the joy of buying your first homePresented by: Victoria Johnson

Broker/Owner of Luxury Loans

Agenda

• Homeownership Brings....• What is Homeownership?• Preparation• Budgeting, Savings, and Credit• Qualifying• Loan Programs• Are you ready to buy a home?

What is homeownership?

• The American Dream• An opportunity to provide for family• A tax deduction• Property appreciation• Having the nicest lawn on the block• Your own backyard• Your own garage

Homeownership brings...

• Sense of community• Stability• Tax benefits (Consult your tax advisor)

• Stable housing costs• Potential appreciation

the home buying process

• Real Estate Agent• Mortgage Broker• Home Inspector Professional• Appraiser• Surveyor• Insurance Agent

The Homebuying Team: Who is Involved?

•Attorney•Escrow/ Title Officer

rent vs. buy

• Personal- a place of your own that reflects your taste and lifestyle

• Emotional- an accomplishment you can take pride in.

• Generational- a secure future for your family, for generations to come.

• Financial- the investment of a lifetime

Why Buy a Home? What are the Benefits of Ownership?

Preparation

• Find a home• Qualify for a loan

Two things have to happen:

4 C’s of lending• Captial (savings)

• Do you have enough cash for the down payment and closing costs?

• Do you have enough cash for emergencies?

• Capacity (income)

• Can you repay the debt?

• Character (credit history)

• Will you repay the debt?

• Collateral (house)

• Will the lender be fully protected if you fail to repay the loan?

what lenders look for• Debt to Income Ratios

• Relationship between current consumer debts and current income

• Is your income high enough?

• Are your debts low enough?

• Down payment

• The higher the down payment, the lower the loan amount

• Reserves

• How much money do you have saved?

• How much will be left after closing?

• Do you pay your bills on time?

• Credit Reports

• Non-traditional credit

preparing to buy a home

• Daily Spending Diary• Financial Worksheets• Decrease Spending & Credit Card Use

• Entertainment (movies, dinners out)• Clothes• Dry Cleaning

• Budgeting Tools

budgeting• What is a budget?

• A budget is a plan for managing you income and expenses

make budgeting easier• Decide who pays the bills• Know when bills are due• Open a checking account & savings account• Check interest rates on all of your loans• Pay down high cost loans & credit cards• Involve family saving process

• use coupons• find bargains• cut back on eating out

IMPORTANCE OF SAVING• Pay yourself first• Consider saving via payroll deduction• Bank your change at the end of the day• Bank surprises• Bonuses and gifts• If you can save $2.00 a day @ 2%

interest you will have saved over $1,500 in 2 years

• That is one less Starbucks coffee each day

SAVINGS

budgeting tips• Plan expenses according to current

income• Establish budget for six months to one

year• Keep record-keeping simple• Set money aside for maintenance &

emergencies• Get consensus from the entire family -

makie it a family project• Pay yourself first - SAVE!!

credit

The importance of credit

•What does it mean to be a lender

•Applying for credit•Managing credit

how lenders use a credit score

•Scores assess past bill paying history to predict future behavior

•Scores are used to perform a risk analysis which helps predict the likelihood of loan repayment

Credit scores•The credit bureau risk score is a

summary of the information in your credit file

•Scores range from 300-850•Scores ranks consumers

according to risk•The higher the score, the lower

the risk of default

common credit problems• Multiple credit cards used to their limit• Obtain new credit when existing debts

remain unpaid• Pattern of late payments on current

debts• Bankruptcies• Judgments• Charge-offs• Foreclosures

solving credit problems

• Cancel unnecessary credit• Pay off or pay down debts• Resolve unpaid debts• Write letters to credit bureaus for

corrections• Settle with collection agencies

easy steps to build credit• Open a checking and savings account to

pay bills easily• Establish credit by:

• Applying for a small loan using savings as collateral

• Applying for a credit card and using it minimally

• Applying for a loan with a co-signer• Establish non-traditional credit

easy steps to build credit• Rent payments• Electric and other utility payments, car

insurance• Child care or child support payments• Any other recurring expense• Non-traditional credit sources must be in

your name

know your credit• Request a copy of your credit report• Review for accuracy• Dispute inaccurate information• Send a letter to the 3 credit bureaus if you

have a dispute• Pay all past due accounts as soon as you can• Negotiate with creditors if you can’t pay in

full• If blemishes are severe- consider credit

counseling

credit reporting agencies

Experian (formerly TRW)Experian (formerly TRW)P.O. Box 9600P.O. Box 9600

Allen, TX 75013Allen, TX 75013www.experian.com

(888) 397-3742(888) 397-3742

TransunionTransunionP.O. Box 1000P.O. Box 1000

Springfield, PA 19022Springfield, PA 19022www.transunion.com

(800) 888-4213(800) 888-4213

EquifaxEquifaxP.O. Box 740241P.O. Box 740241

Atlanta, GA 30374Atlanta, GA 30374www.equifax.com(800) 685-1111(800) 685-1111

qualifying

a house paymentincludes:

• PITI• Principal• Interests• Taxes• Insurances

pre-qualification• Determines how much mortgage you

qualify for• Informal, no obligation• Figure is an estimation - not exact

approval

• Commitment from lender “conditional approval” for a predetermined amount

• Based on verified information

are you ready to buy a home•Review your employment* Have I been employed on a regular basis for 2 years

•Evaluate our sources of income* Is my income steady?* Do I have money saved for a down payment & closing costs?

•Analyze your current expenses* Do I have a budget?* Can I handle a monthly mortgage payment, taxes, insurances, repairs* Can I handle unexpected events?

•Determine the status of your credit history* Do I have established credit? * Have I paid my bills on time?

•Yes - I want to own a homeAm I familiar with what is required to qualify for a home loan?Am I willing to work towards preparing myself to become a homeowner?

PAPERWORK

• Good Faith Estimate* What is it?* What fees are included?

• Truth in Lending* What is it?

Loan programs&

Loan types

Loan programs• Government insured loans

* FHA Loans* VA Loans

• Conventional mortgage loans* Affordable loan programs - 0-5% down payment

• Special loan programs* Bond programs* Down payment assistance programs

Loan types• Fixed-rate loans• Adjustable rate loans

sample programs• Standard Conforming 30 Yr. fixed• My community 97 (Conforming)• My community 100 (Conforming)• Flex 97 (Conforming)• Flex 100 (Conforming)• FHA• ARM’s/ Hybrids

sample product comparisonFHA vs. MC100

Sales price $110,000.00 $110,000.00Down Payment $3,300.00 $500.00

Req. Borr. Funds 3% Minimum Inv. $500 or 1% = lesser of

Disc. / Prem $0.00 $0.00Loan Amount $105,788.00 $110,000.0030 Yr. Rate 6.125% 6.125%

1st Mtg. P & I $642.78 $668.37MI Pymt Factor 0.000416667 0.000866667

MI Monthly Pymt $44.08 $95.33Total Payment $686.86 $763.70

sample product comparison30 Year vs. MC100

Sales price $110,000.00 $110,000.00Down Payment $5,500 $500.00

Req. Borr. Funds 5% Minimum Inv. $500 or 1% = lesser of

Disc. / Prem $0.00 $0.00Loan Amount $104,500 $110,000.0030 Yr. Rate 6.250% 6.125%

1st Mtg. P & I $643.42 $668.37MI Pymt Factor 0.00065 0.000866667

MI Monthly Pymt $67.93 $95.33Total Payment $686.86 $763.70

r e a d y ?

The closing process• Sign mortgage or deed of trust• Sign your mortgage note & other loan

documents• Bring funds to close on your home• Verify insurance policies• GET THE KEYS TO YOUR HOME!

Is this something you want to do???!!!

life as a homeowner• Stay within your budget• Make your mortgage payment top

priority• Any mortgage payment difficulties-

CONTACT THE LENDER IMMEDIATELY• Use cost-effective energy savings

measures• Hire a reputable contractor for major

repairs• Have an emergency maintenance fund

The members of the National Association of Mortgage Brokers, believing that the interests of the public and private sector are best served through the voluntary

observance of ethical standards of practice, hereby subscribe to the following Code of Ethics.

HONESTY & INTEGRITYNAMB members shall conduct business in a manner reflecting honesty, honor, and integrity.

PROFESSIONAL CONDUCTNAMB members shall conduct business activities in a professional manner. Members shall not pressure any provider of services, goods or facilities to circumvent industry professional standards. Equally, members shall not respond to any such pressure placed upon them.

HONESTY IN ADVERTISINGNAMB members shall provide accurate information in all advertisements and solicitations.

CONFIDENTIALITYNAMB members shall not disclose unauthorized confidential information.

COMPLIANCE WITH LAWNAMB members shall conduct business in compliance with all applicable laws and regulations..

DISCLOSURE OF FINANCIAL INTERESTSNAMB members shall disclose any equity or financial interest they may have in the collateral being offered to secure a loan.

www.namb.org www.sdnccamb.com

enjoy your new home!

Thank you for attending!