First Time Home Buyer Seminar
-
Upload
poo1shark8 -
Category
Real Estate
-
view
11.686 -
download
1
description
Transcript of First Time Home Buyer Seminar
First Time Home Buyer SeminarFirst Time Home Buyer SeminarPresented By:Presented By:
Mike Hall http://wwwmyohiohouse.com 614-937-4162
First Time Home Buyer First Time Home Buyer SeminarSeminar
• Everything you need to know to make buying your first home easy and affordable.• Learn some of the financial reasons to buy a home. • Learn about your mortgage finance options and how to improve your credit. • Learn how to evaluate a home and make an offer.
Why buy now?$7,500 interest free loan that may
turn into a grant that does not need to be repaid
Interest rates are near record lowsHuge selection to choose from means
prices are lowerNo money down options still availableThere is no fee to use a Realtor to
buy a home.
Why Buy A Home?Why Buy A Home?Deduct the interest
payment and property taxes
Stable housing costs. No landlord to raise your rent.
Grow your equity and wealth through appreciation of the property.
Future equity build up lets you set up retirement investments.
Renting Vs. Buying a Renting Vs. Buying a HomeHome$700 per month in rent5% annual rent increaseAfter 5 years you have spent
$46,415 in rent. Net equity gain: $ 0You have nothing to show after
spending all this money.
Renting Vs. Buying a Renting Vs. Buying a HomeHome $700 rent buys you a $972 mortgage
payment (if you are in a 28% tax bracket). Subtract $ 150 per month for month for
taxes / insurance. Leaves 822 for an interest only payment
At 7% this buys you a 141,000 mortgage Assume the house price is $150,000. 5%
appreciation per year give you an extra $41,150 in equity.
$43,150 vs. $ 0? You do the math!
How to Afford a Higher How to Afford a Higher PaymentsPayments Mortgage interest and
property taxes are tax deductible.
Change your withholding with your employer.
You can pay this extra money to the IRS, or pay it to yourself.
IRS.gov website has a withholding calculator.
You use the extra money to make the higher mortgage payment.
Are You Ready To Buy?Are You Ready To Buy? Do you have a steady
income? Do you pay bills,
including your rent, on time?
Do you have low to medium debt?
Do you have cash for closing costs or down payment?
Do you have 2 month’s reserves of PITI in the bank?
Do you have the ability to make the mortgage payments?
How Much Home Can You How Much Home Can You Afford?Afford?Housing costs should be less than 29% –
36% of gross monthly income. Housing costs include mortgage payment,
taxes, homeowners insurance, condo fees, other association fees.
Mortgage payment is based on the lender's "qualifying rate".
Housing costs plus long-term debt not to exceed 40% to 55% of gross monthly income.
Long term debt includes car payments, credit card payments, other loan payments.
Why be Pre-Approved?Why be Pre-Approved? You know what you can
afford to pay before you look for a house.
You know if you are in a position to buy a home in your target neighborhood.
It tells sellers that you are a qualified buyer.
It lets you make an offer right away, before someone else does.
It makes it easier to get the service of a Realtor.
Approval DocumentsApproval Documents Provide 2-3 months of
pay stubs. 2 years worth of tax
returns or W2 forms. Provide 6 to 12 months
bank statements. Proof of any additional
qualifying income such as alimony and child support.
Show a 2 year employment history.
580 credit score needed for 100% financing.
Types of Loan ProgramsTypes of Loan Programs 30,40,50 year fixed rate. Interest-only mortgages.
Option ARM Mortgages. 2/1 Rate buy-downs give
you lower payments the first 2 years.
2/28 ARM stays fixed for the first two years, then adjusts annually.
80/20 Combo loan avoids the need for PMI (Private Mortgage Insurance).
A seller-held second mortgage lets buyers conserve cash.
100% Financing & PMI100% Financing & PMI100% financing can be done as a single
loan or a combo loan (80/20) with NO PMI.
Some 100% financing loans also require PMI, while others don't.
PMI can be as much as 4% annually on the loan amount.
On a $100,000 loan, this can exceed $333 per month.
PMI can be removed when the LTV drops below 80%.
Property appreciation can eliminate PMI in a few years.
Credit Scoring OverviewCredit Scoring Overview A credit report is an
accounting of your credit history.
It records payment histories, amount of time accounts are open, credit inquiries, and results of legal proceedings.
A credit score can be between 350 and 800.
It is an indication of the probability of going 90 days late on any account within the next 24 months.
It has the greatest effect on your interest rate.
The Three Credit BureausThe Three Credit Bureaus Experian - FICO score
(888-397-3742). Equifax - Beacon score
(800-685-1111). TransUnion - Emperica
score(800-916-8800).
Each bureau has its own scoring model and not all accounts report to all three bureaus.
You are entitled to a free annual credit report.
Credit reports can have errors and help you spot identity theft.
How Your Score is UsedHow Your Score is Used Your score is used to
determine the maximum loan-to-value.
Your score is used to determine your base interest rate.
Your score is used to determine which mortgage programs you qualify for.
A mid-score below 500 limits you to 70% LTV and very high rates.
A mid-score of 580 or higher is required to go 100% LTV.
A mid-score of 700 gets you access to prime lenders.
How to Improve Your Credit How to Improve Your Credit ScoreScore Pay all bills on time. Keep balances below
50% of available limit, and below 30% if possible.
Don't close unused accounts. The zero balance can help your score.
Pay off recent collection accounts or charge-offs.
Let old items over 2 years remain unpaid.
Become an authorized user on someone's credit card with a good payment history.
Working With Your RealtorWorking With Your Realtor Your Realtor is your
agent. He or she provides the expertise you need to buy a home safely.
Your Realtor abides by a Code of Ethics and takes continuing education courses every year.
Your Realtor knows the community.
Your Realtor can provide you with lists of homes that meet your criteria and price range.
Your Realtor will prepare your offer and assist with negotiations.
Your Realtor will guide you through the home buying process.
Determining How Much to Determining How Much to OfferOffer
Know what the comps are for similar homes.
Know the home's condition and short-term repair expenses.
Know how long the home has been on the market and how fast homes are selling.
Know your financing options. Get pre-qualified by your mortgage consultant.
Know the seller's situation and motivation.
Be prepared to negotiate.
Making an Offer to PurchaseMaking an Offer to PurchaseYour Realtor will fill out a purchase
agreement with you. The amount of earnest money will be
determined. Earnest money goes toward the down
payment or returned to you if the deal does not go through.
The down payment and amount financed will be determined.
Determine a settlement date. Understand what is included with the
purchase of the home as in fixtures, appliances and even plants.
When the Offer is AcceptedWhen the Offer is Accepted Schedule a home
inspection. This can be done with your Realtor.
Schedule a home appraisal. This is done by your mortgage broker.
Get your mortgage application in process.
Select a title agency or escrow company. This is done by your Realtor.
Get a homeowner’s insurance policy.
Get your documentation together for your mortgage application.
Inspections and Tests You Inspections and Tests You NeedNeed
Termite inspection will uncover potentially devastating wood damage.
Home inspection will uncover any problems with your home's structure and systems.
Radon and mold tests will make sure you have no environmental hazards.
Municipal inspection lets you know of any code violations and hazards.
A Certificate of Occupancy may be required by your municipality.
Home Warranty ProgramsHome Warranty Programs A service contract which helps protect against
the expense of repairing or replacing covered home appliances and mechanical systems which breakdown due to normal wear and tear .
Basic coverage includes: heating system, plumbing system, electrical system, water heater, oven/range/cook-top, dishwasher, built-in microwave oven, garbage disposal, built-in whirlpool motor and pump, exhaust fan, garage door opener, sump pump and other items.
1-year contract is about $400.00. Golden Gate will negotiate so the sellers pay for this.
Property AppraisalProperty Appraisal Appraisal determines the estimated market
value of the property. Mortgage is based on the lower of the sales
prices or the appraised value. Value is determined by looking at recent
sale prices of properties in your area that are similar to yours.
Adjustments are made for differences in property features and amenities.
The appraiser also looks at the property value based on its replacement cost.
An appraisal does not warrant the condition of the property or that it meets local code.
Understanding Closing CostsUnderstanding Closing Costs Property appraisal Home inspection Processing fee Underwriting fee Lender fee Loan discount fee Origination fee Recording fees
• Settlement Officer fee • Title insurance • Document preparation fees • Escrow of taxes and insurance • Prepaid interest • Credit report • Transfer taxes • Attorney / Notary fee• Survey Fee
Settlement DaySettlement Day Closing agent will
prepare and present a HUD-1 form. This lists the money you owe and the credits you get.
The deed and mortgage will be recorded
Seller will provide proof of any warranties or inspections.
You will sign a stack of about 40 forms and documents.
You and/or the seller will pay the closing costs.
You get the keys to your new home!
Take The Next StepTake The Next Step Work with your
mortgage consultant, so he or she can help you find the program that is right for you and get pre-qualified.
Work with your Realtor® to find suitable properties.
Don’t make any major purchases on credit or fill out any credit applications.
Michael HallGolden Gate Real Estate
Cell: 614.937.4162
Office: 614.888.3600
Fax: 614.231.4653
Email: [email protected]
Web: www.myohiohouse.com