Helpful Home Buyer Information Booklet

austinlampson

Austin Lampson

Sr. Mortgage Consultant

NMLS #517060

805.335.8200

austin@austinlampson.com

www.austinlampson.com

The material contained herein may have been obtained from a third party (selement agents, tle companies, or credit agencies)

and is deemed to be accurate and reliable, but we do not make any representaons as to its completeness and there is no guarantee

that it is without errors. The material provided is for informaonal and educaonal purposes only and should not be construed

as investment.


Updated August 2016


Congratulations!

You’ve just taken the first step towards a new home.

Especially these days, there is a lot that goes into the process. This book is

designed to help you through the process, and give some information about

homeownership in general.

If you have any questions throughout the way, just ask!

We are here to help.

Table Of Contents:

1.) Our Team & General Info

2.) Loans

3.) Escrow

4.) Insurance: Title & Homeowners

5.) Tax Info

6.) Glossary of Terms

7.) Worksheets

www.austinlampson.com


Our Team &

General Info

Ausn Lampson, NMLS #517060

1332 Anacapa St. Ste. 110 ¨ Santa Barbara, CA 93101

O: 805.335.8200 ausn@ausnlampson.com

www.ausnlampson.com


Notes:


Austin Lampson

Mortgage Loan Officer

805.335.8200

Serving all of California out

of beautiful Santa Barbara


www.austinlampson.com

Meet Team Lampson

OnQ Financial

Ausn Lampson has over 15 years in the lending industry. She is a

graduate of UCSC, with a degree in Global Economics. She rejoined

OnQ Financial in 2013, as a Senior Mortgage Consultant.

Having a broad depth of knowledge in all aspects of the mortgage

process, Ausn offers her customers the well‐rounded experience

to get the job done and works with her team to provide the highest

level of customer service. She lives in Carpinteria with her

husband of a dozen years and their Boston Terrier, Haley.

NMLS #517060 | ausn@ausnlampson.com

Sco Lindberg is our Team Mortgage Consultant. His role

is to deliver WOW service to help guide you through the

paperwork and applicaon process, so that we can best

address your financing needs. There is a lot of moving

parts to the process and he is there to make it go as

smooth and easy as possible for you. A graduate of UCSB,

he has been in the real estate industry since 2007. Sco is

married, living in Santa Barbara, with his wife and their

two cats, Mr, Keats and Cinder.

NMLS #321923 | sco.lindberg@onqfinancial.com

Cindy Sallee is our Transacon Coordinator. She communicates

with clients, realtors, and all other pares during the transac‐

on, resulng in a smooth, efficient experience. Always ready

with a smiling face and helping hand, she has worked in all

aspects of Real Estate. From Escrow Officer to agent assistance

to closing, she pools her talents together to service clients at

the highest level. She grew up in Eugene, Oregon and is passionate

about the Oregon Ducks!

cindy.sallee@onqfinancial.com

Heather Ronan handles markeng, events, and

client relaons. She also assists you through the

applicaon process and tries to make the process

flow smoothly as possible. She wears many hats

around the office and will greet you with a big

smile and a helping hand as you enter the office.

She moved to Santa Barbara from the East Coast

aer graduang college and she has loved every

minute in this beauful city.

heather.ronan@onqfinancial.com

Our team can be reached at (805) 335‐8206

Our behind‐the‐scenes staff include our own in‐house processing, underwring,

closing, and funding departments. Our expert staff will efficiently expedite your enre

transacon. We also employ the most advanced mortgage technology available. The

Internet, our cung‐edge soware, and underwring system all coordinate to speed

your mortgage process and deliver the greatest rates and terms to you.

We pride ourselves on providing superior customer service and creating satisfied clients. We work hard to exceed your expectations.

It is our goal to keep you as a client for life. We want you to feel comfortable recommending us to your family and friends.

On Q Financial, Inc. is an equal housing lender. NMLS #5645

These programs are available to only qualified borrowers. These programs are subject to change without notice.

Underwriting terms and conditions would apply to qualified borrowers. Some restrictions may apply.

NMLS #5645

AZ Lender #BK-0906866

www.onqfinancial.com

068i0000000ArRm


Loans

Ausn Lampson, NMLS #517060

1332 Anacapa St. Ste. 110 ¨ Santa Barbara, CA 93101

O: 805.335.8200 ausn@ausnlampson.com

www.ausnlampson.com


Notes:


What is a Pre-Approval?

A pre-approval is the lender’s verification that they have verified your personal and financial

information, as well as that you qualify for the terms of purchase being offered in contract.

Benefits: Strategically positions your offer, advises you of your maximum price point,

and gives you the freedom to discuss your options.

What documents are needed for a pre-approval and why?

Income documents: Paystubs, W2s, Personal Tax Returns

Documents qualifying income for the loan

Asset documents: Bank statements, retirement statements

Documents ability for down payment, closing costs, and reserves

Credit Report: A report from all three bureaus verifying history & obligations

Shows other obligations and confirms credit score. Also lets us know of any issues that

need to be resolved prior to purchase.

How long does it take?

Your pre-approval can only be completed once your complete documentation has been submitted.

Upon receipt, your lender can take 48-72 hours for pre-approval.

What does a pre-approval consist of?

At On Q Financial, we want you to know not just what your loan payment is, but the entire obligations

of the purchase. This includes:

Down payment options and requirements

Reserve requirements

Closing cost estimates

Loan structure options and requirements

The goal is for you to know and understand the requirements, obligations, and benefits of

your mortgage loan purchase.

What should I do to be prepared?

Ask questions! If you’ve heard of any programs, or just are curious, let us know. No question is

unwelcome.

Be open! Let us know what you are thinking, and be responsive to questions and ideas.

Know your comfort zone! Just because you qualify for a certain amount may not mean

that’s what you want to spend. Let us know any concerns you may have, and we will work

within your needs.

Your lender has a fiduciary responsibility to you as their client. It is not our job, but our duty, to keep

your information confidential and act in your best interests.

We are on your side—use us to your advantage!

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


The Life of a Loan

Prepare Loan

Application & Gather

Documentation

Select your new home.

Offer Accepted!!

Inform Realtors,

Borrowers, and Escrow

Set Appointment with

Team Lampson

Discuss financing

options to best suit you

Home Search

Determine Loan Terms

Buyer Fills Out

Application

Team Runs Credit +

Analyzes

Team Prepares Closing

Cost Estimate

Inform Borrowers,

Realtors, and Escrow of

Date Documents will

Arrive

Obtain Formal

Loan Approval

Collect Required

Conditions to Finalize

Loan

Confirm Loan Terms

and Order Documents

Sign Documents and

Send Final Funds to

Escrow

We commit to keep you

informed every step of the

way.

At minimum, you can

expect a call every

Tuesday, and an update

email on Friday.

Our goal is for you to have

the smoothest transaction

possible.

Inform Realtors

and Borrowers

Fund Loan

Record Loan

Receive Final

Closing Statement

Follow-Up After Close.

Answer Questions.


How Purchase Loans Are Made:

A Step-By-Step Walkthrough

1. Pre-Approval: Getting pre-approved for a mortgage allows borrowers to know exactly how much they

can afford. It also confirms their ability to buy at the negotiated price, including verifying your funds.

Buyers should seek the advice of an experienced mortgage professional, our goal who will help determine

which financing options best suit their needs today and in the future.

2. Loan Application: It’s crucial that consumers supply the lender with as much information as possible,

as accurately as possible. All outstanding debts, as well as assets and income, should be included. Withholding

information can hurt you down the line.

3. Documentation: Buyers must submit paperwork supporting the application as well. Information commonly

sought includes pay stubs, tax returns, and account statements verifying the source of the down

payment, funds to close, and reserves.

4. The Hunt: The buyer begins shopping for a house. When the right one is found, the terms of the sale

will be negotiated, including the price and potential terms of the loan being sought.

5. Accepted Offer! You have negotiated an offer on a property, and the sellers have accepted! Now the

clock starts ticking to close on time. We will update the application & move to processing.

6. Title Search: This is the time when any liens against the property are discovered. A lien may have been

placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared

before a transaction can be completed. As a consumer, you can shop for title/escrow.

7. Termite Inspection: While most purchase loans do not require a formal inspection for termite and water

damage, government loans do. If problems are found, repairs may be necessary.

8. Processor’s Review: The processor packages and verifies all pertinent information, then sends it to the

Underwriter, including any explanations that may be needed, such as reasons for derogatory credit.

9. Underwriter’s Review: Based on the information put together by both our team and the processor, the

Underwriter makes the final decision regarding whether or not a loan is approved, as well as what

additional information may be needed.

10. Mortgage Insurance: Many lenders require mortgage insurance when borrowers put down less than

20% on a loan.

11. Approval, Denial, or Counter-Offer: In order to approve a loan, the lender may ask the borrowers

to put more money down to improve the debt-to-income ratio. The borrower may also need a greater

down payment if the property appraises for less than the purchase price. There may also be a counteroffer

to a different loan program.

12. Insurance: Lenders require fire and hazard insurance on the replacement value of the structure. Flood

insurance will also be required if the property is located in a flood zone. In California, some lenders

require earthquake insurance on condominiums.

13. Signing: During this step, final loan and escrow documents are signed and executed.

14. Funding: At this point, the lender sends a wire for the amount of the loan to the title company

(less lender fees).

15. Confirmation of Recording: The lender authorizes the disbursements of loan proceeds. The appropriate

deeds record with county.

16. Close of Escrow: Congratulations! You own your home! All funds have been dispersed, and title to the

property is now in your name.

17. Buyer Begins Making Mortgage Payments.

The Life of a Loan


Credit

Credit Report Ordered

A credit check will be run for a cost of $_________. We will go over the report to

make sure the balances are accurate. If there is any derogatory credit, it will be

addressed because it is a consideration in the approval process of your loan.

Credit Bureaus

There are 3 credit bureaus:

Experian XPN

Equifax (EQ)

Transunion (TU)

Fair, Isaac Model

Beacon Model

New Empirica Model

How Your Score Affects the Loan:

Each bureau has different items reported to them and will provide a score: the lenders

will look at each score. The terms of your loan is typically based on the middle of the

three scores. The scores are based on many variables, the major criteria are:

Number and type of open accounts

Length of time since account was opened

Number of late payments

Amount owed vs. high balances

Remember

The more data, the more robust your report and score can be.

If some type of credit repair is needed, we can refer you to several credit repair specialists.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Credit Scores

FICO scores were developed in 1958 by Fair Isaac Corporation—an Analytics company in

the United States. A credit score is a number, based on a consumers credit report, which

represents the creditworthiness of an individual, or the probability that the person will

pay his or her debts. Meaning, the higher your credit score, the better the chances that

you will be able to repay, on time, your car payments, credit card payments, a mortgage,

loans, insurance, etc.

NOTE: Even the highest FICO credit score doesn’t guarantee that you get what you want

and the worst one may not prevent you from getting at least some sort of loan. This is a

general guideline but offers no guarantees in what sort of loan you may receive.

1. 800-850+ Credit Score: A score of 800-900 is basically flawless credit. An important thing to note

here is that some consumers may have 800 credit scores the minute their credit profile is established,

but without supporting credit history, the score will mean very little to banks and lenders. On the other

hand, a credit score of 800-900 accompanied with years of solid history indicates that the borrower

could be granted the lowest rate on everything from credit cards to auto insurance and mortgages.

2. 720-799 Credit Score: A credit score of 720-799 is considered great credit, and will typically result in

interest rates and approval rates that a credit score in the range of 800-850+ would yield. The only

difference might be a few more pricing incentives at the 800-850+ range, and a more thorough credit

check in this range. But all in all, credit scores in this range are considered excellent and you really

don’t need to worry if your scores fall in this category.

3. 680-719 Credit Score: A score in this range is considered good credit. Although it’s not perfect, you

should still be able to qualify for most loans and auto or rental leases, although interest rates may be a

little higher than those offered to borrowers with excellent credit. There will be situations where a

credit score in this range will prevent you from getting certain types of financing.

4. 620-679 Credit Score: Credit scores in this range are still considered “good” or “ok” by many

creditors, though you may see further restrictions and fewer approvals when attempting to get a loan,

lease, or a mortgage. Scores at this level are fairly common, and no reason for alarm. But it would be

wise to evaluate your score and work to improve it. In this range, it is quite probable that you aren’t

securing the lowest interest rates, and subsequently losing money as a result.

5. 580-619 Credit Score: This is where “ok” and “good” turn to “bad.” Credit scores in this range are

clearly below average, and you will have a difficult time securing a loan, or applying for a credit card. If

you are able to secure financing, you’ll find higher interest rates for low credit scores. If your credit

falls in this range, you definitely need to evaluate your credit report and take measures to raise your

credit score. Many consumers with credit scores in this range may have to work with non-traditional

lenders to secure financing.

6. 500-579 Credit Score: Credit scores in this range are just flat out ugly. If you’ve got a credit score in

this range, there’s a good chance you have a major derogatory mark on your credit report such as a

collection, charge-off, mortgage late, a foreclosure, or a bankruptcy. There is no question that your

credit is in need of serious credit repair. At this level, you must evaluate your credit and act

immediately to turn things around. You’re clearly paying higher interest rates and making credit mistakes

that will impact your life for years to come.

7. Below 500 Credit Score: Credit scores below 500 are the worst of the worst. To fall into this range,

your credit report will definitely contain major derogatory marks, with very little positive data whatsoever.

If your credit score is at this level, you may want to consider speaking with a professional about

your situation. There’s a good chance you’ve got serious financial problems if your credit score is in

this range.


How to Maximize Your Credit Score Quickly

While the following is not required, it is strongly recommended to maximize your results.

Credit cards you currently have:

Look at your credit card limit, and subtract 70% of the limit amount. Never charge

greater than this amount.

This will equal 30%

Example: $1,000.00 limit - 70% = $300.00

Creditors report information to the credit bureaus every 30-90 days and in most cases in

the middle of the month when most people have large balances. They do not report what

you paid but what your current balance is in the middle of the month. Therefore, never

charge greater than 30% of the available credit limit to be safe. In this example, only

charge $300.00 on a $1,000.00 limit.

If no current active credit cards in the last 6 months:

If you do not have at least 2 active, current credit card accounts, you can do the

following which will make up approximately 30% of your credit score:

Apply for 2 secured credit cards today, do not wait. Remember, once these new

cards are opened, your score will drop for approximately 6-12 months. However,

it is better to drop your score now than to wait in most cases. If you do not have

current active credit, it is difficult to raise a score even when removing negative

credit. This will make up 30% of your credit score.

If you have open credit cards with zero credit balances and you have not charged

on it for more than 6 months, charge a small amount such as 5%, then immediately

pay it off. Within 30-90 days, in most cases, you will increase the score because the

account before charging was dormant or inactive. Any credit card that has not

been used with balances for greater than 6 months will typically lower the score.

Do not close any credit cards you currently have:

If you close your credit cards, you will dramatically lower your credit score.

Do not open ANY new accounts without talking to your mortgage consultant first:

In most cases, opening a new account of any type: cars, mortgage, credit cards, etc. will

lower your credit score for 6-12 months. Choose your accounts wisely.

New lates, collections, charge-offs, bad debt of any type:

Will lower your score as much as 107 points, even a late payment of $5.00 can cost you

the loan you want and your credit score. Make all payments including your mortgage

payment even if someone tells your not to. Get your money back later so you do not

have a new mortgage late.


Gift Funds

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Appraisal

Depending on the length of the escrow, the appraisal will usually be done

approximately 10 to 15 days following acceptance of the offer.

An appraisal is an estimated value of a property. It is used by the lender to

ensure the purchase price of the property is reasonable. We hire an

independent appraiser to prepare the appraisal. The appraisal fee will be

paid up front at the time the purchase contract is approved. The appraiser

inspects the property and prepares the appraisal. It is submitted to the

lender and their review team examines the appraisal before the file has

complete loan approval.

Our team will e-mail you a copy of the appraisal when we receive our copy.

If you are refinancing...

The appraiser will call the homeowner to schedule an appointment. The

appraiser will expect payment at the time of the appointment. On Q Financial

will place the appraisal order through Appraisal Tek.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Pre-Closing Costs

In addition to your final down payment and closing costs, there are initial, up-front

costs and funds needed on a purchase.

Earnest Money:

Upon writing an offer, you will need to present your realtor with an agreed percentage.

This must be seasoned money written from your account. Seasoned means these fund

have been in your checking, savings, or investment account for a minimum of two

months.

This money will be held in escrow upon acceptance of your offer by the seller. This

deposit will be credited toward the money that is needed for down payment and closing

costs.

Always write the deposit check out of your own account!

Appraisal:

Upon acceptance of the offer, your loan and appraisal contingency period will begin. In

this time we have to receive complete loan approval which includes the appraisal being

signed off. Appraisals usually run between $400.00 and $800.00 depending upon the

price of the home.

Homeowner’s Certification:

This is a document required by the lender that typically the seller does not pay for on

condos. Most Association Management companies require this to be paid up front by

either a check or credit card—to be determined after being contacted. The cost is $50.00

to $350.00. This is a non-recoverable cost in the event you choose not to buy this

property.

Physical Inspection:

Most buyers make the choice to hire a licensed contractor to inspect the home they just

purchased. This falls into the 17 days to give you, the buyer, the opportunity to look for

any code violations. You will pay the contractor the day he does his inspection. This

usually runs between $350.00 and $600.00. Your realtor will coordinate this for you.

After the checks have been written, you will not have to bring in any more

money until you sign your loan documents, at which time the final down

payment and closing costs are due. This is usually one week before closing.


Closing Costs

Purchase or refinance transactions require services from several entities and each one

has fees connected to the services provided. There are 2 categories of fees:

(1) Non-Recurring

These are one time, possibly deductible fees associated with services

provided.

(2) Recurring or Prepaid

There are not considered fees. These are prorated costs associated with

your monthly costs. These will include interest, taxes, hazard insurance,

homeowners dues, and mortgage insurance.

Non-Recurring

Escrow:

The escrow company charges fees for handling the escrow. It also charges for special

services such as messenger fees or notary fees.

Title:

The title company charges for title insurance and government fees.

Lender:

The lender charges for loan-related fees such as origination fees, credit, appraisal, processing,

and undercutting.

Interest:

Recurring/Prepaid

On a purchase, interest will be paid from the day before closing (also called funding)

until the end of the month.

Insurance:

On a purchase, 1 year premium must be collected. On a refinance, they will have you

bring in enough to bring 12 months current.

Taxes:

Property taxes will be prorated and collected, and if impounds have been requested, the

proper amount will be collected.

HOA:

Homeowner Association fee will be prorated and collected.

Mortgage Insurance:

If this applies to your loan, amounts will be collected.

*If any of the above are due + payable within 90 days of settlement, it will very likely

be required to be paid. FYI


Closing Costs

1. Sales/Broker’s Commission: The commission is typically a percentage of the selling price of

the home and usually paid by the seller. Often two realtors, the buyer’s agent and the seller’s

agent, and their respective brokerage companies, split the commission.

2. Loan Fees: These are fees that the lender(s) charges to process, approve, and make the

mortgage loan.

3. Loan Origination Fee: Sometimes called a “point” or “discount points,” a loan discount is a

one-time charge imposed by the lender or broker to lower the interest rate at which the lender

or broker would otherwise offer the loan to you.

4. Appraisal Fee: The charge, which may vary significantly for different properties, pays for a

statement of property value for the lender, made by an independent appraiser or by a member

of the lender’s staff. The appraiser inspects the house and the neighborhood, and considers

sales prices of comparable houses and other favors in determining the value. The appraisal

does not, however, necessarily detect or discuss defects in the property or title to the

property. As your lender we will provide you a copy of the appraisal.

5. Credit Report Fee: The cost for a credit report, which shows your credit history.

6. Lender’s Inspection Fee: This charge covers inspections, often of newly constructed housing,

made by employees of your lender or by an outside inspector.

7. Mortgage Insurance Application Fee: The fee covers the processing of an application for

mortgage insurance which may be required on certain home loans.

8. Assumption Fee: A fee which is charged when a buyer “assumes” or takes over the duty to

pay the seller’s existing loan.

9. Interest: Lenders usually require that borrowers pay at the close of escrow the interest that

accrues on the loan from the date of funding to the beginning of the period covered by the

first monthly payment.

10. PMI (Mortgage Insurance): Mortgage insurance protects the lender from loss due to payment

default by the borrower.

11. Hazard Insurance Premium: The premium prepayment is for insurance for you and the

lender against loss due to fire, windstorm, and natural hazards. The coverage may be included

in a Homeowner’s Policy which insures against additional risks such as personal liability and

theft.

12. Title Charges: These may cover a variety of services performed by title companies and others

and include fees directly related to the transfer of title and fees for recording, transfer tax,

notaries, etc.

13. Escrow Services: The fee for the services performed by the escrow officer. Typically,

responsibility for payment of this fee is negotiate between buyer and seller when the sales

contract is signed.

14. Recording and Transfer Fees: The sales contract or local custom determines how fees are

split between buyer and seller. The buyer usually pays the fees for legally recoding the new

deed and mortgage loan. The county charges a transfer tax and many cities also have transfer

tax fees.

15. Pest and Other Inspections: This fee is to cover inspections for termites or other pest

infestation of the home. Payment is determined by sales contract or custom.


TRID: What you need to know


Points - Explained

What is a Point?

One point is equal to 1% of the new loan amount.

Why do lenders charge points?

Whenever government regulation state usury law and/or competitive practices prohibit

the lender from charging a rate of interest which would make the real estate loan

competitive with other fields of investments, the lender must seek some method of

increasing the yield for the investors. By charging “points,” the lender can bring the real

estate loan up to those other investments.

Are points called by different names?

Yes. Some examples are: Loan Origination Fee, Commitment Fee, Discount Fee,

Warehousing Fee, Funding Fee, etc.

Who must pay the points?

FHA: The buyer is usually charged with the Loan Origination Fee. The Discount Fee can

be paid by the buyer of seller.

VA: The buyer is usually charged with the Loan Origination Fee and the Funding Fee.

Discount Fee must be paid by the seller.

Conventional: Points can be paid by the buyer, the seller, or split between the two as

stated on the Contract of Sale.

City/County/State Government Sponsored Loans: As published by them.

Do the number of points charged fluctuate?

Yes. If rates on mortgage loans are lower than other investments (such as stocks, bonds,

etc.) then funds will be drawn away from the mortgage market. Also, when there is a

heavy demand upon the money market because of business needs, role requirements, or

other government borrowing, the result is that money for home mortgages becomes

scarce and more expensive. When this occurs, more points can be charged. Points balance

the market. Points are not set by government regulation but by each lender individually.

Is FHA or VA financing unfair to sellers?

No. Homes can sell faster because more buyers can qualify with the lower down payment

requirement and interest rate. Sellers receive all cash for their equity to reinvest in a new

home or other investment. The purpose of these loans is to provide purchasers the

opportunity to buy homes with minimal cash investment thus providing a bigger marker

for sellers.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


What is APR?

The APR reflects the cost of a mortgage loan as a

yearly rate. This rate may be higher than the rate

stated in the mortgage or deed of trust note

because the APR includes, in addition to interest,

points, fees, and other credit costs.

Within 3 days of receiving a loan application, the lender is required to give or

mail to the borrower a Loan Estimate that will disclose the “annual percentage

rate” (APR).

The annual percentage rate (APR) can be a valuable tool to help shop for a

mortgage, but only when you know how to use it.

An APR measures the total cost of the loan (including interest, points, and fees)

and compares this cost to the amount borrowed. You could call an APR the

“effective” interest rate because points and fees are also included.

Your lender does not control all costs included in APR. Settlement charges are

included also.

For more detailed information regarding Truth-in-Lending, contact the Division

of Consumer and Community Affairs, Board of Governors of the Federal Reserve

System, Washington, D.C. 20551 or go to www.federalreserve.gov

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Mortgage Interest

Interest is the fee charged by the lender for borrowing their money. It is charged

at a percentage of the loan amount, called the principal. The interest rate is stated

for a term of a year. Lenders use 360 or 365 days in a year to simplify the

computation. When calculated, the principal amount is multiplied by the interest

rate then by the length of time. An example of interest calculation:

Principal (Loan Balance): $100,000

Interest Rate: 6%

Period: 6 months

Calculation:

$100,000 x 0.06 x (6/12) - $3,000

Interest on a loan is paid in arrears, meaning: for the previous month. An example

would be: Your payment due on September 1st is for the month of August.

When closing your loan, you must bring in, as a part of your closing cost, the

interest for the remaining days left in the month. You will not make a payment

on the 1st day of the next month.*

*(unless it is an interest credit back, then it is possible)

Because interest is paid in arrears, your first mortgage payment will be after the

next full month.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Escrow

Ausn Lampson, NMLS #517060

1332 Anacapa St. Ste. 110 ¨ Santa Barbara, CA 93101

O: 805.335.8200 ausn@ausnlampson.com

www.ausnlampson.com


Notes:


What is Escrow?

An escrow is created when money and/or documents are deposited by two or

more persons with a third party which are to be delivered upon the happening of

certain conditions. The third party is known as the escrow agent or escrow

holder.

The authority given to an escrow holder is strictly limited by instructions

provided by the parties involved. Consequently, an escrow holder acts on mutual

instructions deposited into escrow and DOES NOT represent any party. They are

neutral to the transaction. The escrow officer is authorized by instructions to

allocate funds for items during the escrow period, such as real estate

commissions, title insurance, liens, recording fees, and other costs. Instructions

also specify the method of collecting funds, proration issues, time limitations,

and all the terms of the transaction. The escrow process protects all parties

involved by retaining money and documents until the mutual instructions are

met.

The statutory definition of escrow is found in Section 17003 of the California

Financial Code and reads as follows:

‘Escrow’ means any transaction wherin one person for the

purposed of effecting the sale, transfer, encumbering, or

leasing of real or personal property to another person,

delivers any written instrument, money, evidence of title

to real or personal property, or other thing of value to a

third person to be held by such third person until the

happening of a specified event or the performance or a

prescribed condition, when it is then to be delivered by

such third person to a grantee, grantor, promisee,

promisor, obligee, obligor, bailee, bailor, or any agent or

employee of any of the later.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Steps for a Successful Escrow

1. When your agent open escrow, ask for your Escrow Reference number to use for all

future communications.

2. Read and understand the Preliminary Title Report with your agent.

3. COMMUNICATE with your escrow officer. They must be instructed when to order

payoffs, releases, etc. It is important that we all keep them informed throughout the

process.

4. Remember, with rare exceptions, escrow acts only on MUTUAL instructions from all

parties.

5. It is important to understand the fiscal tax year, debits, credits, prepaid interest,

impounds, and due delinquent dates. Be sure to review your Loan Estimate and Closing

Disclosure with your realtor and lender.

6. Check each signature for accuracy as to middle initials and spelling. Sign exactly as

shown on the document. Make sure all required documents are signed and notarized

when applicable.

7. Ensure you have identification that matches to the name on your loan and escrow

documents.

8. Double check all papers and documents before returning them to your escrow officer

to verify the following:

a. They are signed properly. Any and all changes are initialed.

b. The vesting shows as how you want the title to read.

c. Addresses are supplied for all future correspondence.

d. Any changes in phone numbers are provided.

e. Any and all addendums are executed.

f. All funds held by the broker are deposited into escrow.

g. The notary completes the acknowledgment, signs it, and places the seal

clearly.

h. You have determined how to transmit funds to closing.

i. Closing funds are sent by certified/cashiers check or wire.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


The Escrow Process—Day by Day

Based on a standard 30-day escrow

Acceptance (Day 1) : Congratulations on your accepted offer, now it’s time to hustle!

What your loan officer will do:

Contact you to confirm loan terms, structure, and down payment amount.



Update your information in the system. This may mean new paystubs & bank

statements.

Go over expectations, time frames, your obligations, and commitments.

What your realtor will do:

Open escrow, and request your earnest money deposit check.



Schedule your initial inspection of the property.

Ensure the carbon monoxide & smoke detectors, as well as the water heater are

installed in the property prior to appraisal inspection (CA Law Requirement).

What you should do:




Be responsive to requests for information. Let us know any concerns you may

have.

Keep us informed of any travel or scheduling arrangements.

Start shopping for homeowners insurance!

Loan Set Up



Your loan is disclosed based on fees received from the escrow officer and your

loan structure.

Your appraisal needs to be ordered. The report usually takes 7 business days to

complete, and is your only up-front loan fee.

Loan Processing (2 days)



Your loan cannot be processed without your signed disclosures.

The Loan Processor reviews the file received from you loan officer, and

addresses any questions or concerns.

Conditional Approval (3-7 days)




This is the Underwriter’s initial review and approval of your file.

The goal is to have this long before you are required to release contingencies so

any loose ends may be tied up prior to you releasing your contingencies.

By this time, you may have to prove to the seller(s) your availability of down

payment & closing costs.


The The Escrow Escrow Process—Day Process—ctd. by Day

Based on a standard 30-day escrow



Final Approval (by the 17th day)

Underwriter reviews any final documents that have been submitted to complete

the file & sign off for docs, including your appraisal, property insurance, and

conditions of the file.

This is when you release your contingencies and confirm you are moving ahead

with the purchase.

Resubmission to Underwriting (by the 20th day)

Signing Loan Documents (by the 25th day)




Loan documents are generated by our closing department & sent to the escrow

office.

Ideally, you sign with your escrow officer. This saves time and money.

Be sure to bring your identification documents—they need to match your loan

documents.

Loan Funding (by the 29th day)



You will need to send final funds to escrow and provide proof of the final funds

into escrow to your lender. Make sure it is from an account we’ve reviewed!

Sometimes, you may need to sign, or correct, documents that were missed at

escrow signing.

Closing (30th day)




Recording is most often the day after funding. Keys are then given to you at the

time specified in your contract.

Your first payment will be due the subsequent month after closing

(i.e. closing in December means a February date).

FYI—Post Closing Audits are common these days. File is reviewed a last time to

make sure its in compliance Additional information may be requested...don’t be

alarmed!

Congratulations on a successful closing!

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Life of an Escrow

Prepare Escrow

Instructions &

Pertinent Docs

Obtain Signatures

Order Title Search

Receive & Review

Preliminary Report

Request Beneficiary

Statement

Process Financing

Request/Prepare New

Loan Application

Receive Demands,

Request Clarification

of Other Liens, and

Review Taxes on

Report

Receive Demands and

Enter into File

Request Beneficiary Statement and

Enter into File. Review Terms of

Transfer and Current Payment Status

Obtain Loan Approval

and Determine that

Terms are Correct

Request Loan

Documents

Review file to determine that all conditions have been met and that all

documents are correct and available for signature.

Forward recordable

documents to title

officer for review

Upon approval, forward

original documents to

the county recorder

Figure file and request signatures

on all remaining documents

Obtain funds from

buyers

Request loan funds

Fund the escrow

Order recording

Close File: Prepare

statements &

disburse funds

Complete closing. Forward all final

documents to all interested parties

(buyer, seller, lender)

Return original loan

documents to lender


Escrow Services

What is Escrow?

Escrow is a transaction where one person delivers something of value to a neutral third

party (“Escrow Holder”), to be held until the happening of a specified event or condition,

upon which it is then delivered by the Escrow Holder to another. Both parties to a real

estate transaction entrust legal documents and various funds to the escrow holder,

which transfers the papers and funds upon the closing of escrow. Because the Escrow

Holder is a neutral third party, both buyer and seller are assured that all mutually

agreed to terms are met before the transaction is completed.

Convenience

Using the escrow holder as a common depository, the buyer and seller can proceed

simultaneously in providing funds, deeds, inspection reports, insurance information,

and other required documents. Both parties give mutually agreed upon written

nstructions, the requirements of which must be met before the transaction is complete,

to an experienced escrow officer. Lenders also specify their conditions for completing

the loan process. Provided that the instructions are clear and mutually consistent, the

escrow officer, as a limited agent for all parties, saves time and helps streamline the

closing process.

Protection

The authority given to an escrow holder is strictly limited by mutual instructions

provided by the buyer and seller. The escrow officer is authorized by instructions to

allocate funds for items during the escrow period, such as real estate commissions, title

insurance, liens, recording fees, and other closing costs. Instructions also specify the

method of collecting funds, proration of insurance and taxes, and time limitations on

settling the transaction. The escrow process protects all parties involved by retaining

money and documents until mutual instructions are met.

Confidentiality is another important aspect of escrow. To effectively handle a

transaction, your escrow officer must be instructed as to the required terms necessary

to close. The officer will discuss escrow matters only with the parties directly involved,

specifically the buyer, seller, lender, and real estate agent. No one else has access to this

information, except through proper legal procedures. The escrow officer retains

impartiality and confidentiality concerning the real estate process.

Closing Escrow

Upon closing, the escrow holder causes the required documents to be recorded and

disburses funds according to the instructions given to the escrow officer. Escrow fees

are included in these costs, and are based on the sales prices of the property, the loan

amount, and services required.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Responsibilities of Each Party

Buyer:

Deposits funds to pay the purchase price, and funds for the property and closing

costs



Provides deed of trust or mortgages needed to secure the loan

Provides, if required documents such as inspection reports, insurance policies, and

lien information to verify compliance to the instructions

Seller:




Executes the grant deed to the buyer with the escrow holder

Provides evidence to meet the buyer’s condition of sale, such as proof of repair work,

inspections, and legal ability to sell the property.

Provides other documents, such as disclosures, mortgage information, insurance

policies, and warranties, as requested or applicable

Lender:


Deposits loan funds, lender instructions, and other loan documents with the escrow

holder

The Escrow Holder:


Serves as a central depository for funds and documents








Obtains a title insurance policy, when required

Fulfills the lender’s requirements, if applicable

Secures approval from the parties on requested documents

Prorates insurance, taxes, and rents, as instructed

Fulfills buyer and seller instructions

Allocates funds for closing costs, and verifies that required funds from each party

are deposited into escrow

Once all conditions are met, the escrow holder causes the necessary documents to be

recorded. Executed loan documents are forwarded to the lender

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Common Escrow Questions

What Is Escrow?

An escrow is money or property put into the custody of a third party until specified

conditions are met.

How Do I Open Escrow?

As soon as you execute your purchase agreement, your real estate agent will deliver a

copy of the purchase agreement and your initial down payment check (if in their

possession) to the Escrow Officer to open escrow. Your escrow officer will then send

you escrow instructions.

How Will I Know Where My Money Has Gone?

Written evidence of your deposit is included in your copy of the purchase agreement.

Your funds will then be deposited in your separate escrow account.

What Do I Do Next?

You will want to speak with your mortgage lender. You will be required to finalize your

loan application which will require personal and financial information.

What Happens After I Submit The Loan Application?

The lender will begin the qualification process including ordering/reviewing credit

report, verifying items submitted on the application, and ordering/reviewing appraisal

of the value of the property.

Assuming The Loan Is Approved, What Next?

Your escrow officer will make an appointment for you to sign your final loan papers. At

this time, the escrow officer will also tell you the amount of money you will need to buy

your new home. Your loan funds will be sent directly to the escrow by the lender.

What Are Escrow Instructions?

Escrow instructions define all the conditions that must occur before the transaction can

be finalized. Your escrow instructions represent your written statement to the escrow

holder protecting your interests. They also authorize the escrow officer to order title

insurance which provides ownership protection for your new home.

When Do I Sign Escrow Instructions?

Your escrow officer will send escrow instructions to you for signing along with other

forms such as: vesting instructions, statement of confidential information, and change

of ownership form. Be sure to return your signed instructions and forms as soon as

possible.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Common Escrow Questions, ctd.

What Do I Need To Do Before My Appointment To Sign Loan Papers?


Payment: A cashier’s check made payable to the escrow company in the amount

indicated to you by escrow. You will most likely also be given the option to wire

your closing funds to the Escrow company.




Lender’s Requirements: Make sure you are aware of your lender’s requirements and

that you have satisfied those requirements before you come to the escrow company

to sign your loan documents.

Hazard Insurance: If you are purchasing a single family home, or detached home, be

sure to order your hazard insurance. Then call your escrow agent with the insurance

agent’s name and phone number. You must have secured hazard insurance before

the lender will send documents to the escrow company.

Identification: Please bring a driver’s license or passport (photo ID) for each person

who will be on the title with you to the escrow company. This is needed so that your

identity can be verified by a notary public. It is a necessary step for your protection.

What Is The Next Step After I’ve Completed My Sign-Off?

After you have signed all the instructions and documents, the escrow officer will return

them to the lender for review. This usually occurs within a few days and upon

completion, the lender is ready to fund the loan and advise escrow.

What Is An “Escrow Closing”?

It is the culmination of the transaction. It signifies legal transfer of title from the seller

to you. Usually the Grant Deed and Deed of Trust are recorded within one working day

of the escrow’s receipt of loan funds. This signifies the close of escrow.

When Will I Receive The Deed?

The original deed to your home will be mailed directly to you at your new home by the

County Recorder’s Office. This usually takes several weeks, sometimes longer.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Insurance:

Title &

Homeowners

Ausn Lampson, NMLS #517060

1332 Anacapa St. Ste. 110 ¨ Santa Barbara, CA 93101

O: 805.335.8200 ausn@ausnlampson.com

www.ausnlampson.com


Notes:


What is Title Insurance?

What Is Title Insurance?

A title insurance policy protects a real estate owner or lender against any loss or damage

they might experience because of liens, encumbrances, or defects in the title to said

property, or the incorrectness of the related search.

How Does Title Insurance Differ From Casualty Insurance?

Casualty Insurers (car, life, health, etc.) assume risk for future events, collecting monthly

or annual premiums. A title policy insures the past of the real property and the people

who owned it, for a one-time premium paid at the close of escrow.

What Does Title Insurance Cover?

Title insurance protects against claims from various defects such as another person

claiming an ownership interest, improperly recorded, fraud, forgery, liens, encroachments,

easements, and other items that are specified in the actual policy.

Who Needs It?

Purchasers and lenders need title insurance to know the property they are involved with

is insured against various possible title defects. Whether it is a sale, refinance, or construction

loan, the seller, buyer, and lender all benefit.

How Is A Title Policy Created?

After the escrow officer or lender opens the title order, a search of public records will

begin, including the County Recorder, Federal and State Agencies, and County and City

Offices. A preliminary report is issued to the customer for review and approval. All closing

documents are recorded upon escrow’s instruction. When recording has been confirmed,

demands are paid, funds are disbursed, and the actual title policy is typed and

sent to the insured.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Reasons for Title Insurance

1. Title Insurance will protect you against a loss on your home or land due to a title

defect.

2. A deed or mortgage in the chain of title may be a forgery.

3. Claims constantly arise due to marital status and validity of divorces.

4. A deed or mortgage may have been made by an incompetent or under aged person.

5. A deed or mortgage made under expired power of attorney may be void.

6. A deed or mortgage may have been made by a person with the same name as the

owner.

7. A child born after the execution of a will may have interest in the property.

8. Title transferred by an heir may be subject to a federal estate tax lien.

9. An heir or other person presumed dead may appear and recover the property or an

interest.

10. A judgment regarding the title may be voidable because of some defect in the proceeding.

11. By insuring the title, you can eliminate delays when passing your title on to someone

else.

12. Title Insurance reimburses you for the amount of your covered loss (only after a

claim has been researched and validated by the underwriter of the title company).

13. A deed or mortgage may be voidable if signed while the guarantor was in bankruptcy.

14. Claims has risen dramatically over the last 30 years.

15. There may be a defect in the recording of a document upon which your title is

dependent.

16. Title Insurance covers attorney fees and court costs (with approved claims or

judgments in client’s favor).

17. A deed or mortgage may have been procured by fraud or duress.

18. A title policy is paid in full by the first premium for as long as you own the property.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


The Title Process

Escrow officer opens title order

with title unit

Customer service verifies legal

and vesting, if needed

Title search started

Computerized

Searcher

Required

Engineering

Tax/Bond

Property Chains

Examines

Documents

Department

Searches

General Index

Chain & General

Are

Prepares

Are

Sellers/Buyers

Index

Printed

Plat Maps

Prepared

Examiner examines complete search package and generates preliminary title report

(Prelim)

Prelim is delivered to Escrow and Lender

New documents/demands submitted to title unit

Escrow authorizes recording

Documents are recorded, demands are paid, and funds are disbursed

Title policies are typed, reviewed, finalized, and delivered to you and lender.


Homeowners Insurance

Condo

You may need an additional policy to close this transaction as your Homeowners

Association Insurance policy may not include the upgraded replacement cost of

interior contents. You will be asked to secure this policy with your insurance agent

prior to drawing your loan documents. This is also called “H06” or “walls-in coverage.”

House

A one year premium is required at closing. You will select your own insurance agent

and give him our name and phone number, as well as that of your escrow officer.

Your agent will send the bill to us and escrow and this will be added to the amount

of money you will need to bring in at the close.

1. Impounds

To open an impound account, you will be asked to bring in one

years premium plus 2 months up front. You will give this to escrow

as part of your closing costs.

The lender will open an escrow and most lenders show the account

balance on your monthly statement. From your first payment, 1/12

of your annual premium will be included with your monthly

payment.

2. No Impounds

You will annually receive an invoice and pay it yourself.

NOTE:

Proof of adequate coverage is required prior to generating loan approval.

Don’t let your coverage lapse! As having hazard insurance is a

requirement of your loan, if your coverage lapses or expires, you

will have a policy force placed on you, which is very expensive. It is

not a long term solution, so be sure to pay attention if any insurance

notices are received from your carrier.

Let us know if you need any assistance in placing insurance.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Tax Info

Ausn Lampson, NMLS #517060

1332 Anacapa St. Ste. 110 ¨ Santa Barbara, CA 93101

O: 805.335.8200 ausn@ausnlampson.com

www.ausnlampson.com


Notes:


Property taxes are due twice a year:

Property Taxes



October 10th—Late on December 10th

February 10th — Late on April 10th

They are usually figured at 1.25% of the purchase price (may vary according to

city) for qualification purposes. The true amount will be 1% of assessed value,

plus bonds, and fixed rate charges, which are listed down on your bill.

Property taxes can be paid two ways:

1. Impounds: If your loan has a Loan To Value (LTV) of 90% or higher and is

one loan, or if you have a government loan, you have to include your

taxes in your monthly payment. If you do a 1st and 2nd combination, or

have a LTV less than 90%, impounds are usually optional.

To open an impound account, you will be asked to bring in 4-7 months of

taxes to escrow as part of your closing costs.

The lender will open an escrow account and most lenders show the

account balance on your monthly statement. From your first payment,

1/12th of your tax bill will be included with your monthly payment.

The lender will pay your tax bill; you should also get a copy of the bill

from the county. Always check your January and May statements to

make sure the money was deducted from your account. If it was not,

contact your lender immediately.

Supplemental Tax Bills

For the first six months (sometimes longer), your tax bill will be based on

the prior owner’s assessed value. The new bill will be basd on the current

purchase price. There will need to be an adjustment for the difference in

the two assessments, which is called a tax supplement. When the county

updates their records, you will receive one bill with the new assessment.

The lender will not automatically pay supplemental bills. You can request

them to pay the supplemental bill because they have your impounds.

2. No Impounds: You will be responsible to pay your taxes on time. You will

receive your tax bill in October. The first installment is due no later than

December 10th, and the second installment is due no later that the

following April.


What is Proposition 13?

Those who have owned their homes for a while easily see the value of Proposition

13. Did you know that before Proposition 13, the average property tax rate in

California was three percent of assessed value and there was no limit on annual

increases. Previously, if a house on your block sold for much more than you paid

for your house, you shuddered in fear when you received your next property tax bill.

Chance are, your new taxes would be based on what your new neighbor was willing

to pay for his home. Things got so bad in the late 1970s, people were actually losing

their homes because of uncontrolled tax increases.

The base assessment rate is now only one percent for all California property and

annual tax increases are limited to no more than two percent. When property is sold,

it is reassessed at market value, but the rate remains at one percent and the new

owner is then protected by the two percent cap on annual increases.

What good is Proposition 13 to me?

Every owner of property in the state is covered. Proposition 13 is Article XIII A of the

California Constitution.

Why am I paying more in property taxes than my neighbors with similar houses?

Under Proposition 13, you determine how much your property taxes will be. Your taxes

are not based on your neighbors’, but are based on the price you voluntarily agreed to

pay for your new home.

We all receive the same services, but I pay more. How can this be fair?

In California, similar to other states, services have never been related to the amount you

pay in property taxes. If services were tied to what you paid, you might see four fire

trucks assigned to a costly home while only one would protect a less expensive residence.

In fact, property taxes are not allocated for specific services. They go into the

general fund along with other taxes and it is local public officials who determine how

the money will be spent.

It still seems like I am paying too much!

We all feel that way, but thanks to Proposition 13, the tax rate for all Californians is only

a third of what it was. If you think things are bad now, multiply your tax bill by three

and see what you get.

I still don’t see what good Proposition 13 is to me.

Besides your lower tax rate, it makes your taxes deductible. Over the years, if houses sell

in the neighborhood for more than what you paid, you will be protected. Under

Proposition 13, your property taxes cannot go up more than two percent a year.


What is a Supplemental Tax Assessment?

Chances are you will have a Supplemental Tax Assessment after you purchase

your home.

State law requires the Assessor’s Office to reappraise property immediately upon

change of ownership or completion of new construction. The Assessor’s Office

must issue a supplemental assessment which reflects the difference between the

prior assessed value and the new assessment. This value is then prorated based

on the number of month remaining in the fiscal year, ending June 30th.

For example, if property is purchased on September 15th with a market value of

$150,00, and it has a prior assessed value of $50,000, this will result in a supplemental

assessment for the difference ($100,000) prorated for the remaining

months in the fiscal year (9months from October through the following June).

$150,000

- $50,000

$100,000

x 9.5

$75,000

x 1%

$750

New Purchase Price/Market Value

Prior Assessed/Taxable Value

Supplemental Assessment

Remaining Months in Fiscal/Tax Year

Supplemental Assessment

Tax Rate

Supplemental Tax Bill

This supplemental tax bill is in addition to the regular tax bill which is based on

the assessed value as of March 1st of each year. If a second sale or transfer of the

property occurs during the same fiscal tax year, but before the mailing of the

first Supplemental Tax Bill, the taxes will be prorated between May 31st, a second

Supplemental Assessment will be required for the next fiscal year. If you have

further questions regarding supplemental taxes, you can reach your local assessors

office at the below phone numbers:

Santa Barbara County Assessor: (805) 568-2550

Ventura County Assessor: (805) 654-2181

Los Angeles County Assessor: (213) 974-3211


Tax Write-Off

In order to encourage home ownership, the government allows individuals to

deduct home ownership-related expenses from the taxable income.

The expenses are mortgage interest, real estate taxes, and loan origination fee

(also known as points). Income tax rates are graduated, meaning the rates are

higher as your incomes levels pass certain limits.

In order to calculate your tax benefit, you multiply the marginal tax rate, or

the highest tax rate you paid on your federal and state income tax returns. For

example, if a borrower’s state and federal marginal tax rates are 0.08 and 0.28,

the total is 0.36. To calculate the tax benefit, add the annual interest and real

estate taxes together, then multiply by the marginal tax rate. The product is

your annual tax benefit.

Depending on your loan amount, a first time buyer can usually increase your

withholding exemptions on your W-4 by at least 4 and still get a tax refund.

This should be taken into account when considering the mortgage you can

afford and your tax planning.

To find out what your true tax benefits are, consult a tax professional—

everybody’s situation is unique.

Austin Lampson, NMLS #517060 | On Q Financial | austin@austinlampson.com | 805.335.8200


Glossary of

Terms

Ausn Lampson, NMLS #517060

1332 Anacapa St. Ste. 110 ¨ Santa Barbara, CA 93101

O: 805.335.8200 ausn@ausnlampson.com

www.ausnlampson.com


Notes:


Real Estate Definitions & Abbreviations

Abandonment of Homestead

ADB HOMESTEAD

Document recorded to terminate a

homestead.

Abstract of Judgment

ABST JDGT

A summary of the essential provisions

of a money judgment. When recorded, it

creates a general lien on real property of

the judgment debtor in the county in

which the abstract is recorded.

Assignment of Rents

ASSIGNMENT RENTS

A document which gives the beneficiary

the right to collect rents of the secured

property in the event of a default.

Certificate of a Tax Lien

CTF TAX LIEN

A lien for nonpayment of property taxes.

Attaches only to the property upon

which the taxes are unpaid.

Covenants, Conditions, and Restrictions

(CC&R’s) RESTRICTIONS

A term used in some areas to describe

the restrictive limitations, which may be

places on property. In other areas, they

are simply called restrictions.

Close of Escrow

(COE)

Means essentially that a real estate

transaction has been completed and that

the sale is final.

Declaration of Homestead

HOMESTEAD

Document recorded by a homeowner to

protect his home from forced sale in

satisfaction of certain types of creditors

claims.

Decree of Distribution

DEC DISTRIBUTION

The final determination of the rights of

heirs to receive the property of an

estate.

Deed

Written instrument which, when

properly executed and delivered,

transfers title to real estate.

Deed of Reconveyance

RECON—RECONVEYANCE

An instrument used to transfer title

from a trustee to the equitable owner

of real estate, when title is held as

collateral security for a debt. Most

commonly used upon payment in full

of a trust deed.

Deed of Trust

See Trust Deed

Easement

The granting of a right which one has

in the land of another. It is either for

the benefit of land, such as right to

cross, or “in gross,” such as public

utility easement.

Federal Tax Lien

A lien attaching to property for non

payment of a federal tax (estate,

income, etc.)

Fictitious Deed of Trust

FICTITIOUS TR DD

A deed of trust recorded by a trustee

which discloses all the terms of the

trust deed but does not relate to a

specific transaction and is used for

reference only.

Grant Deed

Form of deed, common in California,

that contains implied warranties to the

effect that the grantor has not

previously conveyed or encumbered

the property.

Judgment

The final determination of a court on a

matter presented to it. Money

judgments, when recorded, become a

lien on real property of the defendant.


Real Estate Definitions & Abbreviations, ctd.

Lien

A charge upon property for the payment

of debt or obligation.

Lis Pendens

A recorded notice that litigation

(a lawsuit) is pending, which may affect

the title of the real estate involved.

Mechanic’s Lien

Statutory lien in favor of laborers and

material suppliers who have performed

work or furnished materials or supplies

to a work of improvement. If not paid,

they have the right to record a lien

within a prescribed period of time.

Notice of Completion

Notice recorded under the California

mechanic’s lien law within ten days after

completion of a structure; it shortens

the time to file a mechanic’s lien.

Notice of Default

DEFAULT—NOD

Recorded notice that a default has

occurred under a deed of trust. It is the

first step in non-judicial foreclosure of a

deed of trust.

Notice of Rescission

RESCISSION

A recorded notice to rescind a notice of

default of a mortgage or deed of trust.

Notice of Trustee Sale

NT TRUSTEE SALE

Foreclosure sale conducted by the

trustee under a deed of trust after a

default occurs.

Power of Attorney

(POA) Instrument used to appoint an

attorney-in-fact

Quitclaim Deed

A deed used to transfer any interest in

real property that the grantor may

have. It contains no warranties of any

kind.

Release

An instrument releasing property from

the lien of the mortgage, judgment,

etc. When a trust deed is used, the

instrument is called a reconveyance. In

some areas, a “discharge” is used

instead of a release.

Request for Notice of Default

REQUEST NOD

A recorded notice made by the

beneficiary of a trust deed that he be

notified in the event that foreclosure

proceedings are commenced by

another party.

State Tax Lien

A lien attaching to property for

nonpayment of state income tax.

Subordination Agreement

SUBDN AGMT

Agreement under which a prior or

superior lien is made inferior or

subject to an otherwise junior lien.

Substitution of Trustee

SUBSTN TRUSTEE

Written instrument by which title to

land is transferred to a trustee as

security for a debt or other obligation

Trustee’s Deed

Deed given by the trustee when

property is sold under the power of

sale in a trust deed

Uniform Commercial Code Financing Stmnt.

UCC FINANCING STMT

In California, evidence of a personal

property security agreement that may

be filed under prescribed conditions


Loan Definitions & Abbreviations

Adjustable Rate Mortgage

ARM

Rate is fixed for a period of time

(typically 3-10 years) then adjustable

Annual Percentage Rate

APR

The cost of the loan in percentage terms

taking into account estimated charges

over the life of the loan (typically higher

than the Note Rate)

Buy & Bail

When you currently own your primary

residence, and are planning on

purchasing a new one

Closing Disclosure

Replaces HUD1. Final closing document

generated by lender and settlement

agent. Outlines transaction.

Combined Loan-to-Value Ratio

CLTV

The ratio of all loans to the property

value and sales price

Co-Borrower

Additional borrowers on the loan who

may or may not occupy the property

Down Payment

Buyer’s contribution to purchase

property (does not include closing costs.

Minimum 3%

Debt-to-Income Ratio

DTI

The total of payments and obligations to

income on a monthly basis

Escrow Officer

Neutral third party individual to

transaction who coordinates

documentation and funds

Escrow Period

Time frame set in your purchase

contract to close the transaction

Fixed Rate

Rate and payments are fixed for the

entire term of the loan

Impounds

Payment of taxes and insurance

monthly with the mortgage payment.

This is not required on all loans

Loan Estimate

(LE)

Upfront disclosure outlines, estimated

fees, costs, and structure of transact

tion.

Loan Officer

Agent representing the buyer as

borrower for loan programs and funds

Loan-to-Value Ratio

LTV

The ratio of the loan amount to the

property value and sales price

Monthly Mortgage Insurance

MMI or MIP

Charged by FHA (.45% - 1.5%

depending on your parameters)

PITIA

Principal + Interest + Taxes +

Insurance + Association Dues

Private Mortgage Insurance

PMI

Required with less than 20% down

payment on conventional loans

Points

1 point = 1% of loan amount. Typically

charged to reduce your interest rate

Pre-Approval

Buyer completed a full application and

provides supporting documentation


Loan Definitions & Abbreviations, ctd.

Pro-Rated Interest

Since interest is paid in arrears, at

closing you will “pre-pay” interest from

the funding date to the end of the

month

Pro-Rated Taxes

Payment of concurrently assessed taxes

for your portion of ownership of the

property

Realtor

Agent representing the buyer or seller in

negotiations, inspections, and general

terms of sale

Reserves

Funds left over after closing. Typically,

guidelines want to see two months of

PITIA in reserves

Supplemental Taxes

If the sales price of the property is more

than the assessed value, expect a bill for

the difference after closing

Up Front Mortgage Insurance Premium

UMIP

Charged by FHA (1.75% for all loans)

Usable Credit Score

The lowest of the middle score(s) of all

borrowers to be used for terms and

qualifications

Vesting

How one holds title to property


Utilities

Cable Television

Cox Communications 805-683-6651

Comcast Advertising Sales 805-688-3210

(Services Santa Ynez Area)

Direct TV 800-490-4388

Electricity

Southern California Edison 800-655-4555

www.sce.com

Gas

Southern California Gas Co. 800-427-2200

www.socalgas.com

Pacific Gas & Electric Company 800-743-3000

(Services San Luis Obispo County)

Sanitation Service

Browning-Ferris Industries (B.F.I) 805-965-5248

Carpinteria Sanitary District 805-684-7214

Harrison Industries 800-418-7274

Health Sanitation Company 805-922-2121

(Services Santa Ynez Area)

Marborg Industries 805-963-1852

Suburban Rubbish Company 805-733-2659

(Services Lompoc Area)

Telephone Service

Verizon Residential 800-483-1000

www.verizon.net Business 800-483-2000

New Service: Residential 800-483-4000

Business 800-483-5000

AT&T Wireless 800-462-4463

www.attws.com

Water

Carpinteria Valley Water District 805-684-2816

Goleta Water District 805-964-6761

(Goleta, Isla Vista, SB North)

La Cumbre Mutual Water Co. 805-967-2376

(Hope Ranch & Annex)

Montecito Water District 805-969-2271

(Montecito & Summerland)

Santa Barbara City Water Dept. 805-564-5343

Santa Ynez Conservation District 805-688-6015

Solvang Municipal Center 805-688-5575

Public Service

MTD (Local Bus Routes) 805-965-5248

www.sbmtd.gov

Greyhound 800-231-2222

www.greyhound.com

Amtrak 800-872-7245

www.amtrak.com

Santa Barbara Municipal Airport 805-683-4011

Fire Stations

Santa Barbara County Fire St. 805-681-5515

(Foothill Road)

Santa Barbara Fire Dept 805-897-3164

(La Venta Drive)

Santa Barbara Fire Dept 805-965-5254

(Carrillo Street)


Utilities, ctd.

City of Santa Barbara 805-963-0611

www.ci.santa-barbara.ca.us

County of Santa Barbara 805-681-4200

www.countyofsb.org

City of Carpinteria 805-684-5405

www.carpinteria.ca.us

SB Board of Supervisors 805-568-2190

Santa Barbara Police Dept. 805-897-2300

California Highway Patrol 805-967-1234

Postal Service 800-275-8777

www.usps.gov

SB County Voter Registration 805-568-2200

SB County Tax Assessor 805-568-2920

Santa Barbara News Press 805-966-717

www.newspress.com

City of Santa Barbara

(Quick Reference Numbers)

Abandoned Vehicles 805-897-2413

(Public Property)

ABOP 805-560-7505

(Antifreeze, Batteries, Oil, Paint)

Airport Noise Complaint Hotline 805-967-1900

Animal Control 805-963-1513

Code Enforcement Hotline 805-897-2676

Creeks 805-897-2658

Dumping/Water Quality 805-897-2688

Fire Dept. (24-hour) 805-965-5254

Graffiti Hotline 805-897-2513

Hazardous Waste 805-564-5371

Information - City Hall 805-963-0611

Mosquito Abatement 805-564-5371

Noise Abatement 805-897-2410

Park Ranger 805-897-1941

Police Department

24 Hour Non-Emergency 805-897-2300

24 Hour Dispatch 805-897-2410

Tip Line (Anonymous) 805-569-2677

Pothole & Sidewalk Hotline 805-897-2630

RADON Information 800-745-7236

Sand Bags 805-564-5411

Sewer Problems (Water/Streets) 805-564-5413

Shopping Cart Hotline 800-252-4613

Street Lights (24 Hour Record.) 805-564-5416

Street Sweeping 805-897-2541

Traffic Signals (Public Works) 805-564-5583

Trash/Solid Waste Complaints 805-897-2618

Tree Problems 805-564-5434

Vector Control (Rodents) 805-564-5371

Water Problems

Broken Mains 805-564-5413

Conservation 805-564-5460

Zoning Enforcement 805-897-2676

*same for Ventura, Goleta, Carpinteria


Worksheets

Ausn Lampson, NMLS #517060

1332 Anacapa St. Ste. 110 ¨ Santa Barbara, CA 93101

O: 805.335.8200 ausn@ausnlampson.com

www.ausnlampson.com


Notes:


Moving Checklist

Two Months Prior to Moving Day:

Six Weeks Prior to Moving Day:

Four Weeks Prior to Moving Day:

Three Weeks Prior to Moving Day:


Moving Checklist, ctd.

Two Weeks Prior to Moving Day:

One Day Prior to Moving Day:

Moving Day:

Delivery Day:


Pre-Closing Checklist

During your final walk-through of the home prior to closing, you have an opportunity to view

the home to verify that the home has been maintained in substantially the same condition as

when you made the offer. In addition, you must check to ensure that any agreed-upon repairs

have been made. Observe areas where large furnishings, carpets, and/or equipment were

covering walls or floors. Operate equipment considered to be part of the purchase and agreed

to be properly operating at the time of closing. You may want to bring a flashlight.


Security Checklist


Borrower Estimated Closing Costs

Interest Rate: Term Of Loan: ___________________

Items Payable in Connection With Loan

$___________________ Loan Origination Fee

$___________________ Loan Discount _____________%

$___________________ Appraisal

$___________________ Credit Report

$___________________

$___________________

Items Required By Lender To Be Paid In Advance

$___________________ ______ Days Interest @ $______ / Day

$___________________ Conventional PMI/FHA Up-Front MIP/VA Funding Fee

$___________________ Hazard Insurance Premium

$___________________ Property Taxes

$___________________ HOA Dues

$___________________

Reserves Deposited With Lender

$___________________ Hazard Insurance ______ Months @ $______/month

$___________________ Mortgage Insurance ______ Months @ $______ /month

$___________________ Taxes ______Months @ $______/month

Title Charges

$___________________ Closing or Escrow Fee

$___________________ Loan Tie in Fee

$___________________ Doc Prep

$___________________ Notary

$___________________ Title Insurance

$___________________ Endorsements

$___________________ Sub Escrow

$___________________ Escrow Pad

Government Recording & transfer Charges

$___________________ Recording Fees

$___________________ City/County Tax/Stamps

$___________________ State Tax/Stamps

Loan Fees

Prepaid

Title/Escrow


Loan Choice


Loan Choice


Loan Choice


Estimated Tax Write-Off

Worksheet


Loyalty Agreement

Ausn Lampson, NMLS #517060 • Sr. Mortgage Consultant

We are excited to be on your team towards achieving homeownership!

We work hard to help you achieve your mortgage needs, and believe that service & communicaon are the keys to

success. As your advocate, I strive to provide the best lending experience possible, so that you may be confident

during, and aer, your loan closing.

Please let us know ANY feedback or quesons throughout the process.

Your well‐being is our primary focus.

Team Lampson Obligaons:








Act as your fiduciary—keeping your informaon confidenal, and always working in your best interest

Do our best, always, to provide outstanding customer service

Communicate consistently & effecvely throughout the loan process, including Tuesday Update Calls and Friday

Email Reviews

Provide and explain any and all financial opons available to you based on your personal parameters & needs

Respond to all inquires in a mely fashion, while priorizing me sensive maers

Be on top of me frames to stay on track for closing

Relate true and accurate closing costs and funding requirements

We will be there for you throughout the enre purchase process to answer any quesons you might have.

Client Obligaons:






Advise of any changes in your parameters, meframes or needs

Understand that issuing a pre‐approval leer is our commitment to you, and we ask for your commitment to us in

return

Comply with me frames needed to successfully & mely close your transacon

Ask quesons! Never hesitate if clarificaon or help is needed

Be open & honest! Your home and your life are unique to you; let us help by providing soluons and a pathway to

success. The more we know, the beer we can assist.

We commit to excellence in assisng you on your path to homeownership, and ask for cooperaon and honesty in

return. A smooth transacon takes a team; we are honored to be on yours to successfully navigate today’s real estate

market.

NAME & DATE

NAME & DATE

Ausn Lampson, NMLS #517060

Sr. Mortgage Consultant


Thank you for taking the time to read this book!

I am excited to help you on your journey to homeownership. Whether or not this is

your first me, my team and I look forward to taking care of you now ‐and for all

your future home financing needs. We are here every step of the way! If you have

any quesons, please reach out at any me.

Even aer your loan closes, we will be here to assist with any quesons or

opportunies as they arise. We know you have choices, and it is an honor to serve.

The highest compliment we can receive is for you to refer us to your friends &

family. We want to earn the right to be your lender for life!

From my team, and my family, to yours ‐ we look forward to helping you find your

way home!

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