THE CONVENTIONAL ADVANTAGE 5/16/2019

Product Facts Products 97/100% Conventional 97/100% Home Ready Loan purpose Purchase Same Amount of Assistance on 2nd: 3% of s/p or a/v whichever is less 1st: Conforming Conventional limits 2nd: Rate will be 2% over the 1st TD rate. Amort. 10 years. A payment is counted in DTI. Occupancy and Property type: Owner occupied, 1 unit SFR, Condo or PUD, no manufactured homes Minimum Fico 640 Borrower Contribution 0% Seller Contributions Up to 3% on a 95%+ LTV Gifts – Family Members Okay No need for borrower’s own contribution 5/16/2019

How do the products differ? 97/100% Conventional 97/100% Home Ready Income Limits None 100% of AMI or none if in low income census tracts Other Income Normal FNMA guidelines Boarder or Accessory Dwelling units – see more info on the following screens First Time Homebuyer (FTHB) At least 1 borrower must be a FTHB Not Required Non Occupant Co Borrowers N/O/O permitted to max 95% LTV with max 43% DTI for occupying borrower (no income limits) Same as Conventional but income for N/O/O will be considered in income limits 5/16/2019

More differences…. Product 97/100% Conventional 97/100% Home Ready Ownership of other Property Both occupant and N/O/O MAY NOT have ownership in other property Both occupant and N/O/O MAY have ownership in other property Homeownership Education Not required At least one borrower has to complete Framework Homeownership Education Course - $75.00 fee or recent HUD approved nonprofit counseling agency prior to signing a purchase contract. Mortgage Insurance % 35% MI Coverage 25% Coverage (LTV’s 90.01% to 97.00%) 5/16/2019

Sample Rate Sheet Always check for the most current pricing – see page 8 of rate sheet 5/16/2019

Major “pricing benefits” when using Home Ready Agency fee hits for Condos and FICO HITS are limited based on FICO FICO 680+ capped at 0% for agency hits FICO 640-679 – capped at 1.50% for agency hits Example: You have a 682 FICO + Condo Normally: Pricing Hits: 682 (1.50%) condo (.75%) Home Ready you would be capped at 0% fee hits – a saving 2.25% Example: You have a 644 FICO + Condo Normally the hits would be 2.75% for FICO and .75% for Condo Home Ready you would be capped at 1.50% fee hits – a savings 2% 5/16/2019

Home Ready Other Income Boarder income (relatives or non-relatives): Up to 30% of qualifying income Documentation for at least 9 out of the most recent 12 months Averaged over 12 months Proof of shared residency for the past 12 months Accessory Dwelling Units: Rental income can be used if the appraiser can provide comps that support the value of it and provide comparable rental data. It does not necessarily have to be permitted. 5/16/2019

Homeowner Education At least one borrower on each Home Ready purchase mortgage must do one of the following: Complete: https://homeready.frameworkhomeownership.org/ $75.00 fee(paid by the borrower to Framework – prior to closing; or Receive housing counseling from a HUD approved non profit housing counselling agency (as evidenced by a signed Certificate of Completion of housing Counseling (Form 1017) prior to the borrower signing a purchase contract. 5/16/2019

Screen shot on how to show 2nd on 1003 and DU - 97% conventional & 97% Home Ready Be sure you to indicate on the 1003 on details of transaction that you have a 2nd. Also on your Declaration Questions on the 1003. DU details: 5/16/2019

Sample MI Chart 5/16/2019

Submit – Fees – Product Codes Upload a 1st and 2nd – two loan numbers On the 1st package – we need complete credit package & submission sheet. On the 2nd package – only need submission sheet Fee for the 1st is $1350 Fee for the 2nd is $250 If using Contract Processor, max $1125 and indicate on submission sheet, include billing (not counted on the 3% max points and fees) Product Codes Conventional 1st 1030CH 2nd: 4030CHC Home Ready 1ST 1030HRCH 2nd: 4030HRCH 5/16/2019

Locking your loan PLEASE CALL YOUR AE WITH ANY QUESTIONS This is a MANUAL LOCK. This will not price thru the Broker Connect. Loan must have an approval and underwriter must have reviewed the appraisal. Loan must be locked by 1:00 PST. When you have reviewed the rate sheet and you are ready to lock, email: locks@essexmortgage.com PLEASE CALL YOUR AE WITH ANY QUESTIONS THANK YOU FOR CHOOSING ESSEX MORTGAGE 5/16/2019