Road to Homeownership by loanDepot

Road to

Homeownership

Table of Contents What to Expect During Your Home Purchase . . . . . . . . . . . . . . . 3

Introducing Pre-Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Collecting Your Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 loanDepot’s Mortgage Menu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Make the Leap to Owning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Time to Turn to the Pros . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 What to Expect During Your Home Search . . . . . . . . . . . . . . . . . . . 11 Know Before You Owe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Top Five Mortgage Don’ts While in Escrow . . . . . . . . . . . . . . . . . . . 13 Looking Towards the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

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What to Expect During

Your Home Purchase We’re committed to a simplified experience. loanDepot understands that purchasing your new home is a complex process. That’s why we’re committed to making your home financing experience as easy as possible. By following these steps below, you could soon enjoy success as a homeowner. 1

Pre-Approval + Application Process

We will arrange for the final documents to be delivered to your closing appointment for your signature.

Complete your digital loan application and prepare the following documents for your Loan Consultant: Copies of the last two years’ W-2 forms for all applicants Copies of Social Security cards and driver’s licenses

Last two months’ bank statements (all pages) on all open accounts

Finalizing Your Mortgage Plan

Once your offer on a home has been accepted, it’s time to finalize the details of your mortgage. You will gather any remaining documents required to obtain final loan approval. Your closing date will be shared among all parties.

Notification of Your Loan Approval

You’re well on your way to owning your new home! Your Loan Consultant will be contacting you to share the good news upon loan approval. 3 Road to Homeownership

Cash to Close Funds

Be sure to arrange either a cashier’s check, money order or wire in advance of closing. If signing in person, don’t forget to bring your driver’s license, proof of homeowner’s insurance and any other required documents.

Selecting Your Realtor®

A real estate professional will be able to assist you in determining your wants and needs. His or her expertise will be helpful in writing the offer on your new home in a manner that is most beneficial for you.

Closing on Your Home

Your closing appointment is typically held at a location convenient for you. Here, you will sign all the documents related to purchasing your new home, including final loan documents.

One full month’s pay stubs, showing year-to-date earnings

If commissioned or self-employed, copies of the last two years’ tax returns

Final Documents for Your Loan

The Funding of Your Home

Your loan will fund through us, and your keys will be provided to you.

Congratulations! You are now a homeowner.

Introducing

Pre-Approvals Make your offer stand out. With loanDepot’s pre-approval1, you can become fully credit-approved and underwritten in advance, stand out among other buyers, and increase your chances of a more timely 2 and successful closing. This is especially helpful when you need to move quickly in markets where inventory may be tight.

Eligibility Purchase loans only

Pre-Approval Issued

Loan Underwritten

Commitment Letter Issued 3

Property Identified

Loan Fully Disclosed

Loan Processed

Loan Disclosed, Re-Approved, Sent to Closing

Conforming and non-conforming loan amounts Borrower must return all disclosures and submit credit documents upfront

Get pre-approved today! 1. A pre-approval is preliminarily approved based only upon the information we have received to date from you. All information must be verified prior to the issuance of a final loan approval. This is not an offer or commitment to lend nor does it guarantee a final loan approval. A final loan approval is subject to verification of the information you have provided and full underwriting review by loanDepot. 2. Closing times may vary depending on the terms & conditions of the loan. 3. Subject to property address, appraisal, and any other applicable conditions as determined by underwriter.

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Pre-Qualification vs. Pre-Approval Pre-Qualification

When a lender performs a quick check to determine generally how large of a home loan the buyer can afford. Essentially, when a buyer is pre-qualified, we notify them—as their lender—about how much they would most likely be approved to borrow.

Pre-Approval

When the lender verifies and examines the borrower’s debt, income, savings, assets and credit report to ensure the borrower can repay the loan amount. Pre-qualification is somewhat of an educated guess of the buyer's purchasing power—pre-approval is a preliminary approval for the loan amount you are eligible to borrow.

Benefits of a Pre-Approval Budget

A pre-approval instantly lets you know your actual budget. Knowing what you can afford from the start helps you and your real estate agent better focus your efforts to keep within your financial comfort zone.

One Step Ahead of Other Buyers

Being pre-approved provides you with an advantage over other buyers because it assures the seller that you are a serious contender and have access to the loan necessary to back your offer. Your lender provides you with a letter demonstrating that you are pre-approved for a certain amount of money, which your Realtor presents with your offer.

With loanDepot’s

Pre-Approval

you’ll never again go to an open house wondering if you can afford it.

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Collecting

Your Documents The following information/documentation will be required to complete your loan application. Here’s a handy checklist to help you start collecting these important items.

Your Residence History

Savings, Checking + Investment Accounts

Previous addresses for the last two years and how long you lived at each location

Checking/savings accounts: Two most recent monthly statements

If you currently rent, your landlord’s name, address and telephone number to verify the most recent 12-month rental history

Stocks/mutual funds: Two most recent monthly statements

Your Employment History Names and addresses for all employers in the last two years

401K/retirement accounts: Most recent quarterly statements

Miscellaneous (If Applicable ) Complete bankruptcy papers, including discharge

Dates of employment for each employer

Complete divorce papers

Letter explaining any gaps in your employment in the last two years

Driver’s License

Pay stubs for the last 30 days Most recent two years W-2s Most recent two years 1040s Year-to-date profit and loss statement and current balance sheet (if self-employed) Award letter and copy of most recent check for retirement, Social Security or disability income (if applicable)

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Additional Information (If Refinancing) Copy of most recent property tax bill Copy of most recent homeowner’s insurance bill Copy of most recent mortgage statement or coupon book

loanDepot’s

Mortgage Menu Conventional

FHA

Conventional loans are the most common type of mortgage. They are best for borrowers with strong credit scores and a stable income.

FHA loans are more suitable for first-time homebuyers as well as buyers with low credit scores. They’re typically a more affordable, government-backed financing option.

Features: • Attractive interest rates and lower costs for those who qualify • No PMI with 20% down • Down payment as low as 3% • Can be used for second homes and investment properties • Broken down into “conforming” and “non-conforming”1

Features: • Credit score as low as 520 • Down payments as low as 3.5% • 1-4 unit owneroccupied residences • Can be used for purchase, rate/term refinance, and cash out refinance

VA2 VA loans are primarily for active-duty military service members, veterans, and surviving military spouses.

Features: • No down payment • Flexible interest rates • No PMI • Both fixed and adjustable types • Limits on closing costs • Penalty-free pre-payment

• Both fixed and adjustable types

1. A conforming loan is a mortgage loan that conforms to Fannie Mae and Freddie Mac guidelines. A non-conforming loan will typically be in reference to a Jumbo loan, however any loan product that does not conform to Fannie Mae and Freddie Mac guidelines is considered non-conforming. Rates, terms and availability of programs are subject to change without notice. 2. Subject to VA Eligibility. 3. Does not allow for luxury or recreational improvements. Additional restrictions may apply.

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203K3

Jumbo

203k loans are used for doing renovations or repairs on a home. FHA 203k Limited loans are used to finance non-structural repairs under $35,000, while FHA 203k Standard loans are used to finance major remodels in excess of $35,000.

Jumbo loans are larger than the conforming limits on conventional loans. These are best for those looking for luxury homes or residences in high-cost markets.

Features: • Down payment as low as 3.5% • Both fixed and adjustable types • Minimum credit score of 580 • No minimum renovation cost • Allowed on 1–4 unit properties

Features: • Down payment as low as 5% • No mortgage insurance • Loan amounts up to $3 million • Both fixed and adjustable types

If you’re someone who was affected by a bankruptcy, foreclosure, or other non-satisfactory closures, you may have already met the waiting period for these events to not impede your loan approval process. Use this summary guide to assess whether you’ve met the required wait times.

Event

FHA Chapter 7: 2 years, min. 12 months with extenuating circumstances* based on verified discharge date

Bankruptcy

Foreclosure

Short Sale (also known as Pre-Foreclosure Sale)

Deed-In-Lieu of Foreclosure

Loan Modification on Other Real Estate Holding (Non-Subject Property)

Chapter 13: Min. 12 months with satisfactory payment history & court approval & evidence that the situation which lead to the bankruptcy is not likely to reoccur

Chapter 7: 2 years, min. 12 months with extenuating circumstances* Chapter 13: Min. 12 months with satisfactory payment history & court approval

USDA

Chapter 7: 3 years, over 12 months with documented acceptable extenuating circumstances* Chapter 13: Completed minimum of 12 months, or if in progress, proof of minimum 12 months of payments made on time and bankruptcy court approval.

Fannie Mae

Freddie Mac

Chapter 7 or 11: 4 years from discharge/ dismissal date or 2 years with extenuating circumstances*

Chapter 13: 2 years from discharge date or 4 years from dismissal date

More than one BK within the past 7 years: 5 years from the most recent dismissal or discharge date

7 years 3 years with restrictions & with extenuating circumstances*

Foreclosure in BK: apply BK wait period if the documentation verifies mortgage discharged in the BK

(DU Approval/ Eligible Findings Required)

(LP Accept Recommendation Required)

3 years 12 months with documented acceptable extenuating circumstances*

2 years Min. 12 months with extenuating circumstances*

3 years Over 12 months with documented acceptable extenuating circumstances*

3 years No wait period if: borrower paid mortgage & installment debt on time for 12 months prior to short sale - or Must be documented acceptable extenuating circumstances* Min. 12 months

2 years No wait period if: the borrower mortgage payment history was not affected before the short sale - or If manual underwrite: Min. 12 months

3 years Over 12 months with documented acceptable extenuating circumstances*

4 years 2 years with extenuating circumstances*

3 years 12 months with documented acceptable extenuating circumstances*

2 years No wait period if: the borrower mortgage payment history was not affected before the short sale

3 years Over 12 months with documented acceptable extenuating circumstances*

4 years 2 years with extenuating circumstances*

Satisfactory 12-month mortgage rating for modified loan with AUS approval

Satisfactory 12-month mortgage rating for modified loan; VA does not provide guidance for loan modifications, but underwriter is to provide due diligence and prudent underwriting

Satisfactory 12-month mortgage rating for modified loan; USDA does not provide guidance on loan modifications but relies on the underwriter to use due diligence and apply prudent underwriting

No wait period, subject to DU messaging

No wait period, subject to LPA Accept

Note: Buyer must demonstrate re-established satisfactory credit per guidelines. Guidelines are for purchase transactions only. Additional underwriting requirements for loan approval may apply. Not all buyers will qualify. *Extenuating circumstances: must be acceptable and documented.

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Make the

Leap to Owning There’s no denying that renting offers greater short-term flexibility when it comes to moving. However, you may reach a point when the benefit of renting is no longer supportive of your lifestyle and goals. If you’ve been considering a place of your own, here are some reasons you may be ready for homeownership:

Affordability

It is becoming increasingly cheaper to own than rent in many regions.

Forced Savings

Building equity in your home is a ready-made savings plan.

Tax Breaks

Property taxes and interest can be itemized for tax deductions.

Predictability

Purchasing a home may help you control your monthly housing expense.

Freedom

Homeownership offers the freedom to create the living environment you’ve always wanted.

Rent Per Month

Rent After 5 Years

Rent After 10 Years

Rent After 20 Years

$700

$42,000

$84,000

$168,000

$800

$48,000

$96,000

$192,000

$900

$54,000

$108,000

$216,000

$1,000

$60,000

$120,000

$240,000

$1,500

$90,000

$180,000

$360,000

$2,000

$120,000

$240,000

$480,000

$2,500

$150,000

$300,000

$600,000

$3,000

$180,000

$360,000

$720,000

$3,500

$210,000

$420,000

$840,000

Rent is continuing to rise while mortgage rates are still low. Owning a home could be more affordable than you think!

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Time to

Turn to the Pros You know how much you can afford, and you know where you’d like to look. Now it’s time to call in the professionals to help you navigate your home purchase.

Working with Your Real Estate Agent for Expertise and Guidance Finding an agent is crucial in the hunt for your new home. Agents have access to MLS listings and can search all the homes available based on your location, needs and criteria. They can also plan home tours, and help you negotiate and offer guidance when you need it. Once you're pre-approved, I can help you find the perfect real estate agent. I’ve worked with some of the best agents in your area, and would be happy to find the perfect fit for you.

You Should Discuss the Following with Your Real Estate Agent How long have you worked in real estate? Is this your full-time job? How well do you know the neighborhoods I’m looking at for my new home? How many homes have you found for your clients in the past year? Have you had any client complaints or issues? If so, how did you resolve them?

Also, it’s helpful to establish communication guidelines with your real estate agent. Can you call them? What hours? How about text or email? Buying a home can sometimes come down to critical timing. The main goal, however, is to make sure your agent is someone who knows more about the area and the market than you do.

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What to Expect During

Your Home Search Educate and Prepare

You have done your home and neighborhood research, assembled your team, and you know just how much home you can afford. You’re ready to hit the streets and find your new home!

Priorities

It’s important to set out a list of priorities. This will help your real estate agent zero in on just what you are looking for. It is okay if your priorities change, but it’s important to keep your agent updated.

Must What do you need in a home? What is your minimum number of bedrooms or bathrooms?

Maybe What do you have wiggle room on? Do you need more than one bathroom right now or could that be a project down the road? You love to cook, but could you live with a smaller kitchen?

No Way What is out of the question? Are you against a house without a basement? Will you only consider a house with a backyard?

These don’t have to be set in stone as your hunt goes on, but it is important for your agent to at least know your “Musts” and your “No Ways.” It helps tremendously to know what you can be flexible on and what is a deal-breaker.

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Do Your Research

While your real estate agent will aid you in your home search, it’s important to have a general idea of the housing market in your area and the type of home you’re looking for. Do some research online before meeting with your agent to get a better understanding of price ranges in your ideal neighborhoods. Being able to communicate to your agent what you need and what you can afford will save both of you time and energy, and will make the home hunt that much more enjoyable. It’s no fun going to see a home you’d never want in the first place! You should also investigate what you’ll be paying for insurance and taxes on your new home. Contact your insurance agent for an estimate and talk to your tax professional to understand how owning a home will affect your tax payments.

Location, Location, Location

Location is key when choosing a home, and is where you should begin your search. Before looking at an area, consider the below points. Your agent should be aware of your considerations as well. • How far from your work is the home? • What is the traffic like, especially during rush hour? • Are you close enough (or too close) to convenient shopping and retail areas? • What is the proximity to medical care? • What is the quality of neighborhood schools? Even without children, this can affect the resale value of your home in the future. • How have homes been valued over time in the area? Are they holding their value?

Know Before

You Owe As you figure out your home budget, it’s key to consider all the factors that will make up your mortgage payment. Here we share four important elements, known as PITI, which affect the amount you will pay each month:

P Principal

Amount borrowed to buy your home

Interest

Taxes

Insurance

Percentage of principal based on interest rate

Payment goes toward

Escrow Account

Payment goes toward

Your House

Lender

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A lender-managed account that pays recurring costs from the money held here

Local Gov’t Tax Office

Insurance Company

Top Five Mortgage Don’ts

While in Escrow Don’t Move Money Around Make sure you keep the money where it is once you get into escrow. If you would like to transfer money from one account to another, you’ll want to make sure you first contact your Loan Consultant.

Don’t Apply for New Credit Any new credit inquiry or debt will show up on your final credit report. If discovered just prior to your closing, it can create delays, change your financing terms, or in some cases, even prevent you from obtaining the loan.

Don’t Pay Bills Late You don’t need to pay off all your balances before closing; however, it’s crucial that you continue making all payments on time, even if only the minimums.

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Don’t Switch Jobs Changing or quitting jobs before or during the loan process may slow down your loan approval, especially if the job is in a different line of work or at a lower rate of pay. It’s best to hold off with any career changes until post-closing.

Don’t Make Major Purchases While it may be tempting to start furniture or appliance shopping, it’s always best to refrain from any big purchases until after the closing. Since your credit will be checked right before funding, you don’t want any purchase to raise concerns and jeopardize your transaction.

Looking Towards

the Future Owning a home is a great way to invest in your personal wealth and financial wellbeing. But it is important to remember there is no landlord to fall back on. You are personally responsible for all the extra costs owning a home includes like plumbing and roof repairs, interior updates and appliances, and increases in taxes and/or insurance. Setting money aside for these costs will make sure there are no financial emergencies in your future.

Remember These Details You will receive several important documents at closing. Keep these in a safe and handy place. You want to be able to access them in case any questions about your home arise. Be sure to stay in touch with your Loan Consultant. Should you seek to move homes or refinance your existing mortgage, he or she will be able to help you find the best financing solution for your needs. As a new homeowner, you’ll realize quickly that it takes a lot of work to protect your biggest investment. Create an annual home maintenance plan or checklist to help you stay on top of projects that should be completed throughout the year, whether it be changing air filters or cleaning gutters.

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About loanDepot

Even though our headquarters are tucked away in Southern California, our reach and dedication extend nationwide! With 250+ retail branches, we are your local experts when it comes to either purchasing or refinancing a home. Contact me with any mortgage-related questions, as I’m here to be of service to you.

This information is not intended to be an indication of loan qualification, loan approval or commitment to lend. Loans are subject to credit and property approval. Other limitations may apply. Rates, terms and availability of programs are subject to change without notice. loanDepot.com, LLC does not provide legal, investment, accounting or tax advice, please consult a licensed attorney, financial planner, CPA or tax professional on these ‘tips’ and any information or opinions contained herein. loanDepot.com, LLC, 26642 Towne Centre Drive, Foothill Ranch, CA 92610. All rights reserved. NMLS #174457 (www.nmlsconsumeraccess.org) AZ: Mortgage Banker 0911092. CA: Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act CRMLA 4131040. CO: Colorado Department of Real Estate under a Mortgage Company Registration. CT: Connecticut Department of Banking as a Mortgage Lender #ML-174457. FL: Florida Lender License number MLD903. GA: Georgia Residential Mortgage Licensee #24020. IL: Illinois Residential Mortgage Licensee #MB.6760709. MA: loanDepot is a Mortgage Lender in Massachusetts License #MC174457. MD: Licensed as a Mortgage Lender by the Commissioner of Financial Regulation #06_18928. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota law. MS: Licensed by the Mississippi Department of Banking and Consumer Finance. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed Mortgage Banker – NJ Department of Banking and Insurance. NY: Licensed Mortgage Banker - NYS Department of Financial Services No. 109061. OR: License # ML-4972. PA: First mortgage banker by the Department of Banking. RI: Rhode Island Licensed Lender. TN: under Mortgage License No. 110371; VA: mortgage lender and broker by the Virginia State Corporate Commission #MC-5431; WA: licensed by the Department of Financial Institutions under the Consumer Loan Act#CL-174457. Also licensed in: AK, AL, AR, DC, DE, HI, IA, ID, IN, KS, KY, LA, ME, MI, MO, NC, ND, NE, NM, NV, OH, OK, SC, SD, TX, UT, VT, WI, WV and WY. (111221 50967v8)