Deal qualification process in loan agreements

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today you're going to learn how to read a loan estimate let's bring in the big guns and show you how this is done all right let's get started i know that there are a lot of numbers and loan estimates it seems really confusing but i'm going to break everything down for you and make it really easy okay so the first thing that we're going to look at you'll see right here and right here we've got the sales price and the loan amount we've got the interest rate and then this only matters if we go here and see if it's locked or not so this one is locked now sometimes loan officers don't lock things right away especially if they know that you're shopping um because then your 30-day clock starts so we're limited on time we have to really hustle um but that'll tell you if you are not and then here is the date another thing to pay attention to up here is the loan type so we have conventional fha va as you can tell conventional is marked all right so the next important thing is your monthly principal and interest so we've got that right here and then also it comes down here okay so then this is something that gets you know people all confused all the time so we have your you know escrow account which is your taxes and insurance uh mortgage insurance if applicable and then you have this number which is your total monthly payment right so that part is great but then there's this number right here and everyone's like is that added on to this number how does this work and all this is is it's showing you the total of your loan so we've got you know if you have an hoa solar panels anything like that that you're paying outside of your loan that's included here just to give you an idea of the total cost of you owning this house and in this case you're just adding this number the 90 50 955 to the 310 and that is the total cost of everything um but really your mortgage payment is this number right here it gets super confusing i'm not sure why they didn't you know specify that a little bit better uh but if you do look here it says like hoa dues in escrow no so that's how you know whether it's part of your mortgage or not okay so then we've got prepayment balloon all of that stuff we don't really see that very much anymore in loans but if you're concerned about it it is right here okay so we've got prepayment penalty balloon penalty no and no uh and then your total estimated closing costs this loan happens to be 58.45 and the cash to close 305 845. so you might be saying like oh my gosh where are these charges coming from that's where we have this page okay so when you're comparing loans especially a purchase you're really going to be looking at section a so section a is going to have discount points underwriting fees processing fees origination fees whatever the case may be and so you want to take that number in this case the total amount of points was 148 dollars so if you're comparing loan estimates for a purchase you're going to be looking at section a and then section j so section j is lender credits um you know sometimes there is a credit for the rate but there might be origination fees whatever the case may be so you balance those numbers out together and that's how you know which one is going to be a better deal now on a refinance we're going to add in one extra step and that is section c services you can shop for now this is title so title fees the reason why you are looking for um you know difference between a refinance and a purchase is a purchase we as lenders don't choose your title company that's between you and your real estate agent that's part of your contract we go along with whatever that is and so every single lender whether you know we're estimating or not from the very beginning at the end these numbers are going to be the same across every lender because we have to use that title company and their fees now on a refinance typically the lender chooses which title company we're going to use so if you have a refinance you're going to also want to look at this number in section c and compare the two between the lenders because if one lender is using a title company that costs a lot more than another that's where some costs can incur um another thing that we're going to look at section b so right here we've got section b services you cannot shop for appraisal credit report some lenders have tax flood certs so this number is also important to look at on a refinance or a purchase too and one thing to keep in mind so i already told you that title costs if you're a purchase it's going to be the same across all lenders now this is where things get tricky is if you look at section f and section g we hear all the time people coming especially for refinances saying well this lender's numbers are so much less than yours well typically and you can compare them side by side it's that um one of the lenders is under estimating this escrow account right so this is your homeowners insurance you pick this policy this is your policy and these property taxes those are your property taxes for your specific property so those aren't supposed to change between lenders now some like to be tricky like mostly online lenders um and they'll tell you like they'll maybe say oh we only need one month for homeowners insurance and we need three months for property taxes and then your cash to close is so much less so you think that it's a good deal but it's not if your escrow account is too short then you're going to pay for it later these are your taxes your insurance it does have to be paid so that's why like i said earlier when you're comparing loan estimates you really mainly want to pay attention to sections a b and c um i know that that's a lot it's a lot of numbers it's a lot that we're throwing at you but if you have any questions feel free to reach out if you have gotten a quote and you're not sure if it's a great deal or not we're happy to look at it for you um compare numbers see if we can help or even to just tell you hey you've got a great deal we want to make sure that you're taken care of no matter who's doing it so if you have any questions just let us know you