Savings: $1,200.00
Debts: 3.00% $6.91 $5.55 $4.22
3.50% $7.15 $5.80 $4.49
Creditors Balance Monthly Payment Months 4.00% $7.40 $6.06 $4.77
Amount Remaining 4.50% $7.65 $6.33 $5.07
Macy's $800.00 5.00% $7.91 $6.60 $5.37
ABC Furniture $2100.00 $16.00 50 5.50% $8.17 $6.88 $5.68
Freeman's Auto $2200.00 $52.00 40 6.00% $8.44 $7.16 $6.00
$1600.00 $195.00 11 6.50% $8.71 $7.46 $6.32
Visa $1200.00 $48.00 33 7.00% $8.99 $7.75 $6.65
J.C. Penny $4000.00 $36.00 33 750% $9.27 $8.06 $6.99
Ford Motor $159.00 25 8.00% $9.56 $8.36 $7.34
8.50% $9.85 $8.68 $7.69
How does debt affect affordability? 9.00% $10.14 $9.00 $8.05

Assume that Wima and Terrance opt to take $390.00 from their savings and
make two payments on the loan to Freeman's Auto. This debt could then be
discounted (not counted) when determining affordability. In the Margin of the
prequalifying worksheet, recalculate their affordability without this monthly
payment. How much did this $390.00 payment buy them in affordability?



Borrower: ____________________________________________________________________
Co-Borrower: ____________________________________________________________________

Gross Monthly Income $ ________________________ (1)

Gross Monthly Income x _________________ % = $ ________________________ (2)

Gross Monthly Income x _________________ % = $ ________________________ (3)

Total Monthly Debt Payments = $ ________________________ (4)

Subtract line (4) from line (3) = $ ________________________ (5)
$ ________________________ (6)
MAXIMUM MONTHLY $ ________________________ (7)

Enter the lesser amount from line (2) or (5)


Multiply line (6) by 20% =

Subtract line (7) from line (6) $ ________________________ (8)

AFFORDABILITY Maximum Principle Plus Interest Payment

Divide line (8) by ________________________ = $ ________________________ (9)

Mulitply line (9) by $1,000.00 = $ ________________________ (10)

Factor Maximum Mortgage Amount



If you had a 30-object budget, what would your priorities be? Read the descriptions in each row. Choose level 1, level 2 or level 3 in
each row. Place the appropriate number of objects in the selected square to indicate your spending choices. You must choose one
square in each row with the exception of the optional row.

How to find whats important to you in your new home.

Level 1 Level 2 Level 3
Commercial business nearby Mix of multifamily and Quiet neighborhood,
single-family residences,
light traffic
moderate traffic

Neighborhood No neighborhood association 40 percent involved in Active neighboorhood
involvement or Neighborhood Watch neighborhood association; association; active
program; several homes in
disrepair; above average Neighborhood Watch Neighborhhood Watch meets
crime rate initiated but not active; 60 monthly; most homes in area
percent of properties well are well kept, clean and neat,
kept, neat and clean, criminal
activity level is moderate minimal criminal activity

Neighborhood Facilities Few facilities available Some facilities available All facilities available
(Paved Streets, sewer Houses are separated; Houses are far apart; more
system, street lighting) moderate amount of
private outdoor space than enough private
Houses close together; not outdoor space
much private outdoor space

Lot size

A few shrubs and small trees Some shrubs and Many shrubs and large trees
medium-size trees
Amount of Landscaping

Size of House Small size, less than Moderate size, about Large size, over
1,500 sq. ft. 2,000 sq. ft. 2,500 sq. ft.

Small Medium Large

Size of rooms



Level 1 Level 2 Level 3
2 bedrooms 3 bedrooms 4 or more bedrooms

Number of Bedrooms

1 bathroom 1 1/2 to 2 bathrooms 2 1/2 to 3 bathrooms


Quality of Structure Minimum quality Average quality Excellent quality
(Soundness of foundation

and roof, quality of
building materials)

Engery Saving Features Few energy-saving features Some energy-saving features Many energy-saving features
(Insulation, storm Minimum quality
Average quality Excellent quality
windows, caulking and
weather stripping)
Quality of Interior

Material (Floor coverings,
wall treatments,

cabinetry, lighting)

Minimum storage Average storage Excellent storage


Optional Attached garage Full basement Family room




Top 49 things that can stop a mortgage transaction in its tracks.

Borrower (and/or Co-Borrower): Property:

1. Incomplete or inaccurate information on loan application. 35. County will not approve septic or well.
2. Late payments. 36. Home is destroyed prior to closing. Or not structurally sound or
3. Additional debt after loan application.
4. Lost job. Or lacks two year history. uninsurable for homeowner’s insurance.
5. Income verification lower than what was stated on application. 37. Incorrectly zoned.
6. Overtime income not allowed by underwriter. 38. Appraiser has difficulty finding comparable sales.
7. Applicant makes large purchase on credit before closing.
8. Illness, injury, divorce or other financial setback during escrow. Appraiser/Inspector:
9. Lacks motivation.
10. Gift donor changes mind. 39. Is not local and misunderstands market.
11. Cannot locate divorce decree or discharge of bankruptcy. 40. Too busy and does not complete appraisal on schedule.
12. Cannot locate tax returns or bank statements. 41. Is not on Lender’s “approved list.” Or Lender requires second
13. Interest rate increases. No longer qualifies.
14. Loan program changes with higher rates, points and fees. or review appraisal.
15. Child support not disclosed on application. 42. Can’t find comparable sales.
16. Has Bankruptcy within two years. 43. Not available when needed.
17. Brings in handwritten pay stubs. 44. Inspection reports alarm buyer. Sale canceled.
18. Starts new job with probation period.
19. Switches from salary to commission. Escrow/Title:
20. Borrower/Co-Borrower/Seller passes away.
21. Can’t find acceptable property in price range. 45. Forgets to notify Lender/agents of unsigned or
22. Cash is short or not properly paper trailed. unreturned documents.
23. Cashier check not provided to escrow at closing.
46. Forgets to obtain information from insurance, lienholders,
lenders, etc. in timely manner.

47. Discovers liens or title problems last minute.
48. Misplaces or incorrectly prepares paperwork.
49. Principals leave town, don’t sign paperwork.


24. Lacks motivation to sell or cannot find suitable
replacement property.

25. Difficulty coordinating with appraiser and/or inspector or
access to property.

26. Cannot clear up liens.
27. Did not own property 100% as previously disclosed.
28. Leaves town and does not give anyone Power of Attorney.
29. Does not complete repairs agreed to in contract.
30. Hidden or unknown defects with the property are

subsequently discovered.
31. Home goes into foreclosure during escrow.


32. Delays access to property for inspectors and/or appraisers.
33. Doesn’t get needed documentation to Lender in timely manner.
34. Inexperienced in this type of transaction.







Address: _____________________________________________________________________________
MLS#____________ On The Market Since_________ Taxes_________ HOA_________

Beds____ Baths____ Sq.ft._________ Yr. Built_________ Stories____ Garage____ Price______

Pro’s Con’s

Curb appeal
Front yard
Living room
Dining room
Master bedroom
Master bath
Spare bedroom
Spare bedroom
Half bath
Full bath
Back yard
Association fees



Address: _____________________________________________________________________________
MLS#____________ On The Market Since_________ Taxes_________ HOA_________

Beds____ Baths____ Sq.ft._________ Yr. Built_________ Stories____ Garage____ Price______

Pro’s Con’s

Curb appeal
Front yard
Living room
Dining room
Master bedroom
Master bath
Spare bedroom
Spare bedroom
Half bath
Full bath
Back yard
Association fees



Address: _____________________________________________________________________________
MLS#____________ On The Market Since_________ Taxes_________ HOA_________

Beds____ Baths____ Sq.ft._________ Yr. Built_________ Stories____ Garage____ Price______

Pro’s Con’s

Curb appeal
Front yard
Living room
Dining room
Master bedroom
Master bath
Spare bedroom
Spare bedroom
Half bath
Full bath
Back yard
Association fees



Address: _____________________________________________________________________________
MLS#____________ On The Market Since_________ Taxes_________ HOA_________

Beds____ Baths____ Sq.ft._________ Yr. Built_________ Stories____ Garage____ Price______

Pro’s Con’s

Curb appeal
Front yard
Living room
Dining room
Master bedroom
Master bath
Spare bedroom
Spare bedroom
Half bath
Full bath
Back yard
Association fees


Equal Housing Lender. This is not a commitment to lend or extend credit. Restrictions may apply. Rates may not be available at time of application. Information and/or data
are subject to change without notice. All loans are subject to credit approval. Not all loans or products are available in all states. Bay Equity LLC, 770 Tamalpais Drive, Suite
207, Corte Madera, CA 94925; NMLS ID#76988. Colorado Mortgage Company Registration #76988. NMLS consumer access: BECH-210503-2.0

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