Create a funding plan for your dreams

When you buy a home, there are two ways to pay for a home: 1) all cash, or 2) with some cash (down payment) and a mortgage. Especially with a mortgage, you'll need to make monthly principal payments, and you'll have additional expenses like taxes, insurance, and HOA fees. It's important to plan your finances. You should size your mortgage loan within what you can afford each month, and use that as a guide to price your new home. Check off the items below to understand your money flow and plan accordingly.

1. Know your finances

   To get a mortgage loan, you need to know your income and expenses, assets, credit score, and DTI.

   Income and expenses

   Naturally, the higher and more stable your income, and the smaller your expenses relative to your income, the easier it is to borrow and the higher your limit. Here's what you need to know about your income and expenses.

   • Gross yearly Income
   • Monthly payment
   • Tax (Property, Special assessment, Mello Roos)
   • Home insurance
   • HOA

   For a mortgage loan, you must meet the following conditions.

   • You must have a current income,
   • You must have at least two years of income (based on tax returns) or,
   • You must have at least 24 months of college or higher education and experience combined.

   Assets

   When it comes time to buy a home, you'll have additional expenses beyond the loan amount. You need to know what cash equity available.

   • Down payment
   • Mortgage Point
   • Closing Cost (Inspection, Title, Escrow fee, etc)

   Credit Score

   To apply for a mortgage, you'll need a credit score that's at least as good as the one below.

   • Minimum 620
   • Jumbo loans that exceed county-specific loan limits are minimum 680 (For California, minimum 720)
   • For FHA, minimum 580

   DTI (Debt-To-Income)

   After the loan, including the monthly principal your monthly debt/pre-tax income must be 50% or less to qualify for a mortgage.
   With Loaning.ai's Check your affordability, you can easily find out how much a home is affordable for your financial situation without entering any personal information.

2. Mortgage Loan Availability and Pre-qualification Self Check

   • Loaning.ai's Check your eligibility makes it easy to check your loan eligibility without entering any personal information.
   • Additionally, Loaning.ai's Find Your Best Rate allows you to select a few options without entering any personal information to easily see if you're eligible for a loan and you can get the rate and limit information.
   • Loaning.ai does not make ANY marketing calls to customers.

3. Search for homes and prices

   • Zillow, Trulia, Redfin, Cozying.ai (Korean support coming soon), and more make it easy to research home listings, prices, and more in your favorite neighborhoods.
   • We recommend using Loaning.ai's Check your affordabilityto get an idea of the right price range of a home before you start searching for a home.

4. Review your funding plan

   • It's important to buy a home that fits your financial situation rather than an expensive one.
   • Review the home price, down payment, and mortgage amount you can afford based on your assets, income, and more.

Take the first step

One of the important steps you should take before touring homes is to get pre-approved for a mortgage, because homeowner require pre-approval to determine if you have a good chance of making a real deal and closing.

1. Get a pre-approval letter

   • If you meet the income, credit, assets, and DTI checks in step 1, you can easily get pre-approved with Loaning.ai.
   • The credit information needed for this is pulled from the credit bureaus via a soft check provided by Loaning.ai (soft checks do not hurt your credit score at all)
   At Loaning.ai, you can get a pre-approval letter in less than 5 minutes.

2. Where to get a pre-approval letter? A checklist for a pre-approval letter

   • There are over 4,000 lending institutions to choose from.
   • You should consider the individual's financial situation to ensure that the loan will work properly for you.
   • You need to make sure that your lending rates are low enough compared to competing banks.
   • You should consider whether you can leverage Discount Point to lower the interest rate on your loan.
   • If the loan rates are the same, you'll need to verify that the Discount Point is appropriate.
   • If Lona Fee is free or offers credit, it may be at a high rate. So, you should be care about a total cost of ownership (TCO) perspective.
   • You must ensure that you do not use the personal information provided for issuance to make marketing calls.
   Loaning.ai doesn't make phone calls and offers lower rates than other financial institutions.

Mortgage lender status (as of end of 2022)

• Division

  Bank - Small

  Number of institutionsNumber of institutions

  1,299

  Number of institutions %

  30%

  Originations (thousands))

  652

  Originations (thousands) %

  5%

• Division

  Bank - Large

  Number of institutions

  638

  Number of institutions%

  15%

  Originations (thousands)

  3,032

  Originations (thousands) %

  22%

• Division

  Credit union

  Number of institutions

  1,355

  Number of institutions%

  31%

  Originations (thousands)

  1,042

  Originations (thousands) %

  7%

• Division

  Mortgage company -

  Number of institutions

  68

  Number of institutions%

  2%

  Originations (thousands)

  400

  Originations (thousands) %

  3%

• Division

  Mortgage company - homebuyingGuid.71

  Number of institutions

  972

  Number of institutions%

  22%

  Originations (thousands)

  8,859

  Originations (thousands) %

  63%

• Division

  Total

  Number of institutions

  4,332

  Number of institutions%

  100%

  Originations (thousands)

  13,986

  Originations (thousands) %

  100%

• Small banks consist of those banks with assets (including the assets of all other banks in the same banking organization) of less than $1 billion.
• 미 번역
• Source: Consumer Financial Protection Bureau (CFPB)

Find your nest

Home searching is one of the most fun parts of the home buying process. After you've searched for homes and narrowed down the ones you're interested in, go to an open house! As long as you have the interest and time, you're free to do so. The process is free and you don't need permission from the seller, but some homes may require an appointment. What you want and what you can afford may be different. It's important to find a home that fits your current situation.

1. Choosing a realtor

   • To trade a house, you need to contact with a buyer's agent or a listing agent who represents the seller and puts the house on the market. If you're looking at several homes and thinking about buying one, you should choose a Buyer's Agent :)
   • If you are not knowledgeable about buying a home or need help, you may want to choose a buyer's agent and work with them to create a comprehensive strategy for buying a home from the beginning. There is no commission to be paid by the homebuyer to the buyer's agent (the buyer seller gets a portion of the seller's agent's commission), but the agent only earns money when the actual transaction closes, so if the transaction takes a long time or there are multiple rejections, you may end up with a home you don't want in order to get a quick deal.

2. Explore housing on your own

   • Finding the home you want is as easy as searching for something on Amazon - although there's a little more to consider.
   • Find the home of your dreams with Zillow, Trulia, Redfin, Cozying.ai and more.
   • Choose which homes to visit based on a comprehensive review of the neighborhood, price, square footage, year built, school ratings in nearby districts (using GreatSchools and Niche), HOA fees, taxes (Special Assessment, Mello Roos Tax (CFD)), neighboring transactions, and how long they've been on the market.

3. Visit an open house

   • Check Zillow, Trulia, Redfin, Cozying.ai, and more for dates and times of open houses and visit them.
   • Get a comprehensive view of sunlight, home condition, neighborhood, move-in date, utility costs, and more based on the information you've already verified.
   • You need to see exactly where you can make small improvements (appliances, tile, lighting, etc.) and where you need to make big improvements (leaks, water, sewer, HVAC, flooring, etc.).
   • Most open houses are often held around the same time (weekend afternoons), so you'll need to manage your schedule well to see all the homes you want.

Make an offer on your dream home

Submitting an offer when buying a home can be exciting, but it can also be challenging. In the United States, the listing price (the price you see on a real estate platform) is not a set amount. There is often competition (bidding) from other buyers, which can result in a home being sold for more or less than the listing price.

It's important to strategize your offer and not let your emotions get the best of you. Price isn't the only negotiation point, so you'll need to make an offer with other terms in mind. You should get a lot of information from your agent during this process, and then let them make the final decision.

1. Steps to strategize your offer with your real estate agent after you've selected a home

   • Deciding how much to buy a home based on price, neighborhoods, and our willingness to pay
   • Specially, you need to review the data such as transaction results for the past 3 to 6 months are received from an agent or you can check directly through sites such as zillow, trulia, cozying.ai, etc.
   • Accommodating the seller's move-in date, or accepting the house in its current condition, are offer terms that can lower your offer by tens of thousands of dollars.

2. Offer submission and response steps

   • After visiting the open house, you'll need to submit an offer through your real estate agent, usually within two to three days. It's important to make the right decision and submit an offer within the limited time frame.
   • After you submit an offer, you'll receive one of three responses from the seller
     • Offer accepted: My terms are accepted and the actual transaction begins.
     • Counteroffer: The seller is asking me to come back with an adjusted offer because my offer was very close to what the seller wants, and we can modify our offer to fit our situation and submit it. It's important that the buyer's agent knows from the listing agent what terms are important to you, not necessarily the price. Especially in an overheated housing market, if the seller receives multiple offers, it's important that you don't get caught up in a bidding war and overpay when they ask you to submit a higher offer. However, it's our choice to submit an offer if we think it's worth it.
     • Offer rejected: When your offer is rejected because it doesn't meet the seller's terms, you should consider alternatives, such as revising your offer or finding another home. Don't get discouraged.

Turn your dreams into reality

After submitting an offer and if your offer is accepted, you will be asked to complete a real estate sales contract. This is the real deal, and you should take the time to review it yourself, or with the help of our brokers along the way, to make sure you understand it fully.

1. Create contracts

   • It includes the name and address of the seller and buyer, the price of the home, and the terms of the contract.
   • The terms of the contract can include contingencies such as home inspections, mortgages, and more, and you can also cancel the contract if there are material defects or if the loan doesn't work out.

2. 3% down payment

   • When the contract is signed, the buyer pays a 3% down payment. This isn't a down payment to the seller, but to an escrow company. The escrow company is responsible for holding the down payment and delivering the money to the seller when the contract is finalized.
   • If you're buying a home in the U.S. from Korea, your primary bank will need to notify the Bank of Korea and wire the down payment to the U.S.

3. Escrow Open

   From the moment the contract is created, Escrow is opened by the seller and will handle all future contract transactions.

4. Home Inspection

   In the United States, it's often said that fixing up a home is more expensive than buying one, so it's important to get an accurate inspection to review your home for structural and functional defects and determine if they can be fixed and returned to service. Typically, the inspection is selected by the buyer and you should expect to pay anywhere from $500 to $1,000 for it.

Start your financial journey

If you're eligible for a loan and have an underwritten pre-approval, you can relax because you've submitted most of the documentation needed for the loan. However, if you're only pre-qualified, you'll need to submit additional supporting documentation.

• Type

  Pre-qualification

  Time

  15~60 min

  Type of credit pull

  None (as reported by customer)

  Features

  Fast but inaccurate

• Type

  Verified pre-approval

  Time

  1~3 hr

  Type of credit pull

  Soft (doesn't affect your credit score)

  Features

  -

• Type

  Underwritten pre-approval

  Time

  Depends on the situation

  Type of credit pull

  Hard (affects credit score)

  Features

  -

1. Complete your loan application

   Submit borrower information, income information (Paystub, W-2, 1099, P&L, etc.), asset information (Bank Statement, stocks, etc.), and credit information (Credit score, Debts) to Lender.

2. Review your loan quote

   • All lenders Lenders are legally required to send you a loan quote within three business days of you signing a home contract and completing an application.
   • The Loan Estimate lists the estimated fees for all the costs of buying a home, called closing costs. This includes not only the fees charged by the lender, but also all the costs of buying a home, such as title work, taxes, appraisal fees, escrow costs, homeowner's insurance, and more.
   • These are estimates and can change midstream, but not by much.
   Loaning.ai makes it easy to enter and submit the required information and documentation through the website, contactlessly.
   This ensures that once your loan documents are ready, you can borrow within 7 days of completion.

Finalizing steps

Once the contingencies in your home purchase agreement are cleared, there's still work to do to get your mortgage approved and executed to finalize your home transaction. Now that you're qualified, don't worry, you just need time to prepare.

1. Home Inspection

   You can submit a home inspection report that you received in advance.

2. Appraisal

   To ensure an accurate appraisal, the lender hires an appraisal management company (AMC) to perform the appraisal, which costs between $500 and $1,000 and is paid for by the buyer.

3. Homeowner's Insurance (home insurance)Homeowner’s Insurance (주택 보험)

   Home insurance is a requirement for buying a home. You can compare quotes from multiple insurers and buy the cheapest policy under the same terms. When you buy a policy, you'll be issued with a certificate of insurance to submit to your mortgage company. Compared to traditional insurers, digital insurers like Lemonade are faster to work with and offer lower premiums, so be sure to compare them. You can also contact Loaning.ai if you have any additional questions about insurance.

4. Title Search

   With Escrow, the title company does the research and provides you with the results after looking up who owns the property, whether taxes are unpaid, and any disputes or liens.

5. Title Insurance

   This insurance is required by financial institutions to cover losses arising from legal issues related to real estate ownership and covers

   • Title defects: Title defects due to previous owner's title issues, burden of non-registration, etc.
   • Third-party claims: When someone else claims rights to the property.
   • Property trespass: When someone else illegally occupies your property.
   • Forged documents: losses due to forged real estate transaction documents

Big decision moments

When you enter into a real estate contract, you are granted a contingency, known as a right to break the contract. This is not always included, and in a competitive market, some contracts may not have this right. Especially in situations where there are multiple competitors, the contingency is considered one of the key conditions for an offer to be accepted.

Real estate contracts typically have a number of contingencies, the most important of which are home inspections and mortgages. These contingencies vary depending on the specifics, but on average, they have a release period of between 5 and 10 days.

1. Home Inspection Contingency

   • Home inspection conditions, 5-10 days after inspection completion
   • If a home inspection reveals unexpected defects

2. Mortgage Contingency

   • Mortgage approval terms, 30-45 days after mortgage application
   • If the buyer doesn't get approved for a mortgage

3. Appraisal Contingency

   • Property appraisal terms, 7-10 days after appraisal completion
   • Appraisal shows the property is worth less than the contract price, effectively affecting mortgage approval

4. Sale of Home Contingency

   • Real estate sale terms, 30 to 60 days after closing on an existing home
   • If the buyer can't sell their existing home

This ensures that once your loan documents are ready, you can borrow within 7 days of completion.

Fresh start

Typically, a real estate transaction should close about 30 days after the signing of the purchase and sale agreement, and in fact, the loan should be finalized and executed by that date. However, the process leading up to loan finalization can be quite stressful, with constant communication and submission of various documents.

1. Signing the mortgage note

   • Check the loan term, interest rate, loan amount, etc.
   • Depending on your state, you must sign in the presence of a notary public or attorney.

2. Sign the Closing Disclosure (real estate cost settlement document)

   Sign a Closing Disclosure that details all costs associated with the sale of the property and the loan.

3. Sign the Mortgage Deed

   Sign a mortgage deed that pledges ownership of your home to a lender.

4. Sending down payment and closing funds to Escrow

   Send the remaining amount, less the loan, to your Escrow account.

5. Loan funds are sent to Escrow by Lender

   The loan funds are sent from the lender to your Escrow account.

6. Escrow pays the seller the proceeds of the home sale

   Escrow pays the seller the proceeds from the sale of the home.

The first payment on a loan is typically due one month after the loan is executed, which is the first day of the month after the one-month anniversary.
For example, if your loan is due on April 15, remember that June 1 will be your first payment.

The first step to a new beginning

You've worked hard over the past month or two to secure the home of your dreams.

Loaning.ai aims to provide you with the best loan products, easily and conveniently, to help you convert your hard-earned income into capital gains.

Lowering your interest rate by 0.125% could reduce your monthly payment by about $300. This lowers your DTI, giving you the opportunity to qualify for a mortgage and increase your loan limit. It can also be used to pay for car payments or homeowners insurance. Using technology and data to reduce your financing costs and increase your financial benefits is what Loaning.ai is all about. Happiness in your new home is all yours.