THE HOME PURCHASE MORTGAGE PROCESS

Buying a home involves several stages. Understanding what happens at each stage can make the process significantly easier and help you make better-informed decisions.

STEP 1 — YOUR INITIAL MORTGAGE CONSULTATION

Before you start making offers, Brandon begins by learning about your financial situation and your homeownership goals.

The conversation can include:

• Your income

• Employment

• Assets

• Credit profile

• Existing debts

• Available funds

• Desired purchase price

• Expected monthly payment

• Down payment

• Closing-cost resources

• First-time-buyer status

• Future financial goals

• Property type

• Primary residence, second home, or investment property

• Expected length of ownership

• Risk tolerance

• Interest-rate preferences

The objective is not simply to determine how much a lender might approve.

It is to determine what mortgage structure makes sense for you.

STEP 2 — DETERMINE YOUR BORROWING POWER

Your mortgage qualification is generally based on multiple factors.

Lenders evaluate areas such as:

INCOME

How much qualifying income you earn and how that income can be documented and used for underwriting.

ASSETS

Funds available for your down payment, closing costs, reserves, and other transaction requirements.

CREDIT

Your credit history, scores, payment history, outstanding debts, and overall credit profile.

DEBT-TO-INCOME RATIO

Your monthly obligations compared with your qualifying income.

EMPLOYMENT

Employment history, stability, and the nature of your income.

PROPERTY

The property itself must satisfy the requirements of the selected loan program.

DOWN PAYMENT

The amount you are contributing toward the purchase affects loan-to-value, mortgage insurance, pricing, and potentially your available loan options.

STEP 3 — BUILD YOUR PRE-APPROVAL

A mortgage pre-approval gives you a clearer understanding of your purchasing position before you begin seriously shopping for a home.

A strong pre-approval can help you:

• Understand your potential price range

• Determine your estimated monthly payment

• Establish an appropriate down payment

• Understand closing-cost requirements

• Identify potential loan programs

• Strengthen your offer

• Move more quickly when you find the right property

Your pre-approval is not a guarantee of final loan approval.

Final approval remains subject to underwriting, verification, appraisal, title, property eligibility, documentation, and all applicable lender requirements.

DOCUMENTS NEEDED FOR PRE-APPROVAL

The exact documentation required depends on your employment, income type, assets, credit profile, property, and loan program.

However, borrowers should generally be prepared to provide documentation such as:

IDENTIFICATION

• Government-issued photo identification

• Social Security number

• Other documentation requested by the lender

INCOME

Depending on your circumstances:

• Recent pay stubs

• W-2 forms

• Federal tax returns

• 1099 forms

• Year-to-date income documentation

• Employment information

• Verification of employment

• Bonus or commission documentation

• Overtime documentation

• Retirement income documentation

• Social Security or pension documentation

• Award letters

• Other income documentation

Self-employed borrowers may need additional documentation, potentially including:

• Personal tax returns

• Business tax returns

• Profit-and-loss statements

• Balance sheets

• Business bank statements

• Business ownership documentation

ASSETS

You may be asked for:

• Bank statements

• Investment account statements

• Retirement account statements

• Savings documentation

• Gift-fund documentation, when applicable

• Documentation showing the source of funds

CREDIT & DEBT

The lender may review:

• Credit report

• Credit scores

• Existing mortgages

• Auto loans

• Student loans

• Credit cards

• Personal loans

• Other recurring obligations

REAL ESTATE

If you currently own property, additional documentation may be required, such as:

• Mortgage statements

• Property insurance

• Property tax information

• Lease agreements

• Rental-income documentation

Additional documentation may be required depending on your circumstances.

THE GOLDEN RULE:

Provide complete, accurate, and timely documentation.

Delays frequently occur when requested documents are incomplete, outdated, inconsistent, or difficult to verify.

STEP 4 — CHOOSE THE RIGHT LOAN PROGRAM

There is no single mortgage program that is best for every buyer.

Brandon can help you evaluate a broad range of financing options.

CONVENTIONAL MORTGAGES

FANNIE MAE & FREDDIE MAC

Conventional mortgages are loans that are not insured by the Federal Housing Administration, Department of Veterans Affairs, or U.S. Department of Agriculture.

Many conventional mortgages are eligible for purchase or securitization through the conventional conforming mortgage system associated with Fannie Mae and Freddie Mac.

These programs can offer competitive financing for qualified borrowers.

Potential advantages can include:

• Competitive interest rates

• Down payments potentially starting at a relatively low percentage

• Options for first-time buyers

• Flexible property options

• Conventional mortgage insurance structures

• Potentially lower mortgage insurance costs for stronger borrowers

• Options for primary residences

• Certain second-home and investment-property financing

Fannie Mae and Freddie Mac have different program guidelines, and eligibility depends on the borrower, property, loan characteristics, and current program requirements.

FHA LOANS

FEDERAL HOUSING ADMINISTRATION FINANCING

FHA loans are insured by the Federal Housing Administration.

They can be particularly useful for borrowers who may benefit from more flexible credit and down-payment requirements than some conventional programs.

Potential advantages include:

• Low down-payment options

• Flexible qualifying guidelines

• Options for borrowers with less-than-perfect credit

• Gift-fund options subject to requirements

• Financing for eligible primary residences

• Certain renovation financing options

FHA loans include mortgage insurance requirements and must meet FHA guidelines.

An FHA loan is not automatically the cheapest loan.

The correct comparison should consider:

interest rate + mortgage insurance + upfront costs + monthly payment + cash required + long-term cost.

VA HOME LOANS

FOR ELIGIBLE VETERANS, ACTIVE-DUTY SERVICE MEMBERS & OTHER QUALIFIED BORROWERS

VA loans are backed by the U.S. Department of Veterans Affairs and can provide significant benefits for eligible borrowers.

Depending on eligibility and circumstances, VA financing may offer:

• Potentially no down payment

• No monthly private mortgage insurance

• Competitive interest rates

• Flexible underwriting

• Options for eligible primary residences

• Potential seller contributions subject to VA rules

VA financing is often one of the most powerful mortgage benefits available to eligible veterans.

However, borrowers must meet VA eligibility and lender requirements, and applicable VA funding fees and other costs may apply.

USDA HOME LOANS

RURAL DEVELOPMENT FINANCING

USDA loans can provide eligible borrowers with financing for qualifying properties in eligible rural areas.

Potential benefits can include:

• Potentially no down payment

• Competitive rates

• Flexible qualifying guidelines

• Financing for eligible primary residences

USDA financing has geographic, income, property, and occupancy requirements.

A property being outside a major city does not automatically mean it qualifies.

Eligibility should be verified for the specific property.

NON-QM MORTGAGE OPTIONS

WHEN TRADITIONAL MORTGAGE QUALIFICATION DOESN'T TELL THE WHOLE STORY

Non-QM means Non-Qualified Mortgage.

Non-QM loans can provide alternative underwriting options for borrowers whose financial circumstances may not fit traditional qualified mortgage guidelines.

These programs can be especially relevant for certain:

• Self-employed borrowers

• Real estate investors

• Business owners

• High-net-worth borrowers

• Borrowers with complex income

• Borrowers using alternative income documentation

• Real estate investors using rental income

• Borrowers seeking alternative financing structures

Non-QM does not mean "no qualification."

These loans still have underwriting requirements, and the interest rate, fees, reserves, down payment, documentation, and eligibility requirements can differ significantly from conventional financing.

NON-QM OPTIONS MAY INCLUDE

Depending on current lender offerings and eligibility, alternative mortgage programs may include:

DSCR LOANS

Investment-property loans where qualifying rental income can play a significant role in determining the property's ability to support its debt.

BANK-STATEMENT LOANS

Programs that may evaluate eligible self-employed borrowers using bank-statement deposits as an alternative method of documenting income.

ASSET-DEPLETION / ASSET-UTILIZATION LOANS

Programs that may allow qualifying assets to be considered as a source of qualifying income under specific underwriting methodologies.

1099 INCOME PROGRAMS

Alternative documentation options for certain borrowers who receive income primarily through 1099 compensation.

P&L-BASED PROGRAMS

Certain programs may allow qualifying self-employed borrowers to use profit-and-loss documentation under specified guidelines.

FOREIGN NATIONAL PROGRAMS

Certain lenders offer mortgage programs for qualifying foreign-national borrowers, subject to specific requirements.

INVESTOR PROGRAMS

Alternative financing structures designed for qualifying real estate investors.

Non-QM products vary substantially among lenders.

Brandon can help you determine whether an alternative program may be worth exploring based on your circumstances.

ADJUSTABLE-RATE MORTGAGES

ARMs

An Adjustable-Rate Mortgage, or ARM, is a mortgage where the interest rate can change after an initial fixed-rate period according to the loan's terms.

ARMs are commonly described using two numbers:

5/1 ARM

7/1 ARM

10/1 ARM

The first number generally represents the number of years the initial interest rate remains fixed.

The second number generally represents how frequently the rate can adjust after that initial period.

Some ARM structures may use different adjustment frequencies, such as:

5/6 ARM

where the initial rate is fixed for five years and then may adjust every six months.

HOW ARM ADJUSTMENTS WORK

An ARM generally has three important components:

INITIAL RATE

The introductory interest rate.

INDEX

A benchmark used in determining future adjustments.

MARGIN

A percentage added to the index to determine the fully indexed rate.

The loan also typically contains caps that limit how much the rate can change.

These may include:

• Initial adjustment cap

• Subsequent adjustment cap

• Lifetime cap

The exact structure depends on the loan.

WHEN MIGHT AN ARM MAKE SENSE?

An ARM may be worth considering when:

• You expect to move before the initial fixed period ends

• You anticipate refinancing

• You want a lower initial payment

• You expect your financial situation to change

• You understand and accept future rate risk

• The ARM's long-term economics make sense for your situation

But an ARM should never be selected simply because the initial rate is lower.

You should understand:

What happens if rates rise?

What will your payment become?

Can you comfortably afford the maximum potential payment?

What happens if you cannot refinance?

That is where mortgage planning becomes important.

MORTGAGE RATE BUYDOWNS

REDUCE YOUR INITIAL RATE OR LOWER YOUR RATE FOR THE LIFE OF THE LOAN

A mortgage buydown involves paying additional money at closing—or having an eligible party contribute funds—to reduce the interest rate or payment according to the applicable loan structure.

There are two major categories:

Permanent Buydown

Temporary Buydown

PERMANENT RATE BUYDOWN

A permanent buydown generally involves paying discount points to reduce the mortgage interest rate for the entire term of the loan, subject to the applicable lender's pricing and requirements.

For example, a borrower may pay points at closing in exchange for a lower interest rate.

The potential benefits include:

• Lower monthly principal and interest payment

• Lower interest expense over time

• Greater payment stability

• Potential long-term savings

The key question is:

HOW LONG WILL YOU KEEP THE LOAN?

If paying points costs $8,000 and saves $200 per month, the simple break-even period would be:

$8,000 ÷ $200 = 40 months

If you expect to keep the mortgage substantially longer than the break-even period, the permanent buydown may deserve consideration.

If you sell or refinance before reaching the break-even point, it may not be financially advantageous.

TEMPORARY RATE BUYDOWN

A temporary buydown reduces the borrower's effective interest rate during an initial period of the loan.

Common structures can include:

2-1 BUYDOWN

The effective rate is generally reduced by approximately:

2% during year one

1% during year two

Full note rate beginning in year three

3-2-1 BUYDOWN

A structure that can reduce the effective rate progressively over three years before reaching the full note rate.

The exact structure and availability depend on the loan program and lender.

WHO CAN PAY FOR A BUYDOWN?

Depending on the loan program and applicable rules, a buydown may potentially be funded through:

• The borrower

• Seller contributions

• Builder incentives

• Other eligible interested-party contributions

Contribution limits and eligibility vary by loan program.

WHY WOULD A SELLER PAY FOR A BUYDOWN?

A seller may prefer offering a rate buydown rather than reducing the purchase price.

For example, instead of reducing the purchase price by $10,000, a seller may contribute eligible funds toward a temporary or permanent rate reduction.

The economic benefit depends on the loan amount, interest rate, contribution amount, time the buyer keeps the loan, and other transaction factors.

The best choice should be determined by comparing the actual numbers—not simply by choosing the option with the lowest initial payment.

WHAT IS A CERTIFIED MORTGAGE PLANNING SPECIALIST?

MORTGAGE PLANNING GOES BEYOND LOAN APPROVAL

A Certified Mortgage Planning Specialist approaches mortgage financing as part of a broader financial strategy.

Instead of asking only:

"What loan can you qualify for?"

Mortgage planning asks:

"How should your mortgage fit into your overall financial objectives?"

This can involve examining:

• Purchase price

• Down payment

• Interest rate

• Monthly payment

• Cash reserves

• Closing costs

• Mortgage insurance

• Debt

• Future refinancing

• Expected length of ownership

• Equity accumulation

• Tax considerations

• Investment objectives

• Liquidity

• Risk

• Long-term financial goals

THE BENEFITS OF MORTGAGE PLANNING

1. BETTER USE OF YOUR CASH

Should you put 5%, 10%, 20%, or more down?

The answer isn't always simply "put down as much as possible."

Keeping additional cash available may be valuable for:

• Emergency reserves

• Home improvements

• Investments

• Business needs

• Other financial objectives

The correct answer depends on your circumstances.

2. UNDERSTAND THE TRUE COST OF THE LOAN

A mortgage isn't just an interest rate.

You should evaluate:

Rate + Points + Mortgage Insurance + Fees + Closing Costs + Expected Loan Term

A slightly lower rate isn't necessarily the better deal if the upfront cost is substantially higher.

3. PLAN FOR THE FUTURE

Your mortgage strategy should consider what you expect to happen after closing.

Are you likely to:

• Stay for 3 years?

• Stay for 10 years?

• Move?

• Refinance?

• Pay the mortgage down aggressively?

• Purchase another property?

• Start investing?

• Build a business?

• Retire?

Your expected timeline can influence the mortgage structure that makes sense.

4. EVALUATE LIQUIDITY

Home equity is valuable—but it is not the same thing as cash.

Putting a large amount of money into your down payment may reduce your monthly payment, but it can also reduce your liquid reserves.

Mortgage planning helps you consider the balance between:

equity + liquidity + payment + risk.

5. COMPARE MULTIPLE STRATEGIES

Instead of automatically selecting a 30-year fixed mortgage, you can compare scenarios.

For example:

30-Year Fixed

vs.

20-Year Fixed

vs.

15-Year Fixed

vs.

5/1 ARM

vs.

7/1 ARM

vs.

10/1 ARM

vs.

Temporary Buydown

vs.

Permanent Buydown

The best choice depends on your objectives, risk tolerance, financial circumstances, and expected ownership period.

STEP 5 — SUBMIT YOUR LOAN APPLICATION

Once you select a mortgage strategy, you complete the mortgage application and provide the required documentation.

The lender reviews your:

• Income

• Assets

• Credit

• Employment

• Debts

• Property

• Loan structure

Your application then moves into processing and underwriting.

STEP 6 — PROCESSING

During processing, your documentation is collected, reviewed, organized, and verified.

The lender may request:

• Updated pay stubs

• Updated bank statements

• Additional tax documentation

• Employment verification

• Explanations for deposits

• Explanations for credit inquiries

• Documentation regarding debts

• Letters of explanation

• Gift documentation

• Additional asset documentation

IMPORTANT:

Do not make major financial changes during the mortgage process without first discussing them with your mortgage professional.

Avoid opening new credit accounts, taking on significant new debt, changing jobs, moving money without documentation, or making large unexplained deposits without understanding how those actions may affect underwriting.

STEP 7 — APPRAISAL

The lender generally needs an appraisal or other acceptable valuation method to determine whether the property supports the transaction.

The appraisal helps establish the property's market value for lending purposes.

If the appraisal comes in below the purchase price, several options may need to be considered depending on the transaction.

This is why having a strong purchase strategy before making an offer is important.

STEP 8 — UNDERWRITING

Underwriting is where the lender evaluates the complete loan file against the applicable requirements.

The underwriter reviews:

Borrower + Income + Assets + Credit + Debt + Property + Loan Program

The underwriter may issue:

• Approval

• Conditional approval

• Additional documentation requests

• Suspension

• Denial

Most approved loans have conditions that must be satisfied before final approval.

STEP 9 — CLEAR TO CLOSE

Once the lender has received and approved the required documentation and all applicable conditions have been satisfied, the loan can move toward closing.

At this stage, you should understand:

• Final loan amount

• Interest rate

• Monthly payment

• Cash required to close

• Closing costs

• Prepaid expenses

• Escrow requirements

• Other final loan terms

STEP 10 — CLOSING

At closing, you sign the final legal and mortgage documents, provide the required funds, and complete the purchase transaction.

Once the transaction is properly funded and recorded according to the applicable process:

YOU OWN THE HOME.

AFTER CLOSING: YOUR MORTGAGE STRATEGY DOESN'T HAVE TO END

Your financial circumstances can change.

Interest rates can change.

Your home's value can change.

Your income can change.

Your investment objectives can change.

That means your mortgage may deserve periodic review.

Future planning may involve:

• Refinancing

• Removing mortgage insurance when eligible

• Changing loan structure

• Accessing equity

• Paying down principal

• Purchasing another property

• Converting a primary residence to an investment property

• Evaluating future mortgage opportunities

A mortgage should be viewed as part of your broader financial picture.

WHY WORK WITH BRANDON S. BROUSSARD?

YOU DESERVE MORE THAN A RATE QUOTE.

Brandon brings together:

Mortgage Origination

Mortgage Planning

Real Estate Knowledge

Investment Perspective

Construction Knowledge

Property Understanding

This allows him to approach the mortgage conversation from multiple angles.

The objective isn't simply:

"Let's get you approved."

It is:

"Let's determine how this mortgage fits your purchase and your financial goals."

YOUR HOME. YOUR MONEY. YOUR STRATEGY.

Whether you're a:

First-Time Homebuyer

Move-Up Buyer

Downsizing Buyer

Veteran

Self-Employed Borrower

Real Estate Investor

High-Net-Worth Borrower

Repeat Homebuyer

Homebuyer with Complex Income

There may be more than one way to structure your mortgage.

The challenge is determining which strategy makes the most sense for you.

READY TO START?

GET YOUR MORTGAGE STRATEGY BEFORE YOU SHOP.

Don't wait until you've found the perfect home to figure out how you're going to finance it.

Start with a conversation.

Brandon S. Broussard can help you understand your potential purchasing power, available financing options, documentation requirements, and mortgage strategies before you make an offer.

BRANDON S. BROUSSARD

Mortgage Loan Originator
Nextgen Mortgage Inc.
Massachusetts & New Hampshire
NMLS #1914798

Certified Mortgage Planning Specialist

YOUR NEXT HOME DESERVES THE RIGHT MORTGAGE STRATEGY.

MORTGAGE DISCLOSURE

Mortgage financing is subject to credit approval, underwriting, property eligibility, income verification, asset verification, appraisal, and other applicable requirements. Not all borrowers will qualify for all programs. Loan programs, rates, terms, fees, down-payment requirements, mortgage insurance requirements, and underwriting guidelines are subject to change and vary by lender and borrower circumstances.

Fannie Mae, Freddie Mac, FHA, VA, USDA, and Non-QM programs have specific eligibility requirements. References to down-payment percentages, DSCR financing, adjustable-rate mortgages, buydowns, or other financing structures are educational and illustrative and do not constitute a guarantee of availability or qualification.

A mortgage pre-approval is not a commitment to lend and is subject to satisfactory verification and underwriting. Borrowers should not make major financial changes during the mortgage process without first consulting their mortgage professional.

The information presented on this page is for educational purposes and is not financial, tax, legal, or investment advice. Borrowers should consult appropriately licensed professionals regarding their individual circumstances.

Nextgen Mortgage Inc. — NMLS #1621958

Brandon S. Broussard — NMLS #1914798

Equal Housing Opportunity.