Looking to buy in North San Diego County?
You’ve come to the right place!

Loan Application Checklist

In General, the documentation you will need includes:

Income & Assets
	Pay stubs for the last 30 days.
	For the past two years:
	Names and addresses of each employer. Tax Returns & W-2s
	Statements for each bank, mutual fund, and/or investment account for the last three months.
	If self-employed:
	Tax returns for the last three years (with schedules). Year-to-Date Profit and Loss Statement prepared by an accountant.
	If you own rental property:
	Tax returns for the last two years and current rental agreements.
	If you receive Social Security:
	Social Security Award Letter.
	If you are counting child support as income:
	Copy of divorce settlement. Copy of twelve months of cancelled child support checks.
Debts
	Names, addresses, account numbers, balances and monthly payments on all current loans.
	Explanation of credit report anomalies, including:
	Late payments, credit inquiries in the last 90 days, charge-offs, collections, judgments and/or liens. Bankruptcy filed within last seven years (bring a copy of your bankruptcy papers).
VA Loans
	Copy of DD Form 214, Report of Separation.

Steps to Home Ownership

Step - 1 Make the Decision to Buy

It seems obvious, but it's good to note that the first step to buying a house is making the decision to buy. Consider the reasons you want a new house and write them down. Determine how long you want to live in the new house - does buying still make good financial sense? Can you afford a house that will meet your list of requirements? A good rule of thumb is your mortgage payment should not exceed 1/3 of your net monthly income.

Step 2 - Seek Professional Guidance

The Torres Team would like to schedule a time to meet with you to hear the reasons you want to buy a house and your plans for the future. We'll talk about neighborhoods, schools, economic factors liable to affect the market today and tomorrow, as well as how you would like your house and neighborhood to grow with you. At this time, the Torres Team will also help you get pre-qualified for a mortgage loan by referring you to our preffered lender. Pre-qualification is a written statement from a loan officer indicating his or her opinion that you will be approved for a mortgage loan up to a certain amount. The fact that you are pre-qualified will help us when we are negotiating the deal.

Step 3 - Begin the Hunt

After our initial meeting, we'll search all our resources for houses on the market that fit your criteria. We'll preview these houses to eliminate the duds. Then, schedule appointments to tour the houses at times convenient to you. As we tour houses, we'll point out positive features and negative features. We'll ask you to tell me what you like and what you don't like. You'll probably amend your "wish list" as we tour houses, some things will become more important and others less important. With this new information, We'll refine our search criteria to narrow in on the house of your dreams.

Step 4 - Know the Market

Our knowledge of the local market is an essential factor in the house search. We'll let you know when the market in a particular neighborhood is "hot" and requires immediate action or when the market is "cool" and allows for thoughtful consideration. As we tour houses, We'll let you know when the asking price has negotiating room and when the house is "priced to sell". Our unique market knowledge will keep you a step ahead of the "house hunting competition". In a "seller's market". It is not unusual to see multiple offers on a property, full-price offers and even above-price offers. On the flip side, during a "buyer's market" there are more houses for sale than buyers. This gives us more negotiating room as houses are taking longer to sell.

Step 5 - Find Your Dream House

The Torres Team is confident we'll find your dream house. When we do, We'll put together the purchase offer tailored for your needs including appropriate contingencies (such as obtaining financing, favorable home inspection, clear title, etc.). The offer is normally presented with "earnest money". This is a cash deposit made to a home seller to secure an offer to buy the property. The amount is applied to closing costs. If the seller accepts the offer, generally closing is held 30 to 60 days from the offer date (generally dependent on the turn around time of your mortgage financing).

Step 6 - Negotiate the Deal

It is not uncommon to receive a counter offer when the initial purchase offer is submitted. Don't let this discourage you. We will discuss the counter offer and decide whether or not to accept the counter offer, submit our own counter offer, or reject the counter offer and move on. Market conditions will play a role in how aggressively we negotiate the deal. We will also work within your limits. Emotions can lead to buyer's remorse. It is better to set limits prior to negotiating an offer and stick to these limits.

Step 7 - Get a Loan

During the closing period, you will be working with your mortgage lender to close the loan. Since you pre-qualified for the loan before starting your home search, you will be that much closer to the end. I'll gather the necessary property information your lender will need to close the loan.

Step 8 - Close the Deal

You will receive a "Good Faith Estimate" of closing costs at the time the loan application is submitted to the lender. The estimate is based on the loan officer's past experience and may not include all the closing costs. I will be glad to review the "Good Faith Estimate," answering questions and highlighting missing costs and estimates I believe to be low.

Step 9 - Move In

Congratulations! It's time to move into your new house and make it your home. Enjoy this exciting time. I'll give you a checklist to help you remember the numerous details that will make your moving day a pleasure.

The Down Payment

The amount you have available for a down payment will affect what types of loans for which you can qualify. Down payments typically range from 3.5 to 20 percent of the sales price for the property.

Tips for Accumulating a Down Payment

Save Look for ways to reduce your monthly expenditures to save toward a down-payment. You could enroll for an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. Most people save a couple of years for their down payment. Borrow the down payment from your retirement plan Check the provisions of your retirement plan. You can borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you understand the tax consequences, repayment terms and/or possible early withdrawal penalties. Move You may be able to save additional funds if you can move into less expensive housing. Reduce other higher interest rate debt Paying off credit cards will initially reduce your savings, but the money you will save from higher interest rates will pay-off in the long run. Sell some investments Get a second job and save your earnings Skip a year's vacation Gift from Family Parents and other family members are often anxious to help children buy their first home and may have the means to give you a gift of money for a portion or all of your down payment.

Alternative Sources

No-down and low-down Mortgages FHA Loans The Federal Housing Authority (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low- to moderate-income families qualify for mortgages. FHA assists first-time buyers and others who would not qualify for a conventional loan, by providing mortgage insurance to private lenders. Interest rates for an FHA loan are usually the going market rate, while the down payment requirements for an FHA loan are lower than conventional loans. The required down payment can be as low as 3.5 percent and the closing costs can be included in the mortgage amount.   VA Loans VA Loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA Loan, which usually offers a competitive fixed interest rate, no down payment and limited closing costs. While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.

Documenting Your Down Payment Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan. Take extra care to document the sources for any monies to be used for the down payment or closing costs. Acceptable Down Payment & Closing Costs Sources Cash in a bank account Mutual funds / stocks / IRA / 401K Proceeds from the sale of another property Gift from an immediate relative

Staying Qualified - The Last Minute Credit Check

Did You Know? Your mortgage lender may run a second credit report just prior to closing. Red flags that appear in this credit report can disqualify you for the mortgage loan.

Your actions after receiving lender approval for a mortgage loan can disqualify you for the loan. A mortgage loan is conditionally approved, with the lender reserving the right to re-verify credit, income, assets and employment at anytime. The lender may cancel the loan if there are any adverse changes to your qualification status.

Debt-to-Income Ratio

Your debt-to-income ratio is your gross monthly income divided by the amount you spend on debt. Debt items include mortgage payments (including principal, interest, insurance, tax), car payments, credit card payments, student loans, child support payments, etc.

The lender considers debt-to-income ratio when approving you for a mortgage loan. Only 28 percent of your income can be used for your mortgage payment, which includes taxes and insurance; and 36 percent for the mortgage payment plus the rest of your debt. Anything you do to negatively affect your debt-to-income ratio may change an "approval" to a "disqualification."

Avoid Red Flags

A red flag is any inquiry made regarding your credit worthiness. If you decide to purchase a big ticket item - like a car, boat or furniture - prior to closing, you're at risk of having a red flag show up on your credit report.

Keep Your Money Where It Is

The balances of your liquid assets are considered when approving you for a mortgage loan. These liquid assets may include checking accounts, savings accounts, certificates of deposit, money market accounts, retirement accounts, stock and mutual funds.

Avoid changes to the balances of these accounts. Do not close accounts. Do not change banks. A large withdrawal or deposit to any of these accounts will trigger a red flag for your mortgage lender. If a red flag is triggered, you may be asked to produce a paper trail tracking large withdrawals and/or deposits.

Employment Status

For most employees a change of jobs to one of equal or higher pay will not trigger a red flag. However, sales people should not change jobs prior to closing on their mortgage loan.

Salaried Employees
If your income is strictly salary than you should not have a problem changing to another job of equal or greater income. If, however, your income includes salary and bonuses, commissions and/or overtime, you should not change jobs prior to closing.

Hourly Employees
If your income is based solely on a 40-hour work week without overtime, than changing to a job with equal or greater hourly pay should not be a problem. However, if your income is dependent upon overtime pay, do not change jobs prior to closing.

Commissioned Employees
If your income is from commission or a substantial portion of your income is from commission, then you should not change jobs prior to closing. Typically, mortgage lenders average your commissions over the last two year period to determine income. Changing employers eliminates the two-year commission history and places uncertainty on your income status.

Talk to Your Loan Originator

Do not make any changes to your financial and employment status without first talking to your loan originator.

 Closing the Sale

Escrow

To finalize the sale of the home a neutral, third party (the escrow holder, a.k.a. escrow agent) is engaged to assure the transaction will close properly and on time. The escrow holder insures that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being finalized, including receiving funds and documents, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you clear title to your property before the purchase price is fully paid.

The documentation the escrow holder may be collecting includes: Loan documents Tax statements Fire and other insurance policies Title insurance policies Terms of sale and any seller-assisted financing Requests for payment for various services to be paid out of escrow funds

Upon completion of all instructions of the escrow, closing can take place. All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then transferred to the seller and appropriate title insurance is issued as outlined in the escrow instructions.

At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. As your real estate agent, I'll inform you of the acceptable form.

The Escrow Holder Will:		The Escrow Holder Won't:
Prepare escrow instructions Request title search Comply with lender's requirements as specified in the escrow agreement Receive funds from the buyer Prorate insurance, tax, interest and other payments according to instructions Record deeds and other documents as instructed Request title insurance policy Close escrow when all instructions of seller and buyer have been met Disburse funds and finalize instructions		Give advice - the escrow holder must maintain neutral, third-party status Offer opinions about tax implications

Mortgage Escrow Account

A Mortgage Escrow Account is established to pay on-going expenses while there is a loan on the house. These expenses include property taxes, home insurance, mortgage insurance, and other escrow items. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.