The Joy of Buying Your First Home

1. TheJoy of Buying Your First Home {Your Company Information Here}

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

3. 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

4. Homeownership brings……. • Sense of community • Stability • Tax benefits (Consult your tax advisor) • Stable housing costs • Potential appreciation

5. The Home Buying Process The Homebuying Team: Who is Involved? • Real Estate Agent • Mortgage Broker • Home Inspector Professional • Appraiser • Surveyor • Insurance Agent • Attorney • Escrow/Title Officer

6. Rent vs. Buy • See handout for comparison

7. Preparation

8. Preparation Two things have to happen: • Find a home • Qualify for a loan

9. 4 C’s of Lending • Capital (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?

10. 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

11. Preparing to Buy a Home • Daily Spending Diary (examples) • Financial Worksheets (examples) • Decrease Spending & credit card use • Entertainment (movies, dinners out) • Clothes • Dry cleaning • Budgeting Tools

12. Budgeting • What is a budget? • A budget is a plan for managing your income and expenses

13. Make Budgeting Easier • Decide who pays 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 in saving process • use coupons • find bargains • cut back on eating out

14. 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 entire family – make it a family project • Pay yourself first - SAVE!

15. SAVINGS

16. Importance of Saving • Pay yourself first • Consider savings 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

17. CREDIT

18. The Importance of Credit • What does it mean to a lender • Applying for credit • Managing credit

19. 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

20. Credit Scores • The credit bureau risk score is a summary of the information in your credit file • Scores range from 300-850 • Score ranks consumers according to risk • The higher the score, the lower the risk of default

21. 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

22. 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

23. 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

24. 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

25. 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

26. Credit Reporting Agencies

27. QUALIFYING

28. A House Payment Includes • PITI • Principal • Interest • Taxes • Insurance

29. Pre-Qualification • Determines how much mortgage you qualify for • Informal, no obligation • Figure is an estimation - not exact

30. Approval • Commitment from lender: “conditional approval” for a predetermined amount • Based on verified information

31. Are You Ready to Buy a Home? First Steps: • Review your employment • Have I been employed on a regular basis for 2 years • Evaluate your 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, insurance, 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 home • Am I familiar with what is required to qualify for a home loan? • Am I willing to work towards preparing myself to become a homeowner?

32. Paperwork • Good Faith Estimate • What is it? • What fees are included? • Truth in Lending • What is it?

33. LOAN PROGRAMS& LOAN TYPES

34. 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

35. Loan Types • Fixed-rate loans • Adjustable rate loans

36. 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

37. Sample Product ComparisonFHA vs. MC100

38. Sample Product Comparison 30 Year vs. MC100

39. R E A D Y ?

40. 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???!!!

41. 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

42. Enjoy Your New Home! Thanks for attending!