The Journey to Your Own Home

1. The Journey to Your Own Home Made simple… By: Multicultural Marketing Division

2. We understand that it can be overwhelming… We will explain the process for you in 8 simple steps!

3. The 8 important steps: Selecting a Real Estate Agent Selecting a Lending Professional Deciding on a Place to Call “Home”! Presenting the Offer to Purchase The Mortgage Loan Process Escrow Process Begins More…

4. Concurrent Events • Preliminary Title Report • Inspections and Disclosures • Appraisal • Meeting of all Conditions • Final Inspection • The Closing • Execute the documents and send them to the lender • The Funds Transfer and Deed Registry • The Closing

5. 1. Selecting a Real Estate Agent As a homebuyer, a real estate professional is an available complimentary resource to you, as sellers pay for their professional fees! While not required – highly recommended. There is a BIG the difference! ANYONE with a real estate license is a real estate agent Only a member of the National Association of Realtors® is a REALTOR®

6. Why a REALTOR ®? Code of Ethics As a member of the National Association of Realtors®, agents must legally abide by a comprehensive code of ethics protecting you Education and Expertise Only Realtors® have access to a number of certification courses and educational opportunities uniquely poised to mirror current trends and market changes Extensive property search capabilities Only Realtors® have access to the complete multiple property listing service, known as the “MLS”

7. 2. Selecting a Lending Professional A lending professional is the next key player – as he/she can determine how much you can afford based on a combination of facts about you – this is known as the “pre-approval” Typically, a pre-approval is based on good faith analysis of the information you have provided on your lending application In most cases, NOT verified until later in process In return, a good faith estimate of costs and payments is prepared for your review

8. 3. Deciding on a Place to Call “Home”! Now that how much you can afford has been determined, your Real Estate agent can help you find your “dream home”, based on: Your preferred style and size The calculated price range Desired location

9. 4. Presenting the Offer to Purchase You have found your new home! Your Real Estate agent will prepare, on your behalf, the correct contract agreements to present to the seller or seller’s agent as your offer to purchase The seller or seller’s agent reviews your offer for approval Purchase agreement is NOT considered executed until both the seller and buyer have agreed and SIGNED

10. 5. The Mortgage Loan Process • Remember those details you provided to the lending professional for pre-approval? They are now VERIFIED • Ability • Willingness • Equity • Collateral

11. Ability Ability – Basically, how much can you afford to pay per month? Debt to income ratios – Are checked to ensure your debt is appropriate compared to your income Stability (two years, same field) Does not necessarily have to be in the same company – note, same field desirable

12. Ability Verifiability How much has to or can you have verified to get loan approved? Employment Income Assets

13. Willingness Willingness Credit score – traditionally 620 or above to get a “prime loan” – the higher the score, the lower the interest rate on a loan Credit history – you are entitled to a free copy every 12 months at www.annualcreditreport.com Public record, Social Security Number, Fraud Alerts

14. Equity Simply put – value of the property less debt Traditionally, the debt CANNOT exceed the value of the property – you will become familiar with the term LTV – which means “loan to value” You can not expect to request a $500,000 loan for a home priced at $385,000 The equity becomes more stable over time, as property increases value and mortgage payments are made towards existing debt

15. Collateral Lenders approve a loan based on RISK The higher the “collateral” or down payment, the lower the risk The lower the collateral, the higher the risk The higher the risk – the higher the interest rate The lower the risk – the lower the interest rate

16. 6. The Escrow Process Begins Once purchase agreement is fully executed, it must accompany a good faith deposit This good faith deposit is entrusted to an escrow representative for protection in a third party account – most commonly known as a Title company This officially marks the beginning of the “escrow process”

17. 7. Concurrent Events Preliminary Title Report Inspections and Disclosures Appraisal Meeting of all Conditions Final Inspection

18. Preliminary Title Report Ordered by escrow agent to review for presence of any defects Reviewed Accepted by escrow agent to move forward

19. Inspections and disclosures • General property inspector • Usually hired and paid by you as buyer to check for cosmetic, structural, plumbing and electrical defects, may also be certified to check for termites. • If new home or a construction loan, as required by local building codes and ordinances, as well as loan approval (construction loan) • Disclosures – If seller has made any disclosures in regards to property – these are reviewed • All must occur within timeframe specified in written agreement

20. Appraisal The appraiser assesses and confirms value of the homepurchased – required for loan approval

21. Meeting of All Conditions “Condition” - something that must exist for something else to happen, e.g. to bring a situation about or make a contract valid – Encarta Dictionary The escrow agents ensures all stipulated conditions are met - to finalize closing

22. Your Final Inspection Your goal – to approve home is in “move in” condition Also, if any prior inspection items needed attention – that these have been satisfied

23. 8. Closing Lending instructions are reviewed with you by escrow agent Documents to be recorded reviewed with you for accuracy Don’t forget your PHOTO ID and CERTIFIED Check for any amounts due at closing

24. Closing continued The escrow agent returns signed documents to the lender The lender’s funds are transferred to the escrow agent (title company) – electronically The Deed is registered at the county office (the deed is later sent to buyer) The transaction is now closed – all accounting final and account statement remitted

25. Congratulations! You can now receive the keys to YOUR own home!