First Time Home Buyers Seminar

Presented by:

Barry A. Duffey

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!

“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

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

Money: What are Mortgages really made of?

CreditFICO Score, Overall Profile

CapacityIncome, Debt to Income Ratio

Collateral Loan to Value

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

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

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%

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

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

Cost InformationInterest Rate

Points

Origination Fee

Fees

Down Payments

Mortgage Insurance

“Shop, Compare, Negotiate: Get the best deal that you can!”

—Federal Reserve Board

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

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

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

Home ShoppingIs it THE house?

Consider the…Commute

Amenities

School System

Can you really afford it?

Remember, starter homes are just that

—a start

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

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.

Insurance Title insurance

Lender’s Title

Owner’s Title (optional)

Homeowners insurance

Flood insurance

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!

Questions and Answers