Wholesale Mortgage Services of Wisconsin, LLC.

• Mortgage Calculators
• Mortgage Glossary
• Credit Scores
• Loan Pre-approval
• Purchase Process
• Home Refinance
• Buying a Condominium
• Mortgage Forms
• What Can I Expect
• No Closing Costs
• Mortgage For Beginners
• Mortgage Insurance (PMI)
• Mortgage Rate Commentary

Congratulations! You’ve taken the first step to gather information so you can buy your first home. Our beginners guide to mortgages, will explain the process and definitions in a simple and easy to understand manner. This guide is aimed at those people who haven’t yet entered into a mortgage transaction (i.e. first time home buyers), we hope anybody in the process of buying a home is able to gain some useful insight from it. We feel it’s important for everyone to have a good understanding of mortgage and the mortgage process so that you can make the right choices. We recognize many people find the prospect of looking for a mortgage to be quite a daunting and an overwhelmingly complex task.

Here is a list of topics that you may find useful:

• Pre-Qualify vs. Pre-approval
• Buyer’s Agent vs. Seller’s Agent
• Terms of a sales contract
• Down payment
• Do’s and Don’ts

Pre-Qualification:

• A pre-qualification is based on preliminary information regarding your income, debts and assets
• Information is usually provided verbally by the buyer(s)
• In-file credit report may or may not be reviewed
• Once a purchase agreement is executed, the buyer must complete a loan application
• No fee

A Pre-Qualification means that you meet the basic criteria for loan approval, but is not a commitment to lend you the money needed to purchase the home. It tells the seller that you are capable of purchasing the home, but have not completed the steps necessary to acquire a mortgage.

Pre-Approval:

• The buyer provides documentation of income, debts and assets
• Loan application is completed
• Information is verified and loan is approved by underwriter
• There is no need to complete an application once the purchase agreement is executed (it's already done)
• The buyer's loan is approved, subject only to home's appraisal, title and purchase contract

A Pre-Approval is a statement from the lender offering a loan to you, as long as the home you are purchasing has a high enough appraised value. This means that you are capable of purchasing the home and places you in a position to be able to complete the purchase. The seller will take any offer you make as a serious offer from you.

What is the difference between a "Buyer's Agent" and a "Seller's Agent"?

A "Buyer's Agent" is a real estate agent that is hired by the buyer to find the right home for the buyer. The main goal for a "Buyer's Agent" is to find the best home for a buyer, while negotiating the best price.

A "Seller's Agent" is a real estate agent hired by the seller to market and sell their home. The main goal of a "Seller's Agent" is to sell the seller's home at the highest price possible.

Why should I work with a "Buyer's Agent"?

As a buyer, it is in your best interest to work with a "Buyer's Agent" because this will ensure that your agent is working for you and your best interests. Often times, when a "Seller's Agent" is acting on behalf of both the seller and buyer (when a buyer does not have his/her own agent), there is a conflict of interest, since a seller wants the highest possible price for the home, while the buyer wants the most reasonable price for the home.

Learn about the elements and terms of a sales contract.

As a first time home buyer, by definition you've never been a party to a real estate purchase and sale agreement. You'll need to do some studying to learn the elements and terms of a sales contract.

Here is a short list of the basic elements of a real estate contract:

• Acceptance: How much time the seller has to either accept the offer or to provide a counter-offer.
• Closing: A future date by which time the closing will take place.
• Description: A legal description of the property as well as the street address.
• Deposit: How much initial money is included with the contract and who will hold it.
• Financing Contingency: A clause that states the entire contract is subject to the purchaser being able to obtain a mortgage loan of X amount, by a certain date. First time home buyers should make sure their agent includes this clause in the contract.
• Home Inspection: The contract can be contingent upon a satisfactory home inspection to be done by a qualified professional within X number of days.
• Right to Cure: giving the homeowner the right to correct any problems.
  Depending on the problem you may not want to offer a right to cure. A professional may come in and say they have cleaned up mold. Would you still want to buy the house?
• Inclusions and Exclusions: Some items in a home are not considered part of the real estate, but are instead personal property. Refrigerators and washing machines fit this category. This clause should state exactly what is included in the sale, and what isn't.
• Insurance: Who will insure the property until closing?
• Price: The amount of money the buyer will be paying to the seller.
• Possession Date: The date on which the buyer will receive possession of the property.

Down payment

Money becomes yours after it has been in an account for 60 days. If you are selling your car for the down payment or getting paid back a loan, make sure it is in your account for 60 days. If you are receiving a gift, the first 5 percent must be your own funds. The only exception is being gifted 20 percent down payment. Then we just have to prove who gifted the funds.

Do’s and Don’ts

DON'T

• Quitting your job
  We are basing your loan on your current income. Transferring jobs will cause the loan to be re underwritten and possibly denied.
• Opening new accounts
  Opening new accounts, i.e. furniture, appliances, carpeting, can decrease your credit score. If you need to purchase these items check with your loan officer. Your loan officer will tell you when it is ok to move forward on those purchases.
• Pay off debt
  Paying off old or bad debt will move that old debt back into the 12 month window. The credit bureau puts more weight on the last 12 months. This is what you are doing now. If you pay off a two year old collection it moves your most recent action to 1 month ago. That would bring down your credit score.
• Closing credit cards
  Closing credit cards can work against you. If you have three $10,000 credit cards with one having a $5,000 balance, you have $5,000 divided by $30,000 or 16% of your available credit being used. That looks very responsible. The same $5,000 divided by $10,000 would be 50% or on the edge of what the underwriters are looking for.
• Consolidation
  Consolidation would fall under the last category. Three credit cards with $3,000 per card will look better than $9,000 on a $10,000 limit or 90%.
  Do not start maxing out your credit cards to save cash. Too much debt results in a denial.
• Bank accounts
  When the down payment is coming from multiple accounts, do not transfer the funds to one account. We have to trace that money to its origin. It can be a nightmare if funds get co mingled.

DO'S

• Documents
  Provide documents in a timely fashion. Thirty days comes quick.
• Payments
  Make sure you are current on all of your payments.
• Questions
  Please feel free to call Wholesale Mortgage Services of Wisconsin with any questions.
• Stay informed

What lenders are looking for?

• They are looking for an employment history of two years.
• They are looking for assets in your account for over sixty days.
• They are looking for three open trade lines, i.e. credit cards, car payment, student loans, rent.
• They do not want to see that your mortgage would exceed 30% of your gross income. (i.e. if you make $4,000/mon. gross, your payment should not exceed $1,200)

However, mortgage decisions are based on the total picture; debt to income ratio, credit history, monies in reserve, down payment, job history and length. These factors are considered compensating factors. This means that you can expand the guidelines with one or more compensating factors.

We can submit your file for Automated Approval and have a lender decision within 24 hours. Consult with our Mortgage Professionals to see what you qualify for.