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The Need to Know: Mortgage

The Need to Know: Mortgage. Mitchel Ronacher , Isaac Hill, Adam Luehmann, Corey Plath. What is a Mortgage?. A Loan Legal signed agreement Foreclosure Monthly Payments. P.I.T.I. Principal Interest Taxes Insurance. Where do you find a Mortgage Lender?. Lender can be anyone!

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The Need to Know: Mortgage

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  1. The Need to Know:Mortgage MitchelRonacher, Isaac Hill, Adam Luehmann, Corey Plath

  2. What is a Mortgage? A Loan Legal signed agreement Foreclosure Monthly Payments

  3. P.I.T.I. Principal Interest Taxes Insurance

  4. Where do you find a Mortgage Lender? • Lender can be anyone! • Financial Institutions • Wells Fargo and Chase Bank • Credit Union Mortgage association • Online mortgage • AAAmortgage.com • Quickenloans.com • Method of paying is varied

  5. Benefits of getting a Mortgage Builds credit Builds equity Freedom More pocket cash and security

  6. Uniform Residential Loan Application

  7. Income Employment Investments Other Income

  8. Payment Ability • Goal • Not above 36% • Not above 28%

  9. Expenses Itemized list of current debt Real-estate based debt

  10. Assets Bank Balances Security Account Statements Retirement fund interest Life insurance policies Significant Pieces of personal property

  11. Liabilities Loans

  12. Legal Information Other Debts or Income

  13. What happens next • Information is verified • Credit Report • Background Check • Underwriting

  14. Pre-Approval Letter After Verification Amount approved to lend You decide to accept or not

  15. Good Faith Estimate • Outline of Costs • Credit Report Fees • Home Appraisal • Title Search Fee • Down Payment • Closing Costs

  16. Truth-in-lending Disclosure Statement Amount being financed Finance Charge Payment Schedule Annual percentage rate

  17. HUD-1 Settlement Statement • Discloses • Fees of closing • Low range 3% • High range 7% • Services of closing • Given when closing date is set

  18. The Note States you will repay the loan You agree to the terms of payment Explains the consequences of not paying

  19. Mortgage or Deed of Trust • Third party transfer till full payment • Lender’s right to property • You promise • To keep your house in good repair • To maintain insurance on the property

  20. Deed Signed by seller to transfer ownership Held by third party till the loan is paid You receive a copy as evidence at closing

  21. Affidavits and Declarations Declares the information you provide is true States the house will be your main residence States all needed repairs were made

  22. Home Buyer Credit • First-Time Home Buyer Credit • Enacted by the Government in 2008 • Available from 2008 to 2010 • Provided a tax credit for the year you purchased your home • In some circumstances the credit had to be repaid • This tax benefit is no longer available

  23. Mortgage Credit Certificate • Mortgage Credit Certificate • Availability varies from State to State • A percentage of the interest you pay on your mortgage becomes a tax credit • The remainder of your mortgage interest still qualifies as an itemized deduction • Need to fill out tax Form 8396

  24. Mortgage Interest • Mortgage Interest • Can be included in Itemized Deductions (Schedule A lines 10 and 11) • Limited to interest paid on $1,000,000 of home acquisition debt and interest on $100,000 of home equity debt • May be changed in upcoming years

  25. Real Estate Taxes • Real Estate Taxes • Can be included in itemized deductions (Schedule A line 6) • Do not include itemized charges or charges for improvements that increase your properties value like • Monthly charges for garbage collection • Assessment to build a new sidewalk

  26. Tax Forms • Schedule A • http://www.irs.gov/pub/irs-pdf/f1040sa.pdf • Form 1040 • http://www.irs.gov/pub/irs-pdf/f1040.pdf

  27. Get Prepared • Make sure you are ready • http://www.zillow.com/ • http://www.bankrate.com/calculators/mortgages/mortgage-loan-points-calculator.aspx • Get the scores you need • Experian • TransUnion • Equifax • Organize paperwork • Make time for the pre-approval

  28. Five tips for Buying a House Don’t buy if you can’t stay put. Aim for a home you can really afford. Buy in a district with good schools. Get professional help. Hire a home inspector.

  29. Five Mortgage Mistakes Misunderstanding mortgage discount points. Ignoring mortgage rates. Failing to compare lenders. Not considering various loan options. Not understanding basic terms.

  30. News Article The average 30-year fixed-rate mortgage was 4.32% with 0.7 points for the week ending Sept. 26, down from 4.5% a week earlier. A year ago, the 30-year fixed rate was 3.4%. The average rate for a 15-year fixed-rate mortgage was 3.37% with 0.7 points. Last week the rate was 3.54%, and a year ago it was 2.73%. Read more from JSOnline: http://www.jsonline.com/business/mortgage-rates-hit-9-year-low-freddie-mac-reports-b99107307z1-225357992.html#ixzz2gXgTtZol

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