Home sellers guide to mortgages

Home Seller’s
Guide to Mortgages
by Rhonda Porter
Washington State Licensed Loan Officer MLO-1213241
Mortgage Master Service Corporation CLA 40445

• Senior Loan Officer at Mortgage Master Service
Corporation , where she’s been employed since
April 2000.
• Licensed Mortgage Originator MLO121324 for
homes located in Washington State
• Author of nationally recognized blog, The
Mortgage Porter
• Interviewed by NPR, Seattle Times, MSN
Money, WSJ Market Watch.
• 2012/2011 WAMP Outstanding Loan Originator
finalist
• Lives in Seattle area with hubby, three kids (off to
school), flat coated retriever and kitten
• Enjoys cooking and painting on black velvet (in her
spare time)

Dissecting the Preapproval Letter
Preapproval vs Prequal letter. Check for
verbiage in the letter. Does it state the
borrower is preapproved or prequalifed.
There IS a difference.
A prequal letter typically means the buyer
has been interviewed by the lender and
not "preapproved".
Preapproval Letters should include:
• All borrower's names
• Sales price
• Loan amount
• Type of financing
(conforming, FHA, VA, USDA, jumbo, etc
.
• Indication that credit has been reviewed
• State if income has been verified
• Source of down payment (savings, sale
of home, gift from parents, seller
contribution, etc.)
• Any conditions the loan approval is
subject to (such as the appraisal and a
"clear" title
• The date the letter was written as well
as an expiration date.
• Loan originators License or Registration
number.
www.mortgageporter.com | @mortgageporter | Facebook | Google + | Yelp | Rate Quote

Conforming Financing Seller’s Guide
Maximum Seller Contributions
Based on the sales price, it varies
depending on amount of down payment
and occupancy. Contribution can only be
applied towards bona fide closing cost, pre-
paids and reserves.
Primary Residence
• 25% or more down payment = 9%
• less than 25% and up to 10% down = 6%
• less than 10% down = 3% max. seller
contribution
Second Home
• 25% or more down payment = 9%
• less than 25% and up to 10% down = 6%
Investment Property
• 2% maximum seller contribution
Conforming Loan Limits
for King, Pierce & Snohomish Counties
• 1 Unit: $506,000
• 2 Unit: $647,750
• 3 Unit: $783,000
• 4 Unit: $973,100
For other Washington county limits, click here.

FHA Financing Seller’s Guide
• Minimum down payment 3.5% - 5%
• Maximum allowed Seller contribution is 6% of
bona fide closing cost, prepaids and reserves
• No mandatory Seller paid closing cost at
Mortgage Master Service Corporation.
• Owner occupied only
• Higher loan limits than conforming in
Seattle, Pierce and Snohomish Counties
• Flexible underwriting guidelines
• No income limits
• Appraisals are essentially the same as
conforming. Possible second appraisal if
property was "flipped" - HUD does not allow 2nd
appraisal fee to be paid by buyer.
• Less reserve requirements if borrower owns
different property
• Buyers who pay alimony may consider this
program due to flexible underwriting
• Popular with young professionals who have
great employment and income and are shy
on down payment
• 203k rehab programs allow for remodeling
with an all-in-one FHA mortgage
FHA Loan Limits
King, Snohomish & Pierce Counties
• 1 Unit: $567,500
• 2 Units: $726,500
• 3 Units: $878,150
• 4 Units: $1,091,351
For FHA loan limits in other Washington
counties, please click here.

VA Mortgage Loans Seller’s Guide
• Eligible to those who have served in
our military.
• Not difficult to underwrite
• Appraisals are done through VA's
system
• Seller pays for buyer's escrow fee
• Maximum allowed seller contribution is
4%
• VA Jumbo loan amounts up to 1 millionVA Loan Limits
King, Snohomish & Pierce Counties
$500,000 for zero down payment
NOTE: VA does not set loan limits. VA down payments
for loan amounts over the zero down limit are 25% of
the difference.
For example, a $600,000 sales price has a minimum
down payment of $25,000 in King County. 600,000 -
500,000 = 100,000. 100,000 x 25% = 25,000.
For other VA loan limits in Washington State, click
here.

USDA Rural Home Loans Seller’s Guide
• Only available for homes that
are in designated rural areas.
(not orange on map)
• Income limits apply based on
county and family size.
• Owner occupied only
• No maximum seller
contribution
• 100% loan to value (zero down
payment).
NOTE: if you’re selling a home that is in an
eligible area, consider accepting USDA
offers to expand your property to more
potential buyers.

Jumbo/Non-Conforming Seller’s Guide
• Loan amount over $506,000 in King, Pierce or
Snohomish County.
• Typically requires higher credit scores
• Less than 20% down payment possible with piggy back
mortgages or LPMI (lender paid mortgage insurance)
• Additional reserves typically required of buyers
• Two appraisals may be required
• Seller contribution varies depending on the lender.
NOTE: Seller’s with “jumbo” priced homes should be
sure to include VA and FHA buyers as they have higher
loan limits.

Condominiums What Lenders Look For
• Owner occupancy ratios
below 51%
• Someone owning more than
10% of the units
• Inadequate reserves
• Delinquent HOA dues
• Pending (or active) litigation
• How many units are sold (if
new construction)
• Make sure your condominium
has current "approved" status
with HUD for FHA financing.
Click here to check

Appraisals
Appraised values are based on homes similar to your property that
have recently sold in your neighborhood. Because appraised values
are based on other homes that have sold, the values tend to lag
behind current resale value.
Lenders will use the lower of the sales price or appraised value. If an
appraisal comes in lower than the sales price, either the sales price
needs to be reduced OR the buyer may need to make up the
difference with additional down payment.
USDA will allow the buyer to finance closing cost IF the appraised
value comes in above the sales price. Conventional VA and FHA
loans do not permit this.
NOTE: if you are "flipping" a home, be prepared to provide
documentation of the improvements made to the home to the
buyer's lender.

How Soon Can We Close?
This is just intended to be a rough guide as to what can be
expected for closing times with various mortgage programs.
There are always exceptions - some transactions may be
quicker and others may take more time.
Transactions can and do close quicker than 30 days - this is
just to provide an estimate.
Conforming: 30 - 40 Days
FHA: 30 - 40 Days
VA: 30 – 45 Days
Jumbo: 30 – 50 Days (if second appraisal required)
USDA: 60 – 75 Days
FHA 203k: 60 - 75 Days
A home that requires a second appraisal, most likely due to being a “flip” or
jumbo loan may take an additional 10 days to close.
If you’re considering a quick close, check with the buyer’s lender to make
sure they’re up for the job!

Seller Closing Costs Summary
Program Minimum Maximum
Conforming $0 Based on down payment & occupancy
FHA Tax Service Fee* 6% of Sales Price
VA Buyer’s Escrow Fee 4% of Sales Price
USDA 0% No maximum
Jumbo 0% Varies based on lender
*NOTE: Mortgage Master Service Corporation does not charge the buyer the tax service fee
(typically runs around $80) and therefore there is zero "minimum" fee due from the seller
with an FHA transaction. Lenders vary with their policy on this.
In the case of a flip, when a second appraisal is required by the underwriter, the buyer is not
allowed to pay for the second appraisal. The cost for the appraisal is around $500 for a
single family dwelling FHA mortgage.
All closing cost to be paid by the seller needs to be negotiated in the purchase and sales
agreement.
Closing cost is limited to the actual closing cost, prepaids and reserves and may not go
towards down payment. Closing cost credit that exceeds the buyer's allowable closing cost
may be refunded back to the seller.

References and Resources
• APR (Annual Percentage Rate)
• Conforming Loan Limits
• Credit Scores
• Debt to Income Ratios
• Do's and Don'ts during the Mortgage Process [Flyer]
• Down Payment
• FHA Loan Limits
• FHA guidelines on "flips"
• Finance Flyers for Listings Sample [Flyer]
• HUD - FHA Condo approved list
• Loan Application
• Preapproval
• Rate Quote
• Seller Contributions
• The Mortgage Porter - Blog
• USDA income limits
• VA Loan Limits

The Fine Print
The content provided is presented or compiled for your convenience by
Rhonda Porter and is provided for informational purposes only. It does
not necessarily represent the views or opinions of Mortgage Master
Service Corporation.
Neither Rhonda Porter nor Mortgage Master Service Corporation
assumes any legal liability or responsibility for the
accuracy, completeness, or usefulness of any information disclosed, or
represents that its use would not infringe privately owned rights.
The information provided should not be construed as offering
legal, financial or other advice to be relied on by the reader to make or
refrain from making any decision or to take any action.
The investment, mortgage or financial services or strategies mentioned in
and throughout this website may not be suitable for you.
Mortgage Master Service Corporation is an Equal Housing Opportunity
Lender.All rights reserved. All content, including but not limited to
text, photos and videos are protected by US Copyright. Plagiarism will
not be tolerated.
Rhonda Porter is NMLS Licensed Mortgage Originator MLO-121324.
Mortgage Master Service Corporation NMLS# CLA-40445.

Home sellers guide to mortgages

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Home sellers guide to mortgages