Introduction to Home Mortgages

Outline Process to purchase a home Process to purchase a home –Pre-approval Programs Programs What do Lenders look for? What do Lenders look for? What should you look for? What should you look for?

Pre-Approval Realtors and sellers usually require a pre-approval letter when you put an offer down on a home. Realtors and sellers usually require a pre-approval letter when you put an offer down on a home. Application Application Pull credit report Pull credit report Learn maximum loan amount approved for Learn maximum loan amount approved for Know payment Know payment Good Faith Estimate (GFE) Good Faith Estimate (GFE) No Cost for pre-approval No Cost for pre-approval

Programs 1 st time Homebuyer Programs 1 st time Homebuyer Programs –95% loan to value –97% loan to value –100% loan to value –103% loan to value Interest rates for 1 st time Homebuyers vs rates for previous purchase homebuyers. Interest rates for 1 st time Homebuyers vs rates for previous purchase homebuyers.

What Do LENDERS Look For In Customers? Credit Credit –Credit established –680 + credit score –Can build non traditional credit Debt to Income Ratio Debt to Income Ratio –DTI between 38% and 55% –Gross income –Student loans

Example Income: $60,000 a year = $5,000 a month Current monthly debt: Student loans $150 pmt Credit cards $100 pmt Car loan$250 pmt How much do I qualify for? $500 current debt per month 45% DTI = $2,250 minus current debt Approximately $1,750 a month

What Should YOU Look For In A Mortgage? Interest Rate Interest Rate Fixed Rate / Variable Rate Fixed Rate / Variable Rate Pre-Payment Penalty Pre-Payment Penalty Closing Costs Closing Costs Local Representative Local Representative