1. {Your Company Information Here}
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) Capacity (income)
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 Down payment Reserves
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
Credit Reports Include:
General Information about you (name, address, etc.)
Current and previous employers
Bill-paying history (banks, stores, finance companies, mortgage, etc)
Names of creditors
Maximum credit amount granted by one creditor
Maximum credit amount in total
Remaining balance due each of your creditors
Past due remaining balances
Garnishments
Foreclosures
Poor legal credit decisions
Dispute statements
Tax liens
Court judgments
Bankruptcies
Other public records
Non-Traditional Credit
Rent
Utility bill payments
Other recurring expenses

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 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
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
Experian (formerly TRW)
P.O. Box 9600
Allen, TX
(888)
Transunion
P.O. Box 1000
Springfield, PA
(800)
Equifax
P.O. Box
Atlanta, GA
(800)

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 Truth in Lending What is it?
What fees are included?
Truth in Lending

33. LOAN PROGRAMS & LOAN TYPES

34. Loan Programs Government insured loans Conventional mortgage 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 Comparison FHA vs. MC100
Sales Price
$110,000.00
Down Payment $
$500.00
Req. Borr. Funds
3% Minimum Inv.
$500 or 1%=lesser of
Disc./Prem
$0.00
Loan Amount
$105,788.00
30 Yr. Rate
6.125%
1st Mtg. P& I
$642.78
$668.37
MI Pymt Factor
MI Monthly Pymt
$44.08
$95.33
Total Payment
$686.86
$763.70

38. Sample Product Comparison 30 Year vs. MC100
Sales Price
$110,000.00
Down Payment $
$500.00
Req. Borr. Funds
5% Minimum Inv.
$500 or 1%=lesser of
Disc./Prem
$0.00
Loan Amount
$104,500.00
30 Yr. Rate
6.250%
6.125%
1st Mtg. P& I
$643.42
$668.37
MI Pymt Factor
MI Monthly Pymt
$67.93
$95.33
Total Payment
$711.35
$763.70

39. R E A D Y ?

40. The Closing Process Is this something you want to do???!!!
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!