1. LenderSelect Mortgage Group The Benefits of Buying

2. 10/29/2017
We Believe…
OWNING a home is the cornerstone to personal wealth and financial security

3. The Benefits of Buying a Home
Build Equity* through appreciation
Build Equity* by paying down the loan
Tax Benefits – mortgage interest is usually tax-deductible
Stop paying your landlord, start paying yourself!
*Equity is the difference between the value of something and the amount owed on it.

4. Renting vs. Buying $1,145 Rent for 5 Years = $68,700 Vs.
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Renting vs. Buying
$1,145 Rent for 5 Years = $68,700
Vs.
$1,145 Mortgage for 5 Years ($160,000 Home)
2% increase in house value/year = $176,652
$144,716 balance on mortgage
$31,936 in equity
$5,500 less in taxes paid
For educational purposes only and should not be relied upon by you. All information deemed reliable but not guaranteed. Not an exact quote.

5. Experience a Smooth Home Buying Process
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Experience a Smooth Home Buying Process
There are 3 main components when applying for a home mortgage:
Credit
Income
Savings/Assets

6. Credit Credit Score – a minimum of 580 BUT…
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Credit
Credit Score – a minimum of 580 BUT…
Score is NOT the only factor reviewed
Bankruptcy
Foreclosure
Short-sale
Judgments
Collections
Review credit overlays for scores (i.e. liquid cash reserves, etc.)

7. Credit Components Payment History Debt Utilization
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Credit Components
Payment History
Debt Utilization
Length of Credit History
Type of Credit
Inquiries & New Credit

8. 1. Payment History 35% Impact (297 pts)
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1. Payment History 35% Impact (297 pts)
Paying debt on time has the greatest positive impact on your credit score. Late payments, collections, judgments and charge-offs all have a negative impact. One 30-day late can cost you a point decrease in your score.
Missing a high payment will have a more severe impact than missing a low payment.
Delinquencies that have occurred in the last two years carry more weight than older items.

9. 2. Debt Utilization 30% Impact (255 pts)
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2. Debt Utilization 30% Impact (255 pts)
This factor marks the ratio between the outstanding balance and available credit. Ideally, the consumer should make an effort to keep each credit card balance below 25% of the available credit limit.
Outstanding balances that are higher than the credit limit have a very negative impact to score.

10. 3. Length of Credit History 15% Impact (128 pts)
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3. Length of Credit History 15% Impact (128 pts)
This portion of the credit score indicates the length of time since a particular credit line was established. A seasoned borrower will always be stronger in this area.

11. 4. Type of Credit 10% Impact (85 pts)
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4. Type of Credit 10% Impact (85 pts)
A mix of auto loans, student loans, credit cards and mortgages are more positive than a concentration of only 1 type of debt.

12. 5. Inquiries & New Credit 10% Impact (85 pts)
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5. Inquiries & New Credit 10% Impact (85 pts)
This percentage of the credit score quantifies the number of inquiries made on a consumer’s credit within a 6-month period.
Each hard inquiry can cost from 2 to 25 points on a credit score.

13. Tips to Increase Your Score
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Tips to Increase Your Score
Redistribute balances on credit cards.
NEVER close out credit cards when you pay them off.
Increase limits on credit cards, but don’t increase the balance owed.
Open a new credit card to redistribute balances or establish credit history (only if needed).
Don’t pay off old collections unless specifically advised to do so by a lender. If/when you need to, negotiate collection payoffs at 50% of amount owned, but insist that if you pay the collection, it will be REMOVED from your credit report. Use a restrictive endorsement verbiage on the back of the check you write to pay the collection.
Get added as an Authorized User on a seasoned credit card with a low balance and a high limit. Make sure there are no late payments on this account.
Pay off any and all judgments and keep all documentation.

14. Income Consistent – Documented – Taxed
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Income
Consistent – Documented – Taxed
Employment stability & likelihood to continue
Debt-to-Income Ratio (DTI) < 43%
Total monthly debt payments / Total monthly gross income
PITI – Principal + Interest + Taxes + Insurance

15. 40 hours/week x $15/hourly rate = $600/week
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43% DTI Example
Borrower (Hourly)
40 hours/week x $15/hourly rate = $600/week
x 52 weeks = $31,200/year
/ 12 months = $2,600/month
Co-Borrower (Salary)
$25,600/year
/ 12 months = $2,133/month
Total Household Income
$2,600 + $2,133 = $4,733 x 43% = $2,035/month

16. $2,035 - $590 = $1,145/mo Maximum PITI payment
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43% DTI Example
Current Monthly Debt
$2,035 - $590 = $1,145/mo Maximum PITI payment
$1,145/mo PITI = $160,000 Home
This example does not factor in mortgage insurance, condo dues, HOA fees, etc. Actual payment obligation may be higher.

17. Savings/Assets Must be documented Down payment
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Savings/Assets
Must be documented
Down payment
Closing Costs & Prepaids/Escrows
On average about % of the purchase price

18. Ways to Buy a Home with Limited Funds
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Ways to Buy a Home with Limited Funds
VA – no money down
HomeReady/Home Possible – 3% down
FHA – 3.5% down
Conventional – 5% down
Gift Funds
Down Payment Assistance (DPA) Programs
Seller-Paid or Lender-Paid Closing Costs
For educational purposes only and should not be relied upon by you. All information deemed reliable but not guaranteed. Not an exact quote. Programs may vary dependent upon individual scenarios.

19. The Home Buying Process
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The Home Buying Process
Pre-Qualify vs. Conditional Approval
Find a GOOD Buyer’s Agent – They are free!
Select a Home and Write Offer
Contract Acceptance (Ratification)
Home Inspection & Termite Inspection
Appraisal
Title & Insurance
Final conditions > Final Clear to Close
Close and get keys!

20. Types of Real Estate Agents
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Types of Real Estate Agents
Listing Agent (represents seller)
Selling Agent (represents buyer)

21. Multiple Listing Service (MLS)
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Multiple Listing Service (MLS)
What is it?
Why is it beneficial to you?

22. How to Find the Perfect Home
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How to Find the Perfect Home
Geographical Preferences
Special Requirements (“wants” vs. “needs”)
Number of Bedrooms
Number of Baths
Garage
Lot Size
Old or New
How long do you want to live in the home?
Price Range

23. you enjoy the benefits of buying?
How can LSMG help
you enjoy the benefits of buying?