Please note that the information above is not intended to be any decision of, or commitment to, any loan type or amount of loan for which one may qualify with
any financial institution. The accuracy of the information contained in this advertisement is not guaranteed. Please consult a loan professional to learn more about
your eligibility for and availability of a particular loan product.

About PrimeLending


PrimeLending, A PlainsCapital Company, is one of Texas’ largest Mortgage Bankers.
Established in 1986 by Roseanna McGill, PrimeLending has secured the respect of
mortgage professionals nationwide.

Since its inception, the company has grown from producing $80 million annually in
mortgage loans with a staff of 20 to over 600 employees originating $1.9 billion in
production in 2007. This growth is one reason why PrimeLending was named the #1
Residential Mortgage Lender in 2003, 2004, and 2005 by the Dallas Business
Journal. In addition to the corporate office located in North Dallas, PrimeLending
has expanded to over 50 branches around the United States including Arizona,
Ohio, California, Nevada, Washington, Colorado, and Missouri. Our company’s
strength allows us the ability to close loans in 47 states.

Our goal is to provide unsurpassed quality service and support throughout the
entire mortgage process for every client. The in-house processing, underwriting,
and closing departments simplify and accelerate the loan process. Our experienced
mortgage professionals are dedicated to making every customer’s home loan
experience, a positive and successful one.

PrimeLending takes pride in being a premier lender that offers a wide array of loan products which cater to the specific needs of
each individual. Our mortgage loan options include, fixed rate conventional mortgages, adjustable rate mortgages, JUMBO loans,
FHA and VA loans, permanent construction financing, relocation programs and refinances.

Core Values

Examples of honesty and integrity

Providers of the highest quality customer service

Encouragers of individual initiative and professional growth

Professionals committed to quality: Hiring, training, processes and efficiencies

An operating model of team work

Core Purpose

Our purpose is to create and foster growth

in an environment which offers our employees the best opportunities and support

in order for them to provide creative professional mortgage services

to their customers.



Leadership


Roseanna McGill

CEO, Founder

As CEO and Founder of PrimeLending, Roseanna McGill continues to realize her lifelong dream as
a successful entrepreneur and offer her unsurpassed leadership to the mortgage professionals of
PrimeLending. The small mortgage business that Roseanna founded in 1986, now backed by the
strength of PlainsCapital Bank, operates in 47 states through its corporate office and over 50 branch
office locations nationwide. The phenomenal growth and success that PrimeLending has experienced
is a direct result of Roseanna’s leadership and desire to capitalize on the power of people. She has
used her own influence to ensure that the company continues to recognize core values: show respect,
humility and integrity, and learn from challenge and change. Recognized on numerous occasions
by Dallas Business Journal as #1 Residential Mortgage Lender, PrimeLending will continue to excel
as an industry leader and build on Roseanna’s vision for even greater success in an ever-changing
environment.


Todd Salmans

President, COO

Todd Salmans, President and COO of PrimeLending, joined the company in January of 2006. In this
capacity, Todd oversees the daily business operations of the company. Todd has more than 30 years of
mortgage lending experience, holding positions in sales and management for top regional and national
mortgage lenders. His diverse leadership style is one that demonstrates the ability to connect with people
and inspire them to work together to accomplish extraordinary things. Todd is a product of a unique
culture that continues to drive the company’s performance. He firmly believes that in order to be truly
great, a company must be fused together at its core by people with a set of shared, unshakable values,
making him a distinguished industry leader.



Management


Scott Eggen

SVP Secondary Marketing

Since 2001, Scott Eggen has played a vital role in the success of PrimeLending, serving as Senior Vice President of Secondary
Marketing. Scott’s broad background in finance and secondary marketing allow PrimeLending to maximize their position in
the industry by offering a full menu of mortgage products and services. Under his leadership, the company realizes the benefit
of a visionary who studies and senses the pulse of the industry and utilizes his expertise to improve execution and increase
profits. His ability to communicate market updates and trends helps PrimeLending maintain a strong position in the mortgage
banking industry.


James Iley

SVP Net Branch Production

Since 2002, James Iley has served as Senior Vice President of Net Branch Production for PrimeLending. His role encompasses
the daily management of net branch production and business operations. James understands the multi-facet process
of recruiting, on-boarding and maintaining profitable net branches. The positive results and methods developed and
implemented under his leadership have made PrimeLending an authority in the management of successful net branch
operations. With over 18 years in the mortgage industry and net branch production, his primary focus, James is considered
an expert in this sector of the mortgage industry.


Dawn Robinson

SVP National Production

As Senior Vice President of Retail Production, Dawn Robinson oversees the retail branch mortgage operations for PrimeLending.
Since joining the company in 1996, Dawn has demonstrated her leadership skills and expertise to empower the PrimeLending
retail production team. Her vast knowledge of the mortgage industry has proven to be the key to effectively managing
profitable mortgage branch operations. Her desire to promote accountability, while offering “hands on” leadership, has helped
the PrimeLending retail production team achieve their goals and the public recognition they deserve. Dawn’s goal is to continue
contributing to the success of PrimeLending, as they pursue and maintain a dominant presence in the mortgage industry.



Locations

Ever expanding, PrimeLending locations span from coast to coast. With this national representation, we are well equipped
to provide loans in 47 of the 50 states. We have a constant vision on the horizon.

This forward way thinking spreads into every area of our organization. We look for and develop new products with a
goal to meet every client’s need. New strategic partnerships are formed and developed daily with a win/win approach.
PrimeLending is always excited to welcome another branch into our organization which brings more families into their
homes and makes our family a little bit bigger and better.

We are definitely glad and proud to be where we are, but we are thrilled and excited about where we are going.



Frequently Asked Questions... (part one)

1. What is Prequalification?

A process by which a potential homebuyer qualifies for a home mortgage before making an offer on a house. A lending institution reviews
documentation to determine if they can make a loan in the specified amount to the person it is prequalifying.

2. My real estate agent recommended that I get a pre-approval letter. What is a pre-approval letter, and why should I get one?

The lender gives a commitment letter that states the lender agrees to provide a mortgage to a homebuyer based upon certain criteria being met.
Commitment letters help you set realistic goals while you’re house-hunting, provide the same negotiating ability as a cash buyer and enable you
to move quickly once the perfect home is found.

 

3. When mortgage lenders refer to “PITI” what are they referring to?

PITI is principal, interest, taxes, and insurance: the components of a monthly mortgage.

4. When my loan officer asks me if I want to waive escrows, what exactly does this mean?

When you waive escrows, you take the responsibility of paying your taxes and insurance rather than having them included in your monthly
payment. Waiving escrows may add a small fee to your closing costs. You can only waive escrows if your loan program allows for this such as
conventional loans that have a loan value of 80% or less on your first lien.

5. What does my mortgage lender mean by points or origination fee?

One point is equal to one percent of the loan amount. Points and origination fees are used to buy down the interest rate. Origination fees help
pay the cost for the lender to do the loan.

6. How does the annual percentage rate differ from the interest rate?

The APR (Annual Percentage Rate) differs from the interest rate as it is the financing rate calculated with the finance charges over the life of the
loan. The interest rate calculates the principal and interest payment for the loan.

7. How do I know what my interest rate will be?

You discuss this with your loan officer who advises you of the rates available for your loan product. You then “lock” the rate and discount points
with your loan officer.

8. Do I need to have a certain amount of money left after I buy my home?

Reserve requirements are program specific and will be gone over with you by the Loan Officer.

9. What is the Debt-to-Income Ratio?

This is a ratio used by lending institutions to assist in determining whether a person is qualified for a mortgage. Debt-to-Income is the total
amount of debt, including credit cards and other loans, divided by total gross monthly income.

10. What is the difference between a FHA and a VA loan?

An FHA loan is a loan guaranteed by the Federal Housing Administration. FHA issues specific guidelines for mortgages. A VA loan is a loan
guaranteed by the Veterans Administration. To obtain a VA loan, the borrower must have served in the Armed Forces for a specific time period.



Frequently Asked Questions... (part two)

11. What is Private Mortgage Insurance (PMI)?

PMI is insurance required to help cover the lender expenses should the borrower default on the loan. It is required on certain loan products and LTVs.

12. Do I always have to have PMI on my loan?

PMI can be eliminated by having a down payment of at least 20% or by obtaining a second lien with an 80-10-10 or an 80-15-5 loan program.

13. Will I have two separate payments if I have a second lien?

The second lien is often from a different lender than the first lien. Therefore, borrowers with a second lien will make two separate payments each
month - one on the first lien and one on the second lien.

14. What does my lender mean by “paper trail?”

A “paper trail” is composed of the copies of all paperwork necessary to prove a financial transaction: copies of all checks, deposit slips, loan
paperwork, forms to liquidate assets, etc.

15. Why did I receive a Truth-In-Lending?

Truth-In-Lendings are sent to all borrowers after a loan application has been made. The Truth-In-Lending Act is a federal law requiring lenders to
reveal all of the terms of a mortgage. The APR that appears on your Truth-In-Lending will be higher than the interest rate on your Real Estate Lien
Note, as it is calculated based on term and finance charges.

16. Will I get a copy of my credit report and appraisal?

You may obtain a copy of your credit report through the credit bureaus. You will receive a copy of your appraisal at your closing.

17. What inspections are required by the lender?

The lender requires an appraisal on most transactions. A clear termite report is required on government transactions. If the appraiser recommends
repairs or if repairs are mentioned in the contract, the lender will require that those repairs be done before closing. The appraiser then will perform
a final inspection to assure that the repairs were completed. If the termite report recommends treatment, treatment is required. We will need a
receipt showing the name and amount of chemicals used and a clear termite inspection.

18. When will I find out what my final figure is for the total costs to close?

The settlement statement (HUD-1) is prepared by the title company according to closing instructions prepared by the lender. This is available 24
hours prior to closing by contacting the title company.

19. Where do I go for closing?

Your closing will take place at the title company. The title company name and address appears in your sales contract. Call the title company to
schedule a time for your closing.

20. Where do I send my first mortgage payment?

Refer to your “First Payment Letter” in your closing documents to determine where to send your first mortgage payment. If you receive a
statement from your new lender prior to the due date of your first payment, send your payment to the new lender. Otherwise, send your payment
to PrimeLending, a PlainsCapital Company as detailed in your “First Payment Letter.” Remember to include your loan number on your check.



Things to Consider Before Buying a Home

For many people, buying a home is the single biggest investment they will make in a lifetime.

The so-called “right time” is different for everyone.

Before making a decision to buy a home, ask your lender to help you answer the following questions.

Can You Qualify for a Mortgage?

Determine your debt-to-income ratio. If a loan program uses a 28/36 qualifying
ratio, it means you are allowed to spend no more than 28% of your gross income
on monthly mortgage payments, and no more than 36% on total debt. This
includes debt such as car and school loans, credit cards, child support and alimony.
If a person earns $60,000 per year, their monthly gross income is $5,000. Under
the 28/36 guidelines, their maximum monthly mortgage payment should not
exceed $1,400, while their totally monthly debt should not exceed $1,800.

How Much Home Can You Afford?

Down payments are generally paid in cash, due at closing, and are based on a
percentage of the selling price of the home. You can save money — between
$20 to more than $100 a month — if you can make a down payment of 20% or
more and avoid the cost of mortgage insurance. If you don’t have 20% to put
down on a home, don’t worry. There are many affordable mortgage programs
available, including loans that require little or no down payment. In addition,
some veterans, active-duty military personnel and reservists are eligible for zero-
down-payment programs.

How’s Your Credit?

All lenders require a credit report that contains various personal financial data, including loan payment information,
bank and credit card accounts and more. If you are interested in obtaining a copy of yours, you can call any one of the
many credit bureaus throughout the United States.



How Your Credit Score is Derived

Developed in 1956, a Fair Isaac score is a three digit number ranging

from 300-850, according to the following risk factors:

v Payment History (35% of score)

 • Payment information on many types of accounts

 • Public record and collection items

 • Details on late or missed payments

 • Specifically, how late they were, how much was owed, how recently they occurred and how many there are

v Amounts Owed (30% of score)

 • Amount owed on all accounts

 • Amount owed on different types of accounts

 • Whether you are showing a balance on certain types of accounts

 • How much of the total credit line is being used

 • How much of installment loan accounts is still owed

v Length of Credit History (15% of score)

 • How long your credit accounts have been established, in general

 • How long specific credit accounts have been established

 • How long it has been since you used certain accounts

v New Credit & Inquiries (10% of score)

 • What kinds of credit accounts you have and how many of each

 • Total number of accounts you have

v Types of Credit (10% of score)

 • How many new accounts you have

 • How long it has been since you opened a new account

 • How many recent requests for credit you have made

Fair Isaac Resolution Resources Helpline (800) 777-2066



Documents Needed For All Loan Applications

ALL BORROWERS:

1. Copies of W-2’s for the last two years;

2. Copies of paycheck stubs for the last 30 days (most current);

3. Copies of checking and saving account statements for last three months (all
pages);

4. Copies of quarterly or semi-annual statements for checking, savings, IRA’s,
CD’s, money market fund, stock, 401k, profit sharing, etc.;

5. Copy of sales contract when ratified;

6. Employment history for the last two years (address any gaps of employment);

7. Residency history over the last two years, with name, phone number, address
and account number of Land or Mortgage Company. Rental property copies of
leases plus mortgage information.

8. Canceled earnest money check when it clears or corresponding bank statement,
if applicable;

9. Commissioned or bonused income -- if 25% or more of base, must have tax
returns;

10. Check for the expense of appraisal & credit report;

11. Refinance Copy of Note, Deed of Trust, Settlement Statement, Survey, and
Insurance information;

12. Any assets used for down payment, closing cost, and cash reserves must be
documented by a paper trail;

13. If paid off mortgage in the last 2 years, need copies of HUD1;

14. Copy of drivers license for applicant and co-applicant.

SELF-EMPLOYED BORROWERS:

1. Copies of most recent 2 years tax returns (with all schedules including k-I’s if
applicable);

2. Copy of current profit & loss statement and balance sheet;

3. Copy of corporate/partnership tax returns for most recent 2 year period if
owning 25% or more of company -- copies of W-2’s and/or 1099 forms.

DOCUMENTS WHICH MAY BE REQUIRED:

1. Relocation Agreement if move is financed by employer, i.e. buyout agreement
plus documentation outlining company paid closing costs benefits;

2. Previous bankruptcy, need copies of petition for bankruptcy and discharge, including supporting schedules;

3. Divorce Decree if applicable;

4. Documentation supporting moneys received from social security/retirement trust income, i.e. copies of direct deposit bank statements,
awards letter, evidence income will continue.

DOCUMENTS NEEDED FOR FHA/VA LOANS:

1. FHA: Copy of social security card and drivers license for each applicant and co-applicants;

2. VA: Original Certificate of Eligibility and copy of DD214 Discharge Paper;

3. VA: Name and address of nearest living relative



Mortgage Dictionary

Adjustable-Rate Mortgage (ARM)

A mortgage that permits the lender to periodically adjust the interest rate on the basis
of changes in a specified index.

Amortization

The gradual reduction of the mortgage debt through regularly scheduled payments
over the term of the loan.

Annual Percentage Rate (APR)

The measure of the cost of credit stated as a yearly rate; includes such items as the
stated interest rate, plus certain charges.

Appraisal

A written estimate or opinion of a property’s value prepared by a qualified appraiser.

Balloon Mortgage

A mortgage in which the borrower’s monthly payments are amortized over a longer
period than the actual term of the mortgage. As a result, at the end of the loan term,
the borrower much pay off the remaining balance with a single lump sum payment
or refinance the loan.

Cap

For an Adjustable-Rate Mortgage (ARM), a limitation on the amount the interest rate
or mortgage payments may increase or decrease.

Debt-to-Income Ratio

The relationship between a borrower’s total monthly debt payments (including
proposed housing expenses) and his or her gross monthly income; this calculation is
used in determining the mortgage amount that a borrower qualifies for.

Default

The failure to make a schedule payment or otherwise comply with the terms of a
mortgage loan or other contract.

Discount Point (or Point)

A fee paid by the borrower at closing to reduce the interest rate. A point equals 1
percent of the loan amount.

Equity

The owner’s interest in a property, calculated as the current fair market value of the
property less the amount of existing liens.

Escrow

An item of value, money, or documents deposited with a third party to be delivered
upon the fulfillment of a condition. For example, the deposit by a borrower with the
lender of funds to pay taxes and insurance premiums when they become due, or the
deposit of funds or documents with an attorney or escrow agent to be disbursed upon
the closing of a sale of real estate.

FHA Insured Loan

A loan that is insured by the Federal Housing Administration (FHA) of the U.S.
Department of Housing and Urban Development (HUD).

Lifetime Cap

For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate or
monthly payment can increase or decrease over the life of the loan.

Loan-To-Value Ratio (or LTV Ratio)

The relationship between the loan amount and the value of the property (the lower of
appraised value or sales price), expressed as a percentage of the property’s value. For
example, a $100,000 home with an $80,000 mortgage has an LTV of 80 percent.

Margin

For an adjustable-rate mortgage (ARM), the amount that is added to the index to
determine the interest rate on each adjustment date, as stated in the note.

Mortgage Insurance (MI)

Insurance that protects lenders against losses caused by a borrower’s default on a
mortgage loan. MI typically is required if the borrower’s down payment is less than
20% of the purchase price.

Paper Trail

Copies of all paperwork to cover the lender should the borrower default on the loan.
Depending on the lender, this may be required by the lender.

PITI

An acronym for the four primary components of a monthly mortgage payment:
principal, interest, taxes, and insurance (PITI).

Point -- See Discount Point

Prepayment Penalty

A fee that a borrower may be required to pay to the lender, in the early years of a
mortgage loan, for repaying the loan in full or prepaying a substantial amount to
reduce the unpaid principle balance.

Prequalification

A preliminary assessment by a lender of the amount it will lend to a potential
homebuyer. The process of determining how much money a prospective home buyer
may be eligible to borrow before he or she applies for a loan.

Principal

The amount of money owed on a loan, excluding interest. Also, the part of the
monthly payment that reduces the remaining balance of a mortgage.

Second Mortgage

A mortgage that has a lien position subordinate to the first mortgage.

Truth-In-Lending Act

A federal law intended to promote the informed use of consumer credit by requiring
disclosure about its terms and costs. Creditors are required to disclose the cost of
credit as a dollar amount (the finance charge) and as an annual percentage rate
(APR).

VA (or U.S. Department of Veterans Affairs)

A federal government agency that provides benefits to veterans and their dependents,
including health care, educational assistance, financial assistance, and guaranteed
home loans.



Keep Your Credit Clean

 Experian Equifax Trans Union

 www.experian.com www.equifax.com www.transunion.com

 1-888-397-3742 1-800-685-1111 1-800-888-4213

1. Review line-by-line: search for errors, omissions, duplications, “common name” errors.

2. Write out exactly what should be corrected and why - on disputed items, you are allowed to add 100 words or less to your reports.

3. Credit Bureaus have counselors who will help you.

4. Credit Bureaus are obligated by Federal Law to contact all creditors where mistakes were made. These firms must respond in writing within
30 days. Failure to do so obligates the Bureau to remove the disputed items from your records (Fair Credit Reporting Act of 1971).

5. Work out a “deal” with merchants that you owe.

6. Chapter 13 bankruptcies will stay on your record for seven years. Chapter 7 bankruptcies will stay on record for seven years.

Judgments, Garnishments, or Liens

Liens, garnishments, etc., that are recent may indicate an unstable
borrower. (Any judgments, garnishments, or liens must be paid in
full, and a clear credit report supplement or other evidence from
the creditor in paid receipt form and proof that the judgment,
garnishment or lien has been cleared must be obtained prior to
closing.) IRS tax liens must also be paid in full as outlined above.
Standard property tax liens, which are not yet due and payable, do
not have to be evidenced as paid in full. A satisfactory letter of
explanation from the borrower is required.

Delinquent Child Support

Because of the seriousness of the delinquency/default, which in
many states can cause incarceration, the child support payments
must be brought current, and specific documentation evidencing
the fact must be in the file-NO EXCEPTIONS! There must be
evidence from the credit-reporting agency that the payments have been brought current. A letter from the court or the legal authority
responsible for collection in the city/state (e.g. district attorney, sheriff, etc.) is acceptable. A letter from an ex-spouse and copies of personal
checks are not acceptable, nor is an agreed upon, but not yet completed, payment plan.



Loan Programs

We have the loan program that can fit your clients’ needs:

• 40, 30, 25, 20 and 15 year fixed

• 80/10/10 and 80/15/5

• No Income Verification / Stated Income

• Interest Only

• Jumbo loans

• Adjustable Rate Loans (ARMs)

• No PMI loans

• Purchase Plus Improvement Loans

• Pool Escrows

• One Time Close - Wholesale Only

• Option ARMs/Cash Flow ARMs - Wholesale Only

• Escrow Waivers

• Cash Out Refinance / HELOCs

• No Cost Extended Locks (up to 12 months!)

• FHA and VA loans



Do’s and Don’ts Before Closing a Loan

Below are a few reminders of “do’s and don’ts” before you close on your loan.

If you are uncertain about what to do, please call our office for guidance.

• DO bring a cashier’s check made out to the title company for your closing costs.

• DO notify us if your salary or other compensation changes from what is noted on
your loan application.

• DO inform us if your address changes from what appears on your original loan
application. We will complete rental and mortgage verification for all of your
residences within the last two years.

• DO obtain homeowner’s insurance with minimum coverage equal to the amount of
your total loan or the replacement value of the house. Call my office with your agent’s
name and phone number at least 10 days before closing.

• DO keep documentation (or a “paper trail”) on any large deposits into your
account. A “paper trail” is composed of the copies of all paperwork necessary to
prove a financial transaction: copies of all checks, deposit slips, loan paperwork,
forms to liquidate assets, etc.

• DO notify us if you move funds from one account to another. Provide a “paper
trail” on transactions.

• DO make sure you have a clear termite report on the property. If the termite report
is not clear, provide a receipt for treatment that shows the chemicals and the amount
used for treatment.

• DON’T acquire any additional credit lines or make any large purchases on existing
credit without first consulting us. For example: Purchasing a car or buying appliances
for your new home will change your debt-to-income ratios.

• DON’T change jobs without consulting us. A change in compensation may affect
your ability to qualify. Borrowers must have a two-year history of bonuses and/or commissions to be counted as income. Lenders may verify employment
on the day of closing as a quality control check.

• DON’T co-sign with anyone to obtain a line of credit or make a purchase. The payment will show up on your credit report as an additional debt.

• DON’T negotiate your contract with an allowance and expect to get money back at closing. An allowance can be used to pay closing costs and/or
prepaids.



Know What to Expect at Closing

Closing on a new home should be an exciting time.

But to some, it ends with the unwelcome surprise of cost increases.

Closing costs are one of the least understood aspects of the home buying process. However, a good lender will take the time
to answer questions and walk you through the process. Closing costs tend to vary from lender to lender, but are generally
considered any costs associated with the purchases of a new home. Today, these costs range from 2 and 7 percent of the
home’s purchase price and include three basic categories:

Prepaid Expenses

Homeowner’s insurance, mortgage insurance and costs to set up an escrow account
are considered prepaid expenses. Escrow accounts are a service provided by the
lender through which they will pay annual insurance premiums and various taxes
on the borrower’s behalf. The amount that goes into these accounts is based on the
first year’s premiums, plus an additional amount to help build the account for future
premiums. Prepaid expenses are difficult to determine because they depend on the
type of property and the time of the closing.

Mortgage Points

A mortgage point is equal to 1 percent of the mortgage loan amount and actually
helps reduce the loan’s interest rate. For example, depending on prevailing rates,
a $100,000 mortgage might be obtained at 7.75 percent with 2 points, or at 8.25
percent with no points. Obtaining the lower interest rate would cut the mortgage
payment by about $35 a month, but would require $2,000 — or 2 points — up
front at closing.

Out-Of-Pocket Expenses

Out-of-pocket expenses are fees for appraisals, attorneys, credit reports, deed recording, tax services and other miscellaneous
expenses. These fees are for services usually performed by a third party and directly charged to the borrower. Most out-of-
pocket fees are necessary and legitimate. However, whenever the borrower sees a fee which they don’t understand, they
should ask about it.



PrimeLending’s Loan Process



Moving Checklist

4 Weeks Prior to Move

• Make a “Move” file folder.

• Set up a calendar for your move.

• Have a garage sale.

• Contact a local charity to donate any unneeded furniture.

• Gather moving supplies, boxes, tape, rope.

• Call a moving company or make truck rental reservations to move yourself.

• Collect doctors, dentists, medical and school records.

• Collect all financial, tax, and employment documentation that may be needed for your loan.

• Contact your insurance company to transfer your policies (life, auto, homeowners).

3 Weeks Prior to Move

• Arrange a cut off date, and date for new service with your utility companies (telephone, gas, electric,
water, garage, and cable).

• Call friends and relatives to let them know you are moving.

• Canned goods can be costly to move-you may consider donating to a local charity.

• Check out Voter Registration information.

• Send change of address forms to newspapers, magazines, and associations.

• Notify the post office of your move. Fill out a change of address card.

• Review tax deductions on moving expenses.

2 Weeks Prior to Move

• Transfer stocks, bonds, bank accounts, and contents of safety deposit boxes.

• Prepare a list of clothes to take with you, start separating them into suitcases.

• Take the time to check ALL of the previous items, you still have time.

1 Week Prior to Move

• Clean your refrigerator and let it air out at least 24 hours before moving.

• Drain outdoor equipment, water from hoses, propane tanks from barbecue grills, and gas and oil
from lawn mowers. Discard any aerosol, paint, oils, flammable, chemicals. and/or toxic

• Label items you need to easily access and place them in a separate room or closet.

• Arrange for pest control before moving into your new home-especially on new construction.

Move Out Day

• RELAX

• Remember that those items packed last will be unloaded first.

• Once everything is out of the house, take on last look through the house: cupboards, closets, behind doors, attics, stairwells, overhead in the garage,
outside the home, and any storage sheds.

Move In Day

• Have the house ready before the trucks arrive. Take some time, sit back, and relax.



Why Gamble With Rates?


Extended Lock Programs

• Optional up-front fees

• FREE float down available

• Lock in for up to 12 months

• Available on Fixed, ARM’s, Jumbo, etc.

If you are ready to BUY, don’t GAMBLE with

increasing rates and payments.

Take advantage of current rates...

lock in NOW and eliminate the worry.



2-1 Buydown Program (part one)

The 2-1 buydown is an innovative loan program that will enable you to provide your clients with stability when
interest rates are on the rise.

 

Over the last seven or eight years, the 2-1 buydown loan program has all but disappeared from the face of the
earth. However, it is a great loan program, especially in an increasing interest rate market.

This is a wonderful loan to sell to people who have Adjustable Rate Mortgages and are tired of escalating interest
rates. It’s also a terrific loan to sell when you have a flat or even an inverted yield curve.

Back in 1994 and early 1995, similar conditions existed in the mortgage market. People with Adjustable Rate
Mortgages taken out in 1992 and 1993, in the 3.5%–4% range, had received two interest rate increases, which
capped them out and put them in at around 7%–7.5%. I realized then that the 2-1 buydown loan program could
be sold successfully to those people to create comfort and stability.

Many loan officers find this loan program very confusing. They don’t understand how to calculate the formula,
how it works, and cannot explain it to the consumer. I will describe the various calculations involved in a 2-1
buydown loan. Then, word for word, I will offer you the exact script I use in my explanation to a consumer.

Essentially, you’re taking the rebate money that is paid to you as the loan officer and using it to buy down the
interest rate by 2% in year 1, and 1% in year 2 of a 30-year loan. By charging the borrower 1–1.5 points, which
are incorporated into the loan amount during a refinance, you will make the 2-1 buydown rewarding for everyone involved.

Let’s calculate the 2-1 buydown, step by step, using a $250,000 loan as our example. Let’s also say that 7% on a 30-year fixed rate mortgage currently yields a 2.5% rebate.
(Having done this calculation numerous times myself, I can tell you that, when figuring a 2-1 buydown, you want to aim for approximately a 2.5 to 2.625 rebate.)

Step One: Look at your rate sheet and select the interest rate on a 30-year fixed rate mortgage that is currently associated with an approximate rebate of 2.5%. Let’s say
that rate is currently 7% and call that our cap rate. When I give you the script, you will understand why I use this term, which is the rate equivalent to the life cap on an
Adjustable Rate Mortgage.

Step Two: Multiply the $250,000 loan amount by 2.5%, which will yield a commission of $6,250. This represents the money that you have to play with as the loan officer,
to buy that interest rate down for the consumer and create a very attractive loan program.

Step Three: Take the payment at 7%–the rate that yields the 2.5% rebate. At $250,000, a 30-year amortized payment at 7% would be $1,663.26. Drop the rate by 2%
from the capped rate, which represents the “2” in the phrase “2-1 buydown.”

Step Four: Now, having dropped the rate from 7% to 5%, figure out the payment for 1 year on a fully-amortized note on that same $250,000. The amount should equal a
monthly payment of $1,342.05. At 5%, this represents a $321.21 monthly savings versus the payment of $1,663.26 at 7%.

Step Five: Multiply the $321.21 savings by 12 months because you have just bought the rate down 2% in year 1 on the 2-1 buydown. Essentially, this means that as the
loan officer if you want to buy that rate down 2% for the client, you need to pay the lender the difference times 12. This total amount equals $3,854.52 and will be paid
to the lender at the time of closing. Subtract this amount from the original $6,250 rebate money calculated in Step Two, and you should be left with $2,395.48.



2-1 Buydown Program (part two)

To calculate the second year of the 2-1 buydown, simply repeat Steps Three through Five, dropping 1% from the cap rate for the $250,000 loan
amount. This yields a monthly payment of $1,498.88. The difference between this 2nd year payment of $1,498.88 and the 3rd year payment at 7%
of $1,663.26 is $164.38 a month. Once again, because it’s for a second full year, you need to multiply that savings of $164.38 by 12 months.

This generates an additional savings to the consumer of $1,972.56 in year 2 of the loan. You need to pay the lender that $1,972.56 out of the
money remaining from Step Five. The total amount of money left over is $422.92, and this is the rebate you will receive as the loan officer. In
addition, I usually charge the borrower 1 –1.5 points, which is incorporated into the loan amount during a refinance. This will make the 2-1
buydown rewarding for you and your clients.

Let’s examine how you would explain the benefits of this loan program to a consumer, and create comfort if they’re
fearful of their current Adjustable Rate Mortgage.

“Mr. Jones, there is currently a very attractive loan program available which you probably haven’t heard of. In fact, even many loan officers don’t
know that this loan program exists. The loan is called a 2-1 buydown, and though it’s a fixed rate mortgage, it acts, in certain ways, like an
Adjustable Rate Mortgage.”

“Your current Adjustable Rate Mortgage has an interest rate of
6.5%, and I know that you have become very uncomfortable with
the interest rate increases over the last 12 to 18 months. You’ve also
become very concerned with the fact that you have a 10.95% life cap,
meaning that your interest rate could feasibly climb as high as that if
interest rates continue to rise. I have a solution for you that I think is
quite attractive.”

“This tiered, fixed rate program is fixed for the 1st year at 5%; fixed
for the 2nd year at 6%; and fixed for the remaining 28 years of the
30-year loan at 7%. It caps out at 7%, almost a full 4% lower than
the life cap that you have on this adjustable right now.”

“In fact, Mr. Jones, over the course of the first 2 years, you’re going to
save yourself a substantial amount of money because cash flow will
be improved immediately in months 1 through 12, with an interest
rate of 5%. You’ll save money in year 2 as well. The amount of money
you will save can’t be determined because as this adjustable that you
currently have continues to increase, the savings will be that much
more substantial.”



Additional Helpful Tips (part one)

Calling All Arms

When Ben Bernanke says that Adjustable Rate Mortgages (ARM) loans were a better choice than fixed rate mortgages, people start to
pay attention. So if ARM loans could have saved homeowners very significant amounts of money, why have Fixed-Rate products been
the overwhelming favorite?

The answer could be in the borrower’s lack of understanding,
experience, or perhaps it is unjustified fear. There are lots of ARM
loans to choose from and the features can vary quite a bit. The
time that an ARM will remain fixed before adjusting and the
facts governing the future adjustments, including the maximum
amount the rate can change are important points to consider.
The future adjustments are based on an index, so understanding
what will cause the index to fluctuate as well as historical data
on the index are both important to know.

Let’s look at one popular type of ARM...a 5/1. This loan will
remain fixed for the first five years but then adjust every year
thereafter. A common misunderstanding that many consumers
will have is that the savings made in the first five years will offset
future years of possible higher payments if the rate on the ARM
increases.

The best way to illustrate this is to look at a specific example. It is very common for the rate of a 5/1 ARM to be about 1% lower than the
rate of a 30-year fixed loan. Assume the loan amount were $300,000. The 1% savings on the 5/1 ARM would save the borrower about
$200 each month for the first 60 months (5 years). That would net them a hefty savings of $12,000 savings during the initial five years
were just placed in a piggy bank, there would be enough funds there to draw upon to cover future worst case increases for the following
2-3 years. This assures the borrower of coming out ahead by selecting the 5/1 ARM for 7-8 years. Compare that to the average life of a
mortgage loan, which is four years (because people will refinance or sell their home) and the odds become stacked in your favor that the
ARM will save you money.

I’m not a Gambler…

Many borrowers say they refuse to take a gamble on their selection of a mortgage product so they stick with a fixed rate. Well,
like it or not, what ever their choice is, it’s a gamble. Selecting a fixed rate still means they are betting that, during the time
they are obligated to pay the mortgage, the fixed will perform better that the ARM. Either way, they are rolling the dice and
making a bet. The only difference is they will know the result of the fixed payment. The key here is to get the odds to work in
your favor. This is where understanding and guidance from the loan originator can be worth its weight in gold.

Article by Mortgage Market Guide



Additional Helpful Tips (part two)

Let’s get Creative...

Another strategy that can be used for the above mentioned example is
to take the $200 monthly savings and use it to reduce the balance on
the mortgage. The pre-payment of principal will have an even greater
effect because the borrower is now skipping down the amortization
schedule and paying more principle and less interest on each subsequent
payment. After the initial 60 payments made during the first five years, the
borrower would have approximately $17,000 more equity in their home
because of the reduced principal balance. Because of the borrower has
this extra $17,000 in equity, they would be better off with their 5/1 ARM
for approximately 10 full years. This is true if rates moved higher after the
initial five years…even in the worst-case rising rate scenario. And, it just
so happens that the average period of time that people sell their residence
is every 10 years.

Another benefit when using the strategy of reducing the principle balance
happens at the time of the initial adjustment. When an ARM loan adjusts,
it essentially becomes a new loan where the payments are based upon the
remaining years, the new interest rate and the remaining balance. Because
the remaining balance is significantly lower when the savings are used to
reduce principal, the payment can actually go down even if the interest
rate adjusts higher.

… Back to the Future

Over the past 200 years, interest rates on the US 10-year Treasury Note
have, for the most part, remained fairly tame. The average has been close
to 6%, but many fear the chance of runaway double-digit rates. Rates
have remained in the single digits for all except 8 of the 214 years… The rampant inflation of the late 1970’s had to be reigned in. So
rates were pushed higher during the 1980’s. The result…low inflation and rates over the years leading to the present time. The lesson
learned by the Fed was to use an ounce of prevention instead of a pound of cure. In the other words, the Fed acts quickly now to hike
rates a little so that inflation will remain in check, which helps keep rates from running significantly higher. The sky-high rates of the early
1980’s will probably never be seen again.

Article by Mortgage Market Guide



What is Negative Amortization?

Negative amortization occurs when the monthly payments on a loan are insufficient to pay the interest accruing on the
principal balance. The unpaid interest is added to the remaining principal balance due. Negative amortization can be avoided
by paying the additional interest owed monthly.

Adjustable rate mortgages with payment caps and negative amortization are usually reamortized at some point so that the
remaining loan balance can be fully paid off during the term of the loan. Most ARM programs have a limit on the amount of
amortization allowed, usually 110% to 125% of the original loan amount.

Negative amortization can only arise on ARMs with one or
more of the following features:

• The initial payment does not cover the interest due. The purpose of such a
feature is to increase affordability.

• The interest rate adjusts more frequently than the monthly payment. The
purpose of this feature is to avoid frequent changes in your monthly
payment.

• Changes in the monthly payment are capped, usually at 7.5%. The purpose
is to avoid large changes in payment.

ARMs that allow negative amortization can increase home affordability,
and may also offer lower interest costs that other mortgages, provided that
interest rates don’t rise persistently. Basically the benefits come packaged
with risk.