HOMEBUYINGGUIDE

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01 GETTING STARTED

02 TYPES OF MORTGAGES

03 WHAT TO KNOW ABOUT MORTGAGES

05 DOCUMENTS CHECKLIST

06 DREAM HOME WISH L IST

07 ESTIMATED COSTS

09 HOME BUYER CHECKLIST

10 MAKE AN OFFER

11 APPRAISAL & INSPECTION

12 MOVING CHECKLIST

Getting StartedCO N G R AT U L AT I O N S O N YO U R D E C I S I O N TO B U Y A N E W H O M E !This is a big step, and we’re glad we can be here to help you with this important lifechange. We’ve compiled this guide to help you with the organization of this journey,direct you in your research, answer and clarify general questions, and ultimately leadyou to the home of your dreams.

P R E - Q UA L I F I E D V S . P R E - A P P R OV E D

PRE-QUALIFIED: You provide your potential lender verbally with your financial information. Based on that and a credit pull, they give you an estimate as to what you can afford. Thiswill give you a reference for how much you can afford based on your financials from thepast two years.

PRE-APPROVED: This is a more detailed inquiry than pre-qualification. Your lender will determine what mortgage programs you qualify for, along with the maximum amount youcan borrow, and what interest rate may be offered.

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Do I need to fill out a mortgage application?

Do I have to pay an application fee?

Does it require a credit history check?

Is it based on a review of my finances?

Does it require an estimate of my down payment?

Will the lender give me an estimate for a loan amount?

Will the lender give me interest rate information?

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Types of MortgagesCO N V E N T I O N A L M O RTG AG E This is a loan between the borrower and the lender, at the lender’s risk, not insured nor guaranteed by the government. The property is collateral and can be seized by the lenderin the event of nonpayment. It can be insured with private mortgage insurance.

H O M E B U Y E R D R E A M P R O G R A M The maximum grant that a household may receive is up to $14,000, as determined by the Member, and submitted to the FHLBNY. Household's income must be at or below 80% of the Area Median Income of the county where property is being purchased. Must put down $1,000.

J U M B O M O RTG AG EThis type of loan is for high-value homes with loan amounts exceeding $453,100 exceptfor Monmouth and Ocean Counties which exceed $726,000.

F I X E D - R AT E M O RTG AG EThe interest rate for this loan is fixed and remains the same for the entire term of the loan.

A DJ U STA B L E R AT E M O RTG AG E ( A R M ) Also known as variable-rate mortgage, the interest rate on this loan starts off fixed andmay adjust periodically to reflect current market rates.

What To Know About Mortgages W H AT D O E S M Y M O RTG AG E PAY M E N T I N C LU D E ?A mortgage payment consists of principal and interest. The principal portion of your payment reduces the original amount you borrowed. The interest portion covers the fee to borrow the amount you still owe. And if you make less than a 20% down payment, your mortgage payment may also include mortgage insurance. In addition to principal and interest, if you have an escrow account, a portion of your mortgage payment covers:

HOMEOWNERS INSURANCEMost lenders will require you to have homeowners insurance, which protects the homeowner against financial losses resulting from fire, wind, natural disasters, or other hazards.

REAL ESTATE/PROPERTY TAXESMost communities finance schools and other services through property taxes. Tax rates vary from town to town, so ask your real estate agent about taxes in your area. The good news is that property taxes may be fully tax deductible. Consult your tax advisor for details.

MORTGAGE INSURANCE (IF APPLICABLE)Mortgage insurance (MI) protects your lender against financial loss if you can’trepay your loan. If you make less than a 20% down payment, you may be requiredto have mortgage insurance.

W H AT I S A N E S C R O W ACCO U N T ?An escrow account is an account that your lender sets up to pay your homeownersinsurance, real estate/property taxes, and mortgage insurance (if applicable). With anescrow account, your lender deposits a portion of your taxes and/or insurance everymonth. When your taxes and insurance premiums are due, your lender pays those billson your behalf with the money in your escrow account. NOTE: Using an escrow account to pay real estate taxes and homeowners insurance may be optional for some homeowners. If you use an escrow account to collect the funds to pay these expenses, be aware that once your mortgage loan is paid in full, you’ll be responsible for paying your taxes and insurance directly when they come due.

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H O W D O I K N O W H O W M U C H M O N E Y I CA N B O R R O W ?Work with a FAFCU mortgage rep to receive an estimate of what you may qualify for.

WHAT IS A CREDIT SCORE?A credit score is a three-digit number that indicates your creditworthiness basedon information provided by your creditors and lenders, including:

• Your payment history• The total amount you owe• The amount of time you’ve had available credit• Whether you have any judgments entered against you • Whether you filed bankruptcy• The number of times potential lenders have reviewed your credit

The three major credit reporting agencies – Experian, TransUnion, and Equifax – compilethis information in a credit report and your credit score is generated. Credit scores rangefrom 300 to 850. Lenders will use your credit report and score to help determine if you're approved for a loan, the terms of the loan, and the interest rate.

H O W W I L L A L E N D E R D E T E R M I N E I F I Q UA L I F Y F O R A M O RTG AG E ?In order to determine your debt-to-income ratio lenders look at your credit score,income, cash available for your down payment and closing costs, existing debt, andcurrent financial obligations.

THE DEBT-TO-INCOME RATIO Compares your anticipated monthly mortgage payment and your monthly debtrequirements to your gross (pre-taxed) monthly earnings. Monthly debt includes creditcards, car loans, student loans, consumer loans plus other financial obligations.

Expert Tip: Keep your total debt level at or below 45% of your gross monthly income.

NOTE: It is important to know that making any large purchases with a loan or credit card before or after applyingfor a mortgage may impact your ability to qualify. Consider your needs and priorities carefully.

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Documents Checklist

Past year’s tax returns (two years if you’re self-employed)

One month’s pay-stubs

Two years of W2s

Two months of bank statements

Primary ID: Driver’s License or Passport

Secondary ID: Debit or Credit Card

Investment account statements

Credit Card statements

Other loan statements (auto, student, etc)

Bankruptcy discharge papers

PRIMARY

SECONDARY

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Dream Home Wish List

Style Home

Location (Towns/Counties)

Number of Bedrooms

Number of Bathrooms

Finished Garage

Basement

Attic

Square Footage

Other Features

Yard Size

YOUR DREAM HOME

FEATURES YOU DO NOT WANT

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Loan Originating Fee

Appraisal Fee

Credit Report

Additional Loan Fees

Hazard Insurance

Mortgage Insurance

Taxes

Assessments

Other Fees

Escrow, Settlement or Closing Fee

Title Insurance

Notary Fee

Attorney’s Fee

Other Fees

Interest

LOAN ITEMS

PREPAID ITEMS

TITLE & CLOSING CHARGES

Estimated CostsSale Price

Down Payment

Amount Financed

PROPERTY ADDRESS

RECORDING FEES

ADDITIONAL SETTLEMENT CHARGES

ESTIMATED MONTHLY PAYMENT

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Tax Stamps

Pest Inspection

Recording Fees

Survey

Other Fees

Home Warranty

Home Inspection Fee

Other Fees

Total Settlement Charges

Down Payment

Total Estimate of Costs

Amount Financed

Interest Rate

Term

Principal and Interest

Mortgage Insurance

Property Taxes

Homeowners Insurance

Homeowners Assoc. Fee

Total Monthly Payment

Home Buyer ChecklistCHECKLIST

Check Your Credit.

Make sure you have a good score and there are no inaccuracies in your credit report. If there is anything that needs to be fixed, do that before moving forward.

Determine What You Want. Research towns and neighborhoods to find what suits your needs best. Fill out the Dream Home Checklist to help you better picture what you want and need in your new home.

Consider Maintenance.

Some homes need work done. Some homes are pristine. Is this somethingthat could possibly deter you from buying a certain home?

Calculate How Much You Can Afford.

Use the resources available on our website listed below to help you with your calculations.

Get Your Documents Together.

Go through the Documents Checklist to help you keep track of what you may need.

Pay Down Debts.

Debt affects your credit score so the less debt you have, the better. This is also better for you in the long run. Homes can result in unexpected expenses. With less debt, you'll have more money available in case of any unforeseen costs

Save For A Down Payment.

ACCORDING TO FANNIE MAEAn individual is to be considered a first-time homebuyer who (1) is purchasing the property; (2) will reside in the property; and (3) had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the property. In addition, an individual who is a displaced homemaker or single parent also will be considered a first-time homebuyer if he or she had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three-year time period.

V I S I T: FA F C U. CO M / R E S O U R C E S / E D U CAT I O N / CA LC U L ATO R S /

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Make An OfferCO N G R AT U L AT I O N S , YO U ’ V E F O U N D YO U R P E R F E CT H O M E !So what comes next?

M A K E A N O F F E R GET READY TO NEGOTIATE!

• Research first! Find recently sold homes in the same area and find out whattheir prices were. If you need assistance, ask your realtor!

• If the seller denies your initial offer, another round of negotiations can takeplace in hopes of coming to an agreement. Don’t worry if you can’t agree;there are other homes!

Expert Tips• Ask questions! Learn all that you can before making a definitive offer. • Talk to the neighbors. Maybe they lived in the area longer than the sellers.

Maybe they have more stories or facts that they can share. You can never knowtoo much about your potential future home.

• Consider the resale value. • Use what you learn as negotiating tools.

Once the offer is made, your loan application will be reviewed.

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Appraisal & InspectionW H AT I S A N A P P R A I S A L ?Organized by the lender, a professional goes to the home to evaluate the property’scurrent market value. This information is then used in the decision-making processwhen your application is being reviewed.

W H AT I S A N I N S P E CT I O N ?The inspection is organized by you, the buyer. This is not a requirement, but it is recommended. It determines if there is anything in the home that could potentiallylower the value, such as water damage or any cracks in the foundation.

If anything is found, you can negotiate with the seller about whether you would like itrepaired or money off the final cost of the home before the contract is officially signed.

T H E F I N A L ST E P CLOSINGThe mortgage loan closing process is the final step in the home buying process. First,a loan estimate will be given by the lender within 3 days of receiving your application.When you’re ready, you can tell your lender that you would like to proceed. You willreceive a disclosure about a week before closing. This will include closing costs suchas finance charges, your interest rate, down payment, etc. These costs must be paidwith a certified check.

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CO N G R AT U L AT I O N S , T H E H O M E I S O F F I C I A L LY YO U R S !

Moving Checklist

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CHECKLIST

Get rid of everything you won’t be taking on your move as early as possible. Hold a garage sale, donate your items, or sell them online. The earlier, the better.

If you’re moving with children, get a copy of their school records to helpwith their transition to a new school.

Provide your change of address to the post office, your bank, credit cardcompanies, and anyone else that may need it.

Make sure your water, gas, electric, WiFi, cable, etc. are ready forwhen you move into your new home.

Make a map for furniture in your new home. This will help both you and your movers.

Alert your insurance companies, especially for your homeowners insurance.

Keep anything of value with you, not in the moving truck, in case of an emergency.

Plan transportation or boarding for your pets on moving day.

Clean rugs and clothing before moving.