Buying A Home In Todays Market

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You need to customize slides 2, 8, 19 and 21. • Slide 2: Complete with your information.• Slide 8: On the final section, choose the appropriate

descriptors for your market.• Slide 19: The Appendix contains a number of price point

versions of slide 19. Choose the one that best fits your market and delete the remaining unused slides from the Appendix.

• Slide 21: Complete the information identified as HMC in red

For additional information, please contact Marketing Program Manager Jeanne Low at: 515-213-7336.

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Buying A Home In Today’s MarketMaking Smart MovesJanuary 6, 2010

Jonathan OsmanKeller Williams Realty(704) 960-1725 Ext 100

Presented By:Liz CiardiWells Fargo Home Mortgage(704) 756-4059

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Welcome!• Thank you for coming.• Let’s begin with introductions.• Make yourself comfortable.• Don’t be shy about asking questions.

By attending this workshop, you are taking an important step toward buying a home---for the first-time, or as a move-up, second home, or investment buyer.

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This workshop will answer key questions:

• Is this a good time to buy a home?

• Is my credit good enough to qualify?

• How much money will I need?

• What type of mortgage financing should I get?

• What is the home buying process?

• Why Wells Fargo?

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Question #1 Is this a good time to buy a home?

“Don’t worry about timing the market in real estate. It’s time in the market that will matter for you.”

— David Bach#1 best selling author and financial coach

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Is this a good time to buy a home? • For most people, homeownership can still be a solid

long-term investment.• Homeowners make an investment in their home every

month they pay down their mortgage. Renters don’t.

This chart shows that, over time, homeowners have accumulated greater wealth than renters.

Net WorthAverages for U.S. Homeowners and Non-Homeowners

Age 30-59, Summer 2006

$0

$100,000

$200,000

$300,000

$400,000

$500,000

Homeowners Non-Homeowners

$468,000 $73,000

Source: 2006-07 MacroMonitor, SRI Consulting Business Intelligence

Homeowners have more than

6 times the net worth than non-homeowners in this age

range.

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Is this a good time to buy a home? • Through the end of 2007, the average home price in the

U.S. has increased by 532% from 1975.

• Remember—you have to live somewhere!—owning is usually more advantageous than renting over the long term.

0%

100%

200%

300%

400%

500%

600%

1976 1981 1986 1991 1996 2001 2006

U.S. Home Price AppreciationPercent Change from 1975's Average Home Price

Source: OFHEO, Feb 26, 2008

2007: +532%

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• While we have national averages, we don’t have a “national housing market.”

• All real estate is local. –What counts is what’s happening right here.

• In our market:–Home prices are flat.–Housing inventory is high.–Time on the market is increasing.–Sellers are already negotiating.

Is this a good time to buy a home?

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• It’s a buyer’s market.–Sellers are more willing to make concessions.–Prices in many areas have come down, improving affordability.–Overall, good opportunities exist for financially qualified first-

timers, second-home buyers, and investors.

• Tax advantages* for homeowners (not renters).

–Interest on monthly payments is deductible for most homeowners.

–Property taxes are deductible for most homeowners.–For most homeowners, there are no capital gains when a

primary residence is sold.–The government wants you to buy a home!

*See your tax advisor


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Even though rates have declined in the last decade, interest rates may rise again.

0%

3%

6%

9%

12%

15%

18%

1972 1976 1980 1984 1988 1992 1996 2000 2004

30-year Mortgage Rateson Conventional, Conforming Loans

Source: Freddie Mac

4th Quarter, 2007: 6.24%Jan/Feb 2008: 5.83%

Average, 1972-2007: 9.22%

Mortgage rates remain

historically low


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ACTION ITEMS

Work With a Home Mortgage Consultant To:

• Use our Rent vs. Buy calculator if you still rent.• Use our PriorityBuyer® program to help you

determine your purchase power.• Find a Real Estate Agent who can provide you with

historical and local pricing information.

Any Questions?

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Question #2: Is my credit good enough?

“Your credit score is ... the Holy Grail... Knowing how you rate is essential knowledge for anyone even thinking of getting a mortgage.”


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Is my credit good enough?

• It’s a fact: qualifying criteria have gotten somewhat tighter than in previous years.

• Homebuyers need to pay more attention to their credit scores than they did before.

– Credit history reflects your record of paying obligations on time.

– Your credit score may impact your interest rate. – Your credit score may impact your down payment

requirements.– Your credit score may impact the amount of documentation

you provide.

– But you don’t need perfect credit to buy a home.

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Is my credit good enough?

• Limited history• Excessive debt• Slow payments• Legal judgments

• Past foreclosure or bankruptcy• Frequency of new accounts opened• Many new credit applications• Errors

• What makes credit less-than-perfect?– Some causes can be solved relatively quickly.– Others take more time.

• You may still qualify with a less-than-perfect credit score.– The best way to find out is through a personal consultation with a

Home Mortgage Consultant.

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ACTION ITEMS


• Learn your credit score – we can help you do that.• Request a PriorityBuyer® Pre-approval if you’re

ready to go!• Determine next steps if your credit score is too

low. Our Purchase Plan will provide instructions to help you repair your credit.

Any Questions?

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Question #3How much money do I need?

“When it comes to investing in real estate, the bottom line isn’t how much houses cost. It’s how much you can afford to spend.”


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How much money do I need?

• For a down payment?• For closing costs?• For my monthly payments?

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Down Payment Options:• Low down payment programs are still available in

some markets and may help you buy a home sooner.• A larger down payment can help you get lower

monthly mortgage payments.• How much of a down payment is required may be

impacted by factors such as:– Your credit score.– The type of property.– Whether the home will be your primary residence, second

home or investment property.

• Wells Fargo offers down payment options to serve various homebuyer needs.

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Monthly Payment Illustration: $150,000 purchase price.

% Down Payment

Down Payment in Dollars

Mortgage Amount

Monthly Principal

and Interest8

20% $30,000 $120,000 $644.19

15% $22,500 $127,500 $684.45

5% $7,500 $142,500 $764.97

The higher your down payment, the lower your monthly payment.

8. Assumes a 30-year fixed-rate mortgage with a 5% interest rate. Mortgage insurance is generally required if the down payment is less than 20% and is not included in the monthly payments above.

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Benefits of making a lower down payment

Benefits of making a larger down payment

• Buy the home sooner.

• Use any savings for other things, including home improvements.

•Monthly payment is smaller.

•May be easier to qualify.

• 20% or more down avoids mortgage insurance.

• Interest rate may be lower.

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Closing Cost Information:• Typical closing costs:

– $1,800 plus any discount, origination and pre-paids– Total closing cost is approximately 3% of average home price of

$150,000 or approximately $4,500.

• What are the fees?– Discount– Origination– Survey– Appraisal– Title

• What are Pre-Paids?– Interim interest

– Escrow account for taxes, homeowners insurance, private mortgage insurance

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Monthly Payment Expenses:• Your monthly payments include:

– Principal & Interest.– Taxes (real estate) and Insurance (homeowner’s).– Mortgage insurance - if your down payment is less than 20%.– Association fees - if applicable.

• Your maximum monthly payment is calculated using:– The parameters of the mortgage product you select.– Your qualifying monthly income.– Your total monthly debt.

• Be comfortable with the calculated monthly payment:– Repairs and maintenance costs are part of homeownership.

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ACTION ITEMS


• Determine the amount & source of down payment money:

– Personal savings, gifts from parents, family.– Down payment assistance programs. – Secondary financing.

• Determine the amount & source of closing costs:– Personal savings, gifts from parents, family.– Seller concessions.– Wells Fargo’s Closing Cost$aversm program.

• Determine the monthly payment amount for which you qualify.

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Question #4

What type of mortgage should I get?

“There are literally thousands of different kinds of mortgages to choose from. The question is, which one is the right fit for you?”


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• What type of product?• What kind of rate?• How long a term?• What kind of payments?• What type of documentation?

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• We’ll help you select the product type that meets your needs:

– Conforming loans up to $417,000* for a single-family.

– Jumbo loans greater than $417,000.

– Combination loans: conforming first + a second mortgage.

– Government loans: FHA & VA.

*The conforming ceiling of $417,000 has been raised in high-cost housing markets through the end of 2008. The loan limit on these “conforming jumbo” loans varies by location but doesn’t exceed $729,750 in the continental U.S.

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• We have product types for special needs:– Renovation loans to make improvements or rehab

foreclosures.

– New construction loans.

– Reverse mortgages to finance second homes for 62 years or older.

– Wells Fargo’s Home OpportunitiesSM for low-to-moderate income buyers and first-time homebuyers.

– FHA loan programs.

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What type of mortgage should I get?What kind of rate?

Fixed-Rate(FRM)

Adjustable-Rate(ARM)

Hybrid ARM

• Rate is usually higher than an ARM rate or a Hybrid.

• The principal and interest portion of the mortgage payment stays the same through the entire term.

• Stable, easy to budget.

• May want to refinance if rates go lower.

• Usually starts with a lower rate than an FRM or hybrid.

• The rate may adjust every year, changing the monthly payment.

• Rate may eventually be higher than the rate for a fixed-rate loan.

• Usually starts with a rate that is lower than an FRM but higher than an ARM.

• Rate & payments are fixed for 3, 5, 7, or 10 years.

• After that period, the rate may adjust annually changing the monthly payment.

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How long a term?

40-Year 30-Year 15-Year

• Rate is higher.

• Payments are lower because they are spread out for a longer period.

• Easier to qualify for a larger loan amount.

• Pay more interest and it takes longer to build equity.

• Rate is lower than a 40-year, higher than 15-year.

• Payments are higher than a 40-year, but lower than a 15-year.

• Pay less interest than a 40-year, but more than 15-year.

• Rate is lower.

• Payments are higher.

• Pay the least amount of interest over the life of the loan.

NOTE: A Preferred Payment Plansm can reduce the interest and increase your equity, no matter what term you choose—we’ll show you how!

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What type of mortgage should I get?What type of payment?

How $ Applied

Frequency Benefits Added bonus

Principal & Interest.

Monthly. • Designed to pay off loan at end of term.

• Make extra principal payments at any time.


Biweekly or Weekly.

• Build equity faster.• Own home sooner.• Save on interest.

• Half or quarter payment tied to pay date; generates a 13th monthly payment per year, which is applied to principal and accelerates loan payoff.


Monthly or Semi-

monthly.

• Smart budget tool. • Make extra principal payments at any time.

Interest Only.

Monthly for # Yrs.

• Lower payments.• No equity is built

until principal payments are made.

• May provide increased disposable income and may allow you to maximize savings/investment contributions.

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1-In certain circumstances, you may be required to provide documentation. Please ask a Wells Fargo Home Mortgage consultant for details. Depending on their specifics, programs that do not require the standard information and documents may result in higher interest rates and Annual Percentage Rates than a traditional mortgage program.

• What type of documentation will be required?– Items such as employment checks, tax statements, W-2

forms and bank statements help verify that you can qualify for the loan amount requested. “Full doc” may provide you with a lower interest rate.

– Some buyers with good credit can avoid providing limited documentation.

– In some circumstances, you may be required to provide documentation. Depending on the loan program, the interest rate and APR may be higher than with full documentation1.

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ACTION ITEMS


• Gain a full understanding of your options.– Many buyers have multiple options for financing.– Others have more limited options.

• Discuss each facet of the mortgage product thoroughly:– Product – Conventional, FHA.– Rate – ARM, fixed.– Term – 40, 30, 15 years.– Payment frequency.– Documentation type.

• Look beyond rates and shop based on your needs.– Your mortgage should accommodate both your financial

needs and your wealth-building goals.

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Question #5

What is the home buying process?

“The fact is that home buying is both easier and more straightforward than most people realize.”


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1. Set the stage for an easier process. • Find professionals you can trust.

• Ask questions and express your concerns up front.• Learn what to expect — and what will be expected of

you.• The right people will walk you through, talk you

through — and see you through!

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2. Start with a pre-approval.– The Wells Fargo PriorityBuyer® pre-approval.

• It’s reliable pre-approved financing in clearly specified loan amounts and terms on official Wells Fargo letterhead.

• You know you’re setting yourself as a serious buyer who has already completed the application, credit check, and first decision phase.

• PriorityBuyer® is the shortest distance between the opening offer and the closing table.

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3. Determine the right financing for you.• How Wells Fargo can help.

• Your loan scenario is run through a decision engine: you may qualify for instant approval!

• We identify and explain each of the products and features.

• We explain the documentation you need to provide. • At any time from application up to a specified number

of days before closing, your range of rates can be “locked”.

Questions?

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4. When you find the home to buy…– Your real estate agent will guide you.

• Your agent can give you information about recent sales of similar homes and help you determine the amount to offer for the home.

• You will be required to make an “earnest money” deposit to show the home seller you are serious.

– Negotiating.• Your offer may also include a proposed closing date,

down payment amount and conditions that need to be met prior to sale (such as required repairs).

• Sometimes the offer is accepted immediately. Sometimes you may need to negotiate.

• Your real estate agent will be your go-between and advisor during negotiations.

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5. Offer accepted? – Get Ready to Close!

• Your pre-approval must now become an official approval, so let your lender know:

– The home’s property address.– The agreed-upon purchase price. – Your final down payment amount.

5. You’ll receive a Good Faith Estimate that states the estimated cost of your loan. You will also receive a Truth in Lending with your estimated monthly mortgage payment.

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What is the home buying process?6. Final pre-closing details.

– Have the home inspected to identify any repairs the home may need.

• Major repairs can become a negotiating point.

– We will have your home appraised to determine its fair market value.

– Other details.• You will be required to purchase title insurance for the lender. You

can purchase title insurance to cover any claims against your ownership—this is optional.

• We will order a title search to ensure the seller has clear claim to the home.

• You also need to purchase homeowner’s insurance to protect against property damage. Ask about making convenient arrangements through Wells Fargo Insurance, Inc.

• Some properties also need flood insurance.

Insurance is available through Wells Fargo Insurance, Inc.Insurance products are not FDIC insured.

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7. You’re almost home!– Have you met all the conditions of your loan

approval?

– Have you received your estimate of how much money you’ll need to close? Did you get certified checks?

– Have you made your final “walk through” inspection?

– Has the seller removed all belongings from the home and left it in agreed-to condition?

– Proceed to the closing table...

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8. Congratulations on your new home!– Carefully review all documents associated with the

home sale.

– Pay all closing costs in full with a certified check.

– Sign all loan and title documents and take ownership!

– Receive the keys.

– Move on in!!

Questions?

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What is the home buying process?9. After closing…

– Consider signing up for a FREE automated payment option (which can also be done at closing).

• Monthly. • Biweekly---with the extra payment that builds equity.• Weekly—with the extra payment that builds equity.

– Sign up for online servicing —the best online customer experience in the industry1.

– Your mortgage may help you qualify for Wells Fargo’s top-of-the-line PMA® Package or a Complete Advantage® Package.

– We stay in touch to help you with any future needs.

– Don’t hesitate to call us if you have any questions or have a payment problem.

1 Based on findings by Change Sciences Research, Customer Experience Benchmarks and Best Practices: Winning Mortgage Customer Online (April 2007)

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ACTION ITEMS


• Request a PriorityBuyer® pre-approval before you leave, or set up an appointment.

• Obtain a customized First Home® Purchase Plan.

• Find a Real Estate Agent.

“I strongly recommend you take the time NOW — before you start looking at homes — to work with a mortgage advisor to get pre-approved.”


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Why Wells Fargo?

• We have a broad menu of product options.• We are the nation’s #1 retail mortgage lender in

loans for homebuyers1.• Wells Fargo is committed to building lifetime

customer relationships. • Fair & Responsible Lending isn’t just a policy – it’s

the moral fabric upon which we operate.

Wells Fargo Home Mortgage prides itself on its Fair & Responsible Lending & Servicing Principles.

1 Based on yearend 2006 purchase activity volume and market share statistics by Inside Mortgage Finance 3/30/07.

Our Vision: Satisfy our customers’ financial needsand help them succeed financially.

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Why Wells Fargo?Wells Fargo Home Mortgage prides itself on its Fair & Responsible Lending & Servicing Principles.

• Wells Fargo’s goal is not only to get customers into homes, but also to keep them there.

– We value our customers and offer free services to help you:

• Make on-time payments – automatically.• Pay off your mortgage faster – automatically.• Make managing your money easy and routine.

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• A home is an investment in personal and financial well-being.

• Take this opportunity to sit down with a home mortgage consultant.

• Apply for PriorityBuyer® mortgage preapproval.

• Or create a customized First Home® Purchase Plan.

Comfort... Security... A Legacy For Future Generations.

Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. (c) 2008 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. Insurance products are not FDIC insured.

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APPENDIX:Attention Presenter:

choose the most appropriate price point for your market from the

following slides and substitute for slide #19.

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How much money do I need for a down payment?


% Down Payment


Mortgage Amount

Monthly Principal

and Interest8

20% $16,000 $64,000 $394

15% $12,000 $68,000 $419

5% $4,000 $76,000 468


8. Assumes a 30-year fixed-rate mortgage with a 6.25% interest rate. Mortgage insurance is generally required if the down payment is less than 20% and is not included in the monthly payments above.

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% Down Payment


Mortgage Amount

Monthly Principal and

Interest8

20% $30,000. $120,000. $739

15% $22,500. $127,500. $785

5% $7,500. $142,500. $877



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% Down Payment


Mortgage Amount


Interest8

20% $40,000 $160,000 $985

15% $30,000 $170,000 $1,047

5% $10,000 $190,000 $1,170



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% Down Payment


Mortgage Amount


Interest8

20% $60,000 $240,000 $1,478

15% $45,000 $255,000 $1,570

5% $15,000 $285,000 $1,755



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% Down Payment


Mortgage Amount


Interest8

20% $100,000 $400,000 $2,463

15% $75,000 $425,000 $2,617

5% $25,000 $475,000 $2,925



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Buying A Home In Todays Market

Economy & Finance