Purchase and Refinance Mortgage Process: A Handbook and Guide for Real Estate Mortgage!

By Revathi Raja Kumar and Saravana Gupta Ravindran

A Handbook and Guide for Real Estate Mortgage - Home & Rental Investment Property

• Language: English
• Publisher: Revathi Raja Kumar
• Release date: Jun 1, 2022
• ISBN: 9781005960360

Revathi Raja Kumar

I started my real estate journey when I bought my dream home several years ago. I didn't know a lot, but was very curious to learn more. This curiosity drove me to keep learning more. I refinanced the mortgage multiple times to take advantage of the lower interest rates. I refinanced to 15 year mortgage to lower interest rate even further.Had a mindset change to focus on expanding income instead of reducing expense. Explored further on this to understand the single family rental market. Spent several hours on BiggerPockets website to learn and then became a landlord. To expand my understanding further completed hundreds of hours of Pre-Licensure education, took the license tests on Mortgage Broker, Real Estate Agent, Insurance Agent, Notary Public and aced all.Teaching and helping others has been a passion for me since my childhood. I am passionate and dedicated in whatever I do. I became a volunteer to teach Tamil to kids. To take a step further became a woman entrepreneur to help others in their real estate journey.I am now a licensed Mortgage Broker in California & Texas, licensed Insurance agent providing services in California & Texas, Real Estate agent in California Bay area.Come join me and Let's make it happen!

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Revathi Raja Kumar & Saravana Gupta Ravindran

Purchase and Refinance Mortgage Process

First published by Fractal Infinite LLC 2022

Copyright © 2022 by Revathi Raja Kumar & Saravana Gupta Ravindran

All rights reserved. No part of this publication may be reproduced, stored or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise without written permission from the publisher. It is illegal to copy this book, post it to a website, or distribute it by any other means without permission.

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I dedicate this book to my loving mom, beloved husband and my wonderful son for inspiring and supporting me through this journey!

Contents

About the Author

Mortgage Preapproval Process

Tips to better qualify for a home loan

Ways to improve your credit score

Mortgage options for Home buyers and Refinancers and Rental Investors

Factors affecting the interest rates

Interest Rates are going high, 15 years mortgage to your rescue

Escrow account and it’s significance

Home Appraisal process and its significance

Title insurance and its significance

Buy Home Vs Renting Home

Pros and Cons of Refinancing your home loan

Seller Financing

Residential Bridge Loan

Interest only Loan

Adjustable Rate Mortgage

Federal Housing Administration Loan (F.H.A)

Veteran Affairs Loan

United States Department of Agriculture Loan

Buydown Mortgage

Private Mortgage Insurance and Mortgage Insurance premium

About the Author

I started my real estate journey when I bought my dream home several years ago. I didn’t know a lot, but was very curious to learn more. This curiosity drove me to keep learning more. I refinanced the mortgage multiple times to take advantage of the lower interest rates. I refinanced to 15 year mortgage to lower interest rate even further.

Had a mindset change to focus on expanding income instead of reducing expense. Explored further on this to understand the single family rental market. Spent several hours on BiggerPockets website to learn and then became a landlord. To expand my understanding further completed hundreds of hours of Pre-Licensure education, took the license tests on Mortgage Broker, Real Estate Agent, Insurance Agent, Notary Public and aced all.

Teaching and helping others has been a passion for me since my childhood. I am passionate and dedicated in whatever I do. I became a volunteer to teach Tamil to kids. To take a step further became a woman entrepreneur to help others in their real estate journey. I am now a licensed Mortgage Broker in California & Texas, licensed Insurance agent providing services in California & Texas, Real Estate agent in California Bay area.

Come join me and Let’s make it happen!

Mortgage Preapproval Process

What Is a Mortgage Preapproval?

Mortgage Preapproval is a document or letter from the lender stating how much they are willing to lend money to you to buy your home. Getting preapproval is the crucial step in buying a home. The preapproval is an indication that the lender is willing to move forward with the loan if the home meets the criteria expected or there is no drastic changes in your income or assets etc. The lender checks the borrower’s creditworthiness based on income, assets, credit history, employment history etc. Preapproval doesn’t guarantee that the loan will be given to borrower, a proper appraisal has to be done to be approved for mortgage.

What is Prequalification?

Prequalification is similar to preapproval where the lender gives an estimate of how much are they willing to lend to the borrower. The difference is preapproval is a conditional agreement between the lender and borrower given based on the creditworthiness of the borrower. In prequalification, it is just an estimate given based on the information given by the borrower without verifying the credit, income, employment or assets.

Preapproval process

Home Loan Application

The first step in the Preapproval process is filling out a Home Loan Applicant form. This is usually done by the lender online, phone or in person. This form takes around 10-20 minutes where you add in all the details of Personal information, Social Security number for the credit check, Financial Information, Loan information. Once the application is completed, the lender usually pulls the credit records from the Credit bureau agencies (Equifax, TransUnion, Experian).

You may also be able to get loan estimate without formal application submission depending on the mortgage providers.

Documentation

The lender might need all the documentation supporting the loan applicant form information.

W2s of last two years

Pay stubs of last 30-60 days, some lenders prefer to call the Employer to verify the employment and salary information.

Statements from bank accounts, retirement accounts and other asset accounts at least for the past two months

Proof of any other income sources (bonuses, commissions, child support payments, alimony support, rental income)

Personal identification documents such as Driver’s license

Tax returns of last two years

Profit and loss statement is required if self employed

Contact information of your landlord is needed if you are a first time home buyer.

Final Step

Once the application has been filled and the documents required submitted, application fee is paid, then the lender goes through the underwriting process and verify all the information in the documents. Most lenders use an automated system called AUS (Automated Underwriting System) to preapprove borrower for their home loan.

Common mistakes in Preapproval process

Any changes in the information given in the mortgage application after getting the preapproval may affect the eligibility, interest rate etc. Is is very important to maintain certain things after getting a preapproval. If there are any major changes due to unavoidable circumstances, let the lender know about it to get the guidance on how to proceed forward.

Avoid any major purchases or getting other loans until you buy your home to maintain the debt to income ratio.

Maintain the savings account and avoid any major withdrawal.

Keep track of large deposits on your account, you may be needed to provide documentation.

Don’t change jobs as most of the lenders prefer the borrowers to have a minimum of 2 years of Employment history.

How long does Preapproval be valid?

Usually the preapproval lasts for about 90 days, but it may be 30 or