Home-Buying Class Presented by Brian Shields and Trina Torkelson

Meet Brian & Trina Brian Sheilds Redfin Agent ● 327 Redfin Buyers and Sellers ● 4.9 star rating (118 reviews) Trina Torkelson Redfin Agent ● 28 Redfin Buyers and Sellers ● 4.9 star rating (28 reviews)

About Redfin A better way to buy & sell On Your Side Redfin Agents are paid based on your satisfaction, not commission, so your interests always come first. Smarter & Faster Move quickly and confidently with our easy online tools and the most complete and accurate home sales data available. You Get More Get full service and better results while saving thousands in fees. 100% Team Support You’ll work with a team of real estate pros, so there’s always someone ready to help.

Redfin Rebate

Agenda 1. Local Real Estate Trends 2. Home-Buying Process 3. Recap 4. Conclusion

Understanding the Market

#1. Local Real Estate Trends

Everett Real Estate Overview Median List Price$348K Median List $/Sq. Ft.$184 Median Sale Price$304K Median Sale $/Sq. Ft.$176 Median Sale/List99.9% Average Number of Offers1.6 Average Down Payment14.9% Number of Homes Sold525 Calculated using the last 90 days

Trending: Bidding Wars

Swag Slide! Puget Sound is home to the largest species of what animal?

The giant Pacific octopus grows bigger and lives longer than any other octopus species. The size record is held by a specimen that was 30 feet across and weighed more than 600 pounds! Averages are more like 16 feet and 110 lbs

New Construction

Foreclosures & Short Sales

#2. Home-Buying Process

Before You Buy ● Rent vs. own ● Length of ownership ● Life changes (family, job) ● Personal finances

Overview of the Home-Buying Process 1. Research 2. Search for Homes 3. Finance Your Home 4. Make Your Offer 5. Closing Process

Swag Slide! Where did the deadliest avalanche in American History take place?

1910, Wellington, WA 1910

1. Research Home wish list Location & neighborhoods Mortgage loans & pre-approval Real estate agents & reviews

2. Search for Homes Create a wish list for home features Check out open houses See homes in person on home tours Save searches on Redfin and get notifications on the Redfin app &

See Homes in Person

3. Finance Your Home Review your finances Check your credit score Find the right loan Get pre-approved

Latest Mortgage Rates Type of LoanMay 8th, 2015April 9 th, Year Fixed3.8%3.66% 15-Year Fixed3.02%2.93% 5/1 ARM2.9%2.83% 1-Year ARM2.46%

Latest Mortgage Rates Type of LoanFebruary 26 th, 2015January 8 th, Year Fixed3.80%3.73% 15-Year Fixed3.07%3.05% 5/1 ARM2.99%2.98% 1-Year ARM2.44%2.39%

4. Make Your Offer Pricing & comparables Common contingencies Negotiations Mutual acceptance

5. Closing Process Inspection Appraisal Financing & approval Title Closing!

The Closing Process Success! The seller has agreed with your price and terms. You’ve achieved mutual acceptance. Deposit your earnest money to prove you’re serious about the offer. The seller will disclose any known problems with the property. The home’s owner history and title for liens, encroachments, and easements is reviewed. Schedule a professional home inspection. Your agent will have recom- mendations. Select your lender and submit your loan within three days of mutual acceptance. Take your final walkthrough to look for any issues since the inspection. Sign all of the paperwork at your signing appointment. Get your keys, take possession, and start moving! Receive your Redfin commission refund. Complete the Redfin survey for your agent. Appraisal!

Home Inspection

Congratulations, You bought a home!

Swag Slide! Everett is the home of the largest of this type of facility on the west coast?

No- Not Boeing!

Everett Marina! Largest public marina on the West Coast

Questions?

Break! ● Brian Shields ● Trina Torkelson

Mortgages

Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders! Taraya Caple NMLS Bay Equity LLC Phone: (425)

Getting Pre-Approved First Steps… ~CHECK YOUR CREDIT ~DETERMINE YOUR BUDGET ~GET PRE-APPROVED

~CHECK YOUR CREDIT Before starting the application process, you should pay off all collection accounts that appear on your credit report T / F FALSE: Paying off old collection debts will bring the “date of last activity” to the current date, causing a negative effect on your credit score.

~CHECK YOUR CREDIT o Experian, Transunion, Equifax One bureau - once per quarter o Review: Open, closed accounts Derogatory accounts Late payments, collections, public records, judgments, tax liens o Do NOT try and repair your credit on your own Work with a Mortgage Advisor who knows how to help  They have the tools - “What If” simulator

o Paying debt on time and in full has the greatest positive impact on your credit score. o Late payments, judgments and charge-offs all have a negative impact. o Time heals - Delinquencies that have occurred in the last two years carry more weight than older items. PAYMENT HISTORY - 35% ~IT’S ALL ABOUT YOUR CREDIT SCORE

o The ratio between the outstanding balance and available credit. o Keep balances as close to zero as possible, and definitely below 30% of the available credit limit at least 2-3 months prior to trying to purchase a home. AMOUNTS OWED - 30% ~IT’S ALL ABOUT YOUR CREDIT SCORE

o The length of time since a particular credit line was established. The longer the credit history, the better. o Don’t close accounts you’ve had for a long time! LENGTH OF CREDIT HISTORY - 15% ~IT’S ALL ABOUT YOUR CREDIT SCORE

Hard Inquiry vs. Soft Inquiry – o Hard Inquiries: points (maximum # of inquiries that will reduce the score is 10 within 6-12mo) o Same type of inquiry within 30 days will count as one inquiry o Soft Inquiries – Yourself, Existing Creditors - No effect on score NEW CREDIT - 10% ~IT’S ALL ABOUT YOUR CREDIT SCORE

o The ideal combination of credit is 2-3 revolving accounts, 1-2 installment accounts and 1 mortgage. o You should have a minimum of 3 open and active tradelines. TYPE OF CREDIT USED - 10% ~IT’S ALL ABOUT YOUR CREDIT SCORE

To improve score: o Pay down credit balances to 30% of available limit o Don’t pay off old collection accounts*** o Don’t open or close any credit accounts  Unless opening new accounts to establish credit o Don’t buy any big ticket items (no new cars or furniture shopping!)

~DETERMINE YOUR BUDGET o Establish comfort level for monthly mortgage payment Trial period – Try on budget Put difference between current rent payment and projected mortgage payment in savings each month for 6 months o Budget for future expenses or unexpected emergency Starting goal: 3 months mortgage payment in savings Long term goal: 6 months mortgage payment for each property owned in savings

HOW MUCH CAN I AFFORD? DTI (Debt to Income Ratio) 45% - Mortgage payment + Monthly minimum debt payments divided by Gross monthly income Example: Mortgage payment: $1,000 Car payment: $300 Visa: $150 Student Loan: $50 Total Monthly Debt: $1,500 Monthly mortgage payment ($1,000) + monthly debt payments ($500) = $1,500 divided by your monthly income ($3,333) =.45 (45%) $1,500/$3,333= 45% ~DETERMINE YOUR BUDGET cont…

~GETTING PRE-QUALIFIED What are the steps my Lender will take? Pull credit Review any derogatory items Letter of explanation for all credit inquiries Review & Calculate Income/Employment – 2 year history Determine Qualifying Income Wage Earner: 2 yr W2’s Paystubs covering 30 days Self Employed: 2 yr personal and business tax returns Review Assets 2 months bank statements All non-payroll deposits sourced Need to see where down payment is coming from

Run “AUS” Automated underwriting system Issue “Pre-Qualification Letter” ~GETTING PRE-QUALIFIED cont… ~GETTING PRE-APPROVED Issue “Pre-Approval Certificate” ***takes a little longer, but is highly recommended so there are no “surprises” All of the above – plus…. Submit file to underwriting File will be reviewed and approved by an Underwriter

~HOW MUCH MONEY WILL I NEED? ~ Down Payment Where is it coming from? (must be sourced) o Gift Funds o Own Funds ~ Closing Costs – (typically around 3% of sales price) How much are they Who is paying for them? (Seller / Buyer) Lender Credit? ~ Upfront Costs- Inspection (approx $500) Appraisal (approx $500 - $550) Credit Report ($20-$45)

TYPES OF LOANS ZERO DOWN OPTIONS- o VA Loan: (Veterans, active duty personnel, reservists/national guard, surviving spouses)  Zero down payment required o USDA Loan:  Zero down payment required  Must be income & property eligible o WA Bond Programs:  Down Payment Assistance available must income qualify LOW DOWN PAYMENT OPTIONS – (zero down w/gift funds) o Conventional:  As low as 3% down o FHA:  3.5% down payment o Renovation Programs:  FHA 203K  Fannie Mae Homestyle

THINGS NOT TO DO!! Buy large ticket items Close any credit accounts Open any credit accounts (Don’t co-sign for anyone!) Do any credit repair on your own Plan vacation during process or when you expect to be closing Change jobs 2 year history needed – don’t make any major changes

INTEREST RATES What makes them move?

INTEREST RATES - How are they priced? cost of 1.848% credit of.345% Which one will save you more money? Which one would you take? 1.848% (.345%) 4.375% 4.750%

Important Factors: How long you are going to stay in the house What is most important – how much cash you have at closing or lowest monthly payment possible? 4.375%4.750% LOAN AMOUNT$00,000$300,000 INTEREST RATE / APR4.375% / 4.582%4.750% / 4.778% TERMS (MOS)360 PAYMENT$1,497.83$1, CASH TO CLOSE$11,548.91$4, diff of $6, MONTHLY SAVINGS$67.09 SAVINGS (5 YEARS) $1,011 SAVINGS (20 YEARS) $20,000 5 YEAR SAVINGS $1, % 5 YEAR SAVINGS $1, % 20 YEAR SAVINGS $20, % 20 YEAR SAVINGS $20, %

Important Factors: How long you are going to stay in the house What is most important – how much cash you have at closing or having the lowest monthly payment possible? 4.375%4.750% LOAN AMOUNT$300,000 INTEREST RATE / APR4.375% / 4.582%4.750% / 4.778% TERMS (MOS)360 PAYMENT$1,497.83$1, CASH TO CLOSE$11,548.91$4, diff of $6, MONTHLY SAVINGS$67.09 SAVINGS (5 YEARS) $1,011 SAVINGS (20 YEARS) $20,000 5 YEAR SAVINGS $1, % 5 YEAR SAVINGS $1, % 20 YEAR SAVINGS $20, % 20 YEAR SAVINGS $20, %

IS NOW A GOOD TIME TO BUY? (History of Interest Rates)

IS NOW A GOOD TIME TO BUY? (History of House Prices)

Questions?

#4. Conclusion

So, What Now? Make sure it’s the right time to buy for you. Find an agent & get pre-approved for a loan. Search for homes on Redfin.com & mobile app. See homes in person & make an offer. Buy a home!

Get More From Redfin Explore our online tools, including a home affordability calculator to find out how much you can afford, and the home value tool to see how much a home is worth. Take Redfin with you: Download the Redfin app for iPhone, iPad, and Android. Claim your home on Redfin and receive monthly home reports. Sell your home: Work with a Redfin Agent to sell your home and get free professional photography and online marketing to all the right buyers — for a 1.5% listing fee. Check out more classes, including market trends, mortgages, home selling classes, and more at Redfin.com/Events.

Thanks for Coming! ● Brian Shields ● Trina Torkelson