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First-Time Home Buyers Seminar

First-Time Home Buyers Seminar. By: James Eagle Scott Rivers Stephanie Sack. Overview. 1 . How do I qualify or apply for a mortgage? 2. What are the different types of loans and how do they differ? 3. Which loan program will be best for me?. Seminar Outline.

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First-Time Home Buyers Seminar

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  1. First-Time Home Buyers Seminar By: James Eagle Scott Rivers Stephanie Sack

  2. Overview 1. How do I qualify or apply for a mortgage? 2. What are the different types of loans and how do they differ? 3. Which loan program will be best for me?

  3. Seminar Outline 1) Key mortgage statistics 2) Application process 3) Four types of mortgage loans 4) Real world exercise

  4. Mortgage Statistics • First time home buyers • 39% all purchases • Age • 52% age 24-35 • 21% age 35-44 • Average Income • $68,000 couples • $44,000 Single Female • $52,000 Single Males

  5. Financing Homes • 73% used savings as down payment • 98% found mortgage financing • 81% fixed-rate mortgage • Average down payment 11%

  6. Statistics • <50% home buyers reported making sacrifices such as reducing spending • Luxury items • Entertainment • Clothing • 24% buyers reported the mortgage application and approval process was more difficult than expected

  7. Applying for your Mortgage • Collect your information: • Full Name, SS #, Birthdate • Employment Information • W-2s: past 2 years • Pay Stubs: past 30 days • Credit Card Scores (3) • Incomes: primary and secondary • Assets and Liabilities • Available Funds

  8. Once application is filled out… • The lender will look at your Debt to Income Ratio. • Front-End/Back-End Ratio • 43%

  9. Congratulations • You’re Pre-Approved!

  10. Conventional Loan ProgramMost Popular Loan • Originated 1938 • Not backed by government • Secondary mortgage market • Interest rates • 4.5% • Very credit score dependent • Bankruptcy or Foreclosure • 4 year wait period

  11. Conventional Mortgages • Credit Scores • Minimum 620 • Increased rates under 740 • Minimum down payment • 5% • Create equity • 30-year or 15-year

  12. Conventional Additional Fees • Mortgage insurance • 0.54% • None if 20% or greater down payment • Funding fee • $0 • Maximum loan amount • $417,000

  13. Federal Housing Administration (FHA)Lower-Income • Originated 1934 • Great Depression • Most common loan program • Highest cost • Interest rates • 3.875% • Bankruptcy or Foreclosure • 2 year wait period

  14. FHA Mortgages • Credit Score • Minimum 580 • Increased rates >640 • Minimum down payment • 3.5% • 30-year or 15-year

  15. FHA Additional Costs • Mortgage Insurance • 1.35% • Life of the loan (2014) • Funding fee • 1.75% • Adds to total loan amount • Maximum loan amount • $288,650 (Wisconsin)

  16. Veteran Affairs (VA Loan)For Veterans & Military • Originated 1944 • Post WWII • Least common program • Veterans, Active-duty, Reservists, National Guard, some surviving military spouses • Interest rates • 3.875% • Bankruptcy or Foreclosure • 2 year wait period

  17. VA Mortgages • Credit Score • Minimum 620 • Minimum down payment • 0 • 30-year or 15-year • Only eligible 1 time for 0% down payment

  18. VA Additional Fees • Mortgage Insurance • No mortgage insurance • Funding fee • 2.15% • Maximum loan amount • $417,000 • Uses: • Purchases, Improvements, Construction

  19. United States Department of Agriculture (USDA)Rural Locations • Originated 1994 • Promote rural growth • Interest rates • 4.125% • Bankruptcy or Foreclosure • 3 year wait period • 0 down payment required

  20. USDA Income Restrictions • Income eligibility • All 18+ years of age

  21. USDA Property Restrictions • Property eligibility • Population less than 20,000 • Found at www.usda.gov

  22. USDA Fees • Mortgage Insurance • 0.40% • Until 78% Loan to value • Funding fee • 2% • Adds to total loan amount • Water testing required • About $250

  23. Let’s see how much you could afford!

  24. Questions 1. How do I qualify or apply for a mortgage? 2. What are the different types of loans and how do they differ? 3. Which loan program will be best for me?

  25. Sources • Bank of America – Home Loan Guide http://loans.bankofamerica.com/en/home-mortgages/buy-a-home/ • Daily Finance – House to Home http://www.dailyfinance.com/2013/11/04/things-to-do-before-applying-mortgage/ • Daily Herald – 6 Key Considerations when Applying for a Mortgage https://www.dailyherald.com/article/20130414/business/704149984/ • Freddiemac.com – Applying for and Getting your Mortgage. http://www.freddiemac.com/homeownership/mortgage_process/ • Mortgage Calculator – Application Tips http://www.mortgagecalculator.org/helpful-advice/ups-and-downs • Mortgageloan.com – How to apply for an FHA Loan http://www.mortgageloan.com/how-to-apply-for-an-fha-loan-1733 • PNC Mortgage – Buying a Home https://www.pncmortgage.com/home_loans.aspx • US Bank – Mortgage Process Checklist https://www.usbank.com/mortgage/mortgage-process-checklist.html • The Homeowners Café – Your Step-by-Step Mortgage Guide https://thehomeownerscafe.com/docs/freddie-mac-step-by-step-guide.pdf • Wells Fargo – Homebuying Application Checklist https://www.wellsfargo.com/mortgage/apply/

  26. Sources Cont. • http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=pageLoad&requestInfo=GuaranteedIncomeLimits&NavKey=incomelimit@12 • http://www.boewisconsin.com/MortgageChecklist.aspx • http://www.rurdev.usda.gov/supportdocuments/mn-sfh-grhlenderguide.pdf • http://www.fha.com/lending_limits_state?state=WISCONSIN • https://www.fha.com/fha_article?id=305 • http://www.englending.com/products/mortgage/fha.php • http://www.englending.com/products/mortgage/fixed.php • http://www.englending.com/about/guiding.php • http://www.boewisconsin.com/HomePurchaseBasics.aspx

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