Working with ESL

The role of the ESL Mortgage Origination Counselor is to help you wade through all the various mortgage options and products available and to recommend what's best for you. ESL Mortgage Origination Counselors have extensive experience at quickly finding the right program to meet your needs. Meet our Mortgage Origination Counselors.

The major factors for determining the size of your mortgage are:

Income. Your income (gross monthly income) will determine how much of a mortgage amount you can afford. A guideline that most lenders use is no more than 28 percent of your gross monthly income should be used for principal, interest, taxes and insurance (PITI). This is only a guideline. Income can be from many different sources but must continue for three more years in order for it to count. Full time jobs, part-time jobs, social security or retirement income, distributions from investment accounts and IRAs are all eligible sources of income. Even income from regular seasonal work can be considered. Income from alimony, child support and separate maintenance need not be revealed if you do not want that income considered as a basis for repayment of the mortgage.

Credit. ESL will pull a credit report and review it with you. If the report shows any questionable history (for example, being late on a payment) you will be asked for an explanation. In some cases, a written explanation will be requested. The number of open lines of credit and installment loans will be reviewed to determine your debt load. The required monthly payment on each of these loans will be compiled along with your proposed monthly mortgage payment (PITI) to determine your debt ratio. If the debt ratio is considered too high (too much of your monthly income is being used to pay debts), the ESL Mortgage Origination Counselor will recommend a course of action to get your debt load (and ratio) lower. If you are a previous homeowner, the repayment history of your previous mortgage will be of great importance. Most lenders want to see an excellent mortgage repayment history. Maintaining a good credit score, as you can see, is very, very important.

Cash available to close. Even though you've saved money for the down payment, you'll still need funds for the closing. These include property tax escrows, prepaid interest (mortgage interest calculated from the day of closing to the end of the month), mortgage insurance (if applicable), a property insurance binder (homeowner's insurance), flood insurance binder (if applicable), attorney's fees - plus any other funds agreed upon between you and the seller. This can amount to a lot of money.

Your ESL Mortgage Origination Counselor will give you an estimate and look at the amount of money you have available to date. If you appear to be short, they will recommend a course of action which can include:

1. A gift from a parent or immediate family member.
2. Saving the amount before closing.
3. Borrowing funds from your 401(k).

Try our Mortgage Closing Cost Estimator to get an idea of how much cash you'll need.

Appraisal. When you apply for a mortgage, ESL will order an appraisal to determine the market value of the property you wish to purchase. The appraised value will support the fact that you are paying a fair price for the property. An appraiser (certified in the state you are purchasing the property) will receive a copy of the purchase offer and visit the property. They will check the size, condition and special features of the home and compare them to at least three other properties that have been recently sold nearby. The appraiser then determines the market value.

Your loan-to-value Ratio, (LTV), the loan amount versus the purchase price or appraised value, whichever is lower, is then calculated. If your LTV is over 80 percent, mortgage insurance (MI or PMI) will be required.

Mortgage insurance or private mortgage insurance is provided by a non-government insurer to protect lenders against loss if the borrower defaults. It must be paid by the borrower until the LTV is at or below 78 percent of the original appraised value.

Next, you'll want to select the mortgage product that's right for you.

Questions about an ESL Mortgage? Call an ESL Mortgage Origination Counselor at 585.336.1502 or 800.352.6669. Or submit a request on line and we'll call you back!