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Buyers Guide

Helping you FIT into your next Home

There is so much to learn when buying a new home, even if it not your first home purchase. In addition to your Realtor, your FIT Team is here for you. We are trained, Licensed and happy to answer all your questions. Zoom, Call or text: finding answers is Fast and Easy at FIT Funding!

Purchase Qualifier

Working out the best Loan Solutions every day!

Engineered for better results.  Our entire team is trained and empowered to get you the answers you need when you need them.  We do this every day but know that you don’t.  We will make this a fast and easy process for you; we are better because we are built better.  Our loans always work out!

Find Homes for Sale

FIT Funding’s Buyers guide

What you should know

Get Pre-Approved

We will do an in-depth analysis and show you how much lowering your rate or loan term can save you in overall in interest costs. We will also advise as to the best combination of rate and term improvement to FIT your goals.

Work with a Realtor

A Realtor is very valuable to your home shopping and buying 

Realtors have access to the Multiple Listing Service which is more accurate than most online resources. This will accurately let you know all the homes are available for you. 

  • Realtors are experts on the local market and help provide important information so you can make a better buying decision.
  • Realtors provide guidance on the values in local market, helping you to know the right amount to offer for the home.
  • Realtors help you negotiate the best price for your purchase.
  • Realtors also help you by coordinating and recommending the appropriate inspections of the home.
  • If you don’t have Realtor, we partner with some of the finest Realtors in the industry and would be happy to make a recommendation.
Make an offer on a home

Once you have found a home you like it is time to make an offer.

  • Your Realtor will write an offer based on your discussions and submit it to the Listing Agent.
  • Contact us and we will provide you a customized Pre-Approval letter tailored to the property and the terms you are offering.  We will also reach out to the Listing Agent to let further discuss your qualifications and our fast 14-day closings. 
Offer Accepted

After your offer is accepted the next step is to call us!

  • We review the offer to make sure everything is in line
  • We coordinate with Escrow to get your closing on track
  • We order your Appraisal
  • Your Realtor will arrange to meet with the Appraiser and coordinate your inspections.
Earnest Money Deposits

This is the deposit from you to show the sellers you are serious about the offer you are making

  • Your Earnest Money Deposit check is made payable to the escrow Company, you may also be asked to wire the money directly to escrow.
  • The Earnest Money Deposit can vary from as little as $1000 to three percent of the purchase price.
  • These funds need to come from you the buyer(s), not a friend or relative.
Documented Deposits

Large Deposits made into accounts used to qualify for the mortgage will need to be explained.

  • Anytime during this transaction and up to two months prior to your initial Loan Application, large deposits will need to be explained and the source of those funds documented.
  • Deposits that are greater than your pay and are not your regular payroll deposits are considered large deposits.
Contingencies

Your Realtor will probably include contingencies in your offer

  • A contingency allows you to back out of the transaction if the terms associated with it are not met.
  • Contingencies can vary but usually often include, appraisal, loan approval, and inspections.
  • You will remove contingencies when the terms are satisfied, or you agree to waive them.
  • When all contingencies are removed the sale must go through or you risk losing your earnest money deposit.
  • Non-Contingent offers are considered stronger by the sellers, but you should consult your Realtor and lender before making such an offer as they present many potential risks.
Escrow Companies

Escrow Companies are the third-party buffer between the buyers and the sellers.

  • They collect your loan documents and draw up the necessary legal paperwork to complete the sale.
  • They are responsible for collecting the funds and properly dispersing them.
  • Realtors recommend the escrow companies as they are vetted and can be trusted to properly and smoothly carry out your closing.
Title Companies

Title Companies are responsible for providing the legal documents identifying and insuring the clean title of the home.

Title companies provide the title insurance.  

  • ALTA Insurance is the “lenders policy” and guarantees for the lender that there are no other liens against the property when the loan is recorded.
  • CLTA Insurance it the “Owners Policy” and guarantees your rights and that there are no liens or claims against the property you are buying.
  • FIT Funding and every lender will require an ALTA policy.  The CLTA policy is a personal decision but is oftentimes a wise purchase.
Closing Costs

Costs that happen at closing and those that are part of owing your home

  • Non-Recurring costs are the one time fees associated with the costs of purchasing the home. These include the escrow fee, title insurance, appraisal fee, notary fee, transfer fees, discount points, origination fees and others.
  • Discount Points and origination fee reflect the cost of the interest rate you have selected at the time your rate is locked in.
  • Recurring closing costs include costs that recur after the purchase closes. These include prepaid interest, property taxes, hazard insurance, and homeowners’ association fees.
Property Taxes

You will be required to pay property taxes once on your new home.

  •  CA property taxes are 1.25% of the purchase price of the property.
  • Certain areas and jurisdictions may impose additional taxes above that rate.
  • Taxes are due twice per year
    • 1st Installment is due November 1st and covers July 1st through December 31st
    • 2nd Installment is due February 1st and covers January 1st through June 30th
    • Taxes are collected by the county where your property is located.
    • When you close on the home the taxes are adjusted so that you pay or are reimbursed from the seller the taxes due on the property before the closing date.
Homeowner’s Insurance

FIT Funding and indeed every lender will require you obtain Homeowners Insurance on your new home.

  • The costs of Homeowners Insurance can vary based on the coverage, deductible and in some cases the location of the property.
  • A good place to start looking for Homeowners Insurance is your existing Automobile Insurance company.  They often provide discounts for bundling your home and auto insurance.
  • The process is simple, just provide us your insurance company and contact information and we will get from them the necessary documentation.
Impound Accounts

Impound Accounts are set up to allow the mortgage company to pay your Property Taxes and Homeowner’s insurance when the bill comes due.

  • The cost of the Taxes and Insurance are included in your monthly payment
  • Impounds are sometimes required when your down payment is 10% or less 
  • If you can and elect to not have impounds you will need to make the property and homeowners insurance payments directly.
  • The loan servicer will monitor to insure those properties without impounds are current with the hazard insurance and Taxes.  If not, they will pay them and require the homeowner to begin paying impounds and collect amount paid to bring their accounts current.
Closing Costs Credits

FIT Funding and indeed most lenders will allow you to negotiate that the sellers pay a portion of closing costs associated with the purchase of the home.

  • The amount of these credits are limited based on your loan.  Typically, these caps are 3% or 6% depending on the loan type and down payment.  
  • These credits can only be applied to the actual closing costs
  • These credits cannot lower the minimum down payment investment required of the buyer as the loan terms may require.
  • FIT Funding can also provide lender credits to offset closing costs. These lender credits and come at the cost of a slightly higher interest rate but may work to help you get in your new home with less cash out of pocket.
Cash to Close

This is how much money you will need to bring to escrow before the transaction closes.

  • The cash to close is the down payment, plus closing costs (recurring & nonrecurring) less your Earnest Money Deposit and Seller or Lender credits.
  • The Earnest Money is usually handled with a personal check or wire sent directly to escrow.  
  • The balance of the Cash to close will need to be delivered to Escrow in the form of a Cashier’s check or a wire.
  • There are specific requirements regarding the funds to close.  Your closing specialist will provide you instructions as to how to proceed so there are no problems with your closing.
Closing

There are three steps to keep in mind when closing on your purchase or refinance. Your FIT Funding team, your Realtor and Escrow are all working to ensure that these are accomplished smoothly.

  • Doc Signing.  This is the process of signing all the loan and escrow documents necessary for the transaction.
  • Funding. Once the signed documents are reviewed by Escrow, returned to the lender, and reviewed by the funder, money is wired to escrow and the loan is funded.
  • Recording. After the lender wires the money to the escrow company, they record all the new information including the buyers’ names and the mortgage information; at the county recorder’s office. Once this is completed the seller receives their money and you get the keys to your new home.
Inspections

Inspections are necessary to help you inform you of the condition of the property you are purchasing.

  • There are a number of inspections that can and may need to occur on the home. These can include the following: Pest, roof, well and septic, general home inspection, pool, and environmental hazard inspections.
  •  The cost of these and/or payment for the required repairs is negotiable between you and the seller.
  • Some repairs indicated may be required by the lender to be completed prior to the funding of your loan.
  • It is possible that the appraiser my also make of note of items that need repair. Like the results of the inspections, these repairs may need to be completed prior to funding your loan.
Mortgage Insurance

Mortgage Insurance is a monthly premium that you will generally need to pay if your down payment is less than 20%

  • Conventional loans with less than 20% down require private mortgage insurance commonly referred to as PMI.
  • Conventional mortgage insurance can be handled in one of three ways. Your FIT Funding team can go over these options in detail and help you select the best one for your unique situation.
  • Monthly PMI: The cost of the MI is added to your monthly payment for as long as PMI is required.
  • Single Payment: A single payment collected at closing with no additional monthly payment due.
  • Lender Paid PMI: You pay a higher interest rate, and the lender pays your PMI for you. 
  • FHA loans require mortgage insurance, and it is paid in two ways:
  • Up-Front Mortgage Insurance Premium, this is added to your loan amount.
  • Monthly mortgage insurance.
1st & 2nd Trust Combinations

1st & 2nd Trust Combinations might be a better option if putting less than 20% down.

  • 1st & 2nd Trust Combinations are two loans that fund at the same time
  • These can help you by structuring your financing to avoid:
  • PMI
  • Jumbo Pricing
  • High Balance Loan Pricing
  • These options generally require a minimum of 10% Down Payment
  • 10% 2nd Trust Loan
  • 80% 1st Trust Loan
Discount Points & Rate

There are many factors that affect your interest rate.

Here are some of the factors that can go in to determining the rate available to you.

  • The bond market
  • The Loan Program 
  • The Loan to Value
  • The location of the property
  • The property type: such as a Single family, Condo, 2nd Home, or Investment Property
  • The Lock Period: the amount of time your interest rate is protected.
    • This needs to be equal to greater than the time between the day your loan is locked to the day your loan funds

Discount points and Rebates

  • Loans with no Discount or rebate are often referred to being “at Par.”
  • Loans with rebates are referred to as above par.  In these cases, the rebate will be used to offset your loans closing costs.
    • These rates will be higher that loans offered at par
  • Loans with Discount points will have rates lower that those at par.
    • 1 Discount Point equals 1% of the loan amount
    • Discount Points are paid when the loan closes
Don’t Do these Things

Your FIT Funding Pre-Approval allows you to shop knowing you are qualified for a loan. This Pre-Approval is based on extensive review of your financial situation, but this can change if you take certain actions. Not all of these actions will void your pre-approval, but they could result in time consuming delays.

Don’t do these things until you close on your new home without first speaking with us. 

  • Don’t take on any new debt
  • Don’t deposit gift funds from your relatives into your personal accounts
    • These should be sent directly to escrow
  • Don’t make any large deposits that cannot be documented
  • Don’t take time off if you are paid hourly
  • Don’t spend down your liquid Assets
  • Don’t miss any of your payments
  • Don’t co-sign for someone else’s debts
  • Don’t file your taxes without contacting us.  An Extension may be the best option while shopping for a home.

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