2010 Updated First Time Seminar
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Transcript of 2010 Updated First Time Seminar
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First Time Home Buyers Seminar
Presented by:
Barry A. Duffey
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Who is Primary Residential Mortgage, Inc?Founded in 1998, PRMI is a debt-free company
Headquarters in Salt Lake City, Utah
275 offices nationwide in 47 states
More than 1,900 employees
A variety of loan products
from the nation’s top lenders:
Primary Residential Mortgage
Bank of America
Wells Fargo
GMAC,
SunTrust,
CitiMortgage and
more!
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“A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when
you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes,
and usually from your state taxes.
This will save you a lot each year, because the interest you pay will make up most of your monthly payment for most of the years of your mortgage. In addition, the value of
your home may go up over the years. Finally, you’ll enjoy having something that's all yours—a home where your
own personal style will tell the world who you are.”
—U.S. Department of Housing and Urban Development
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Renting vs. Buying
RENTING OWNING
No Ownership Pride of Ownership
No Privacy Complete Privacy
No Foundation Family Foundation
No Tax Benefit Tax Deductible Interest Payment
You’re paying the owner’s mortgage
Build home equity over time
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Money: What are Mortgages really made of?
CreditFICO Score, Overall Profile
CapacityIncome, Debt to Income Ratio
Collateral Loan to Value
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The Keys to Becoming a Home OwnerOrganize
Watch Spending and Savings
No question is a bad question.
Elevate your Credit Score
Read (and Understand)
the Fine Print
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Down Payments30-Year Mortgage
House Price $200,000
Interest rate Monthlypayment
Price with 5% down Price with 10% down Price with 15% down Price with 20% down
4.5 $1,013 $962 $912 $861 $810
4.75 $1,043 $991 $938 $886 $834
5.0 $1,073 $1,019 $966 $912 $858
5.25 $1,104 $1,049 $993 $938 $883
15-Year Mortgage
House Price $200,000
Interest rate Monthly payment Price with 5% down Price with 10% down Price with 15% down Price with 20% down
4.0 $1,479 $1,405 $1,331 $1,257 $1,183
4.25 $1,504 $1,429 $1,354 $1,278 $1,203
4.5 $1,529 $1,453 $1,376 $1,300 $1,223
4.75 $1,555 $1,477 $1,400 $1,322 $1,244
http://loan.yahoo.com/m/basics7.html
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How much can you afford?Debt-to-Income Ratio—the lower the better:
It shouldn’t exceed 36%, though there are exceptionsHow to calculate your debt-to-income ratio:
Calculate your total monthly income: Include wages, overtime, guaranteed commissions/bonuses, alimonyIf income varies, calculate average based on last two years
Add up your monthly debt payments: Include credit cards, car loans, student loans, mortgage payments
Divide monthly debt payments by total monthly income—This is your debt-to-income ratio
$2,000.00 (total monthly debt)
÷ $6,000.00 (total monthly income)
------------0.33 or 33%
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Mortgage Shopping“Shopping around for a home loan
or mortgage will help you to get the best financing deal. A
mortgage—whether it’s a home purchase, a refinance,
or a home equity loan—is a product, just like a car, so the price and terms
may be negotiable. You’ll want to compare all the costs involved in
obtaining a mortgage. Shopping, comparing, and
negotiating may save you thousands of dollars.”
—The Federal Reserve Board
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Basic Loan Types and ProductsConventional
Federal Housing Administration (FHA)
Veteran’s Affairs (VA)- 100% LTV
Virginia Housing Development Authority (VHDA)- 100% LTV
United States Dept. of Agriculture (USDA)- 100% LTV
30 Year Fixed
15 Year Fixed
ARM
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Cost InformationInterest Rate
Points
Origination Fee
Fees
Down Payments
Mortgage Insurance
“Shop, Compare, Negotiate: Get the best deal that you can!”
—Federal Reserve Board
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Pre-ApprovalOnce you’ve found a mortgage company you’re comfortable with, get pre-approved
This essentially gives you a budget for your house
“Getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to
make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a
lender is based on your actual income, debt, and credit history.”
—http://money.cnn.com/magazines/moneymag/money101/lesson8/index.htm
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Good Faith Estimate (GFE)Required by the Real Estate Settlement Procedures Act (RESPA) within 72 hours of applicationProvided by mortgage lenderGives an estimate of fees due at closing, including:
Loan feesFees to be paid in advanceReservesTitle chargesGovernment chargesAdditional charges
Actual closing costs can differ from GFE
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Realtor ShoppingDemand Excellence
Look for CommitmentWho will work for you?
Consider EducationOn-going training
Up to date market knowledge
Conduct InterviewsInterview agents to find the
“right fit”http://ired.com/buymyself/canale/art3.html
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Home ShoppingIs it THE house?
Consider the…Commute
Amenities
School System
Can you really afford it?
Remember, starter homes are just that
—a start
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The OfferWhat are the steps to making an offer?
Negotiating a sales priceAsking Price Initial Purchase OfferAcceptance of Offer and Counter-Offer
Make an offer in writingProposed Purchase PriceConcessionsConveyancesHome inspection contingencesEarnest MoneyAcceptance
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Home InspectionA home inspection is a 3rd party evaluation of a home’s condition by a trained expert. During a home inspection, a qualified inspector takes an in-depth and impartial look at the property you plan to buy. The inspector will:Evaluate the physical condition: the structure, construction and mechanical systems. Identify items that should be repaired or replaced. Estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.
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Insurance Title insurance
Lender’s Title
Owner’s Title (optional)
Homeowners insurance
Flood insurance
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Closing
What to expect
What you need to know?Cash to Closing?
HUD-1 Settlement StatementDo terms match what was quoted?
Do not be pressured into signing!
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Questions and Answers