2. Introductory Module - Real Estate and Mortgage Slide 1 WELCOME Module I: Introductory Presentation Designed for use with the Qualifier Plus ® Training Program Real Estate or Mortgage Workbooks Table of Contents

3. Introductory Module - Real Estate and Mortgage Slide 2 TABLE OF CONTENTS Date Math Overview of Financial Keys Price, Down and LTV Calculating Payments Amortization Qualifying This presentation includes step-by-step instruction for the following introductory chapters:

4. Introductory Module - Real Estate and Mortgage Slide 3 DATE MATH StepsKeysDisplay Example: Assume that today is April 26, 2004 and escrow closes in 45 days. What is the final closing date? Using the colon  key, you can solve for common real estate date problems, including the expiration date of a listing or escrow closing dates. Clear Calculator  0.00 Enter Month  4.— Enter Day  4 — 26 — Enter Year  4 — 26 — 04 Add 45 Days  THU 06-10-04 (Thurs. June 10, 2004) -- Refer to Workbook Chapter 2 06-10-04 THU Table of Contents

5. Introductory Module - Real Estate and Mortgage Slide 4 DATE MATH StepsKeysDisplay Example: How many days are there between October 15, 2004 and March 17, 2005? The date math function also allows you to add or subtract dates or number of days to arrive at a future or past date. Clear Calculator  0.00 Enter Last Date   3 — 17 — 05 Subtract First Date   10 — 15 — 04 Find # of Days  153.00 (days) -- Refer to Workbook Chapter 2 Table of Contents

6. Introductory Module - Real Estate and Mortgage Slide 5 OVERVIEW OF FINANCIAL KEYS The Financial Keys Are: A mortgage payment has four basic elements. If you enter any three of these elements, you can solve for the fourth unknown element. It does not matter in which order you enter the known information. Loan Amount Loan Amount, or Amount to be Borrowed Payment  Payment per Period, Typically Monthly Term  Annual Term, Typically 30 Years Interest  Annual Interest per Period -- Refer to Workbook Chapter 3 Table of Contents

7. Introductory Module - Real Estate and Mortgage Slide 6 PRICE, DOWN AND LOAN-TO-VALUE StepsKeysDisplay Example: Find the loan amount if the sales price is $425,000 and the down payment is 20%. Also find the amount of the down payment. Enter the two known variables (e.g., sales price, down payment), and solve for the third (e.g., loan amount). The calculator will also compute the dollar amount of the down payment if a percentage is entered. Clear Calculator  0.00 Enter Sales Price  425,000.00 Enter Down Pmt %  20.00 % Find Down Pmt $  85,000.00 Find Loan Amt 340,000.00 -- Refer to Workbook Chapter 4 85,000.00 340,000.00 Table of Contents

8. Introductory Module - Real Estate and Mortgage Slide 7 PRICE, DOWN AND LOAN-TO-VALUE StepsKeysDisplay Example: Find the loan-to-value if the buyer is putting $15,000 down on a $289,000 home. The Qualifier Plus IIIx and Qualifier Plus IIIfx will also calculate loan-to-value (LTV). Clear Calculator  0.00 Enter Sales Price  289,000.00 Enter Down Pmt $  15,000.00 Find Down Pmt %  5.19 % Find LTV  LTV 94.81 % Find Loan Amt 274,000.00 -- Refer to Workbook Chapter 4 94.81 5.19274,000.00 Table of Contents

9. Introductory Module - Real Estate and Mortgage Slide 8 PRICE, DOWN AND LOAN-TO-VALUE 20.00300,000.00 StepsKeysDisplay Example: Find the loan-to-value if the buyer needs to borrow 80% for a $375,000 home. LTV can also be entered to determine down payment amount and percentage. Clear Calculator  0.00 Enter Sales Price  375,000.00 Enter LTV  LTV 80.00 % Find Down Pmt $  75,000.00 Find Loan Amt 300,000.00 Find Down Pmt %  20.00 % -- Refer to Workbook Chapter 4 75,000.00 Table of Contents

10. Introductory Module - Real Estate and Mortgage Slide 9 CALCULATING PAYMENTS StepsKeysDisplay Example: What is the monthly P&I (principal and interest) payment for a $200,000 loan at 8% interest for a term of 30 years? The Qualifier Plus IIIx calculator can compute any type of loan payment. Remember, the order you enter the information does not matter. The calculator will solve for the missing variable. Clear Calculator  0.00 Enter Loan Amt  200,000.00 Enter Term  30.00 Enter Interest  8.00 % Find Payment  P+I 1,467.53 -- Refer to Workbook Chapter 5 1,467.53 P+I Table of Contents

11. Introductory Module - Real Estate and Mortgage Slide 10 CALCULATING PAYMENTS Sales Price $225,000 Down Payment 5% Loan Amount 95% Interest 6.25% Term 30 Years Property Tax 1.25% Hazard Insurance $800 PMI 0.50% Example: The monthly principal, interest, tax and insurance payment, or PITI, demonstrates what a buyer’s actual payment will be, including property tax, hazard insurance, and mortgage insurance (PMI). What is the monthly PITI payment? -- Refer to Workbook Chapter 5 Table of Contents

12. Introductory Module - Real Estate and Mortgage Slide 11 1,316.10 P+I 231,750.00 CALCULATING PAYMENTS StepsKeysDisplay Clear Calculator  0.00 Enter Term  30.00 Enter Interest  6.25 % Enter Sales Price   225,000.00 Enter Down Pmt %  5.00 % Enter Tax*   1.25 % Enter Insurance*  800.00 Enter Mortgage Ins*  0.50 % Find Loan Amount 213,750.00 Find P&I Payment  P+I 1,316.10 Find PITI Payment  PITI 1,706.20 Do Not Clear Calculator * If you are using a Qualifier Plus IIIfx, you will need to press  , , and/or  to enter tax, insurance and/or mortgage insurance. -- Refer to Workbook Chapter 5 PITI 1,706.20 Table of Contents

13. Introductory Module - Real Estate and Mortgage Slide 12 CALCULATING PAYMENTS StepsKeysDisplay Example: Add estimated Homeowner’s Association dues of $80 per month to the above example and find the total payment (PITI plus monthly dues). Calculate a the total payment in the event that the buyer will be paying Homeowner’s Association dues. Enter HA Dues  80.00 Find Total Pmt  TTL 1,786.20 -- Refer to Workbook Chapter 5 1,786.20 TTL Table of Contents

14. Introductory Module - Real Estate and Mortgage Slide 13 CALCULATING PAYMENTS StepsKeysDisplay Example: What is the monthly payment for a $250,000 loan at 7%, amortized for 30 years? How fast will a loan be paid off if larger monthly payments are made to the principal? Clear Calculator  0.00 Enter Loan Amt  250,000.00 Enter Interest  7.00 % Enter Term  30.00 Find P&I Payment  P&I 1,663.26 Do Not Clear Calculator -- Refer to Workbook Chapter 5 1,663.26 P+I Table of Contents

15. Introductory Module - Real Estate and Mortgage Slide 14 CALCULATING PAYMENTS StepsKeysDisplay But, if the borrower rounded up to make payments of $1,700 per month, how long would it take to pay off this loan? Enter New Pmt  1,700.00 Find New Term  27.95 (years) Do Not Clear Calculator StepsKeysDisplay What if the borrower paid even more… perhaps $2,000 per month? Enter New Pmt  2,000.00 Find New Term  18.72 (years) -- Refer to Workbook Chapter 5 27.95 18.72 Table of Contents

16. Introductory Module - Real Estate and Mortgage Slide 15 AMORTIZATION Example: What is the monthly payment for a $100,000 loan at 8%, amortized for 30 years? How much of the first payment is interest? principal? What is the remaining loan balance? The  function calculates principal and interest allocation and estimated mortgage interest deduction, as well as amortization and term. -- Refer to Workbook Chapter 6 Table of Contents

17. Introductory Module - Real Estate and Mortgage Slide 16 733.76 AMRT 29.92 REM AMORTIZATION StepsKeysDisplay Clear Calculator  0.00 Enter Loan Amount   100,000.00 Enter Interest  8.00 % Enter Term   30.00 Find P&I Payment  733.76 Set Payment Range   AMRT 1-1 Find Total Interest  666.67 Find Total Principal  67.10 Find Total Int & Prin  733.76 Find Remaining Bal  99,932.90 Find Remaining Term  29.92 -- Refer to Workbook Chapter 6 733.76 P+I 666.67 AMRT 67.10 AMRT 99,932.90 BAL Table of Contents

18. Introductory Module - Real Estate and Mortgage Slide 17 AMORTIZATION The mortgage interest deduction is computed on the sixth press of , after entering the amortization period. It is based on an estimated 28% tax bracket, unless you’ve customized the bracket using . Example: What is the monthly payment for a $100,000 loan at 8% amortized for 30 years? What is the interest paid after making 12 monthly payments (1st year)? What is the principal paid for the 1st year? Total principal and interest? What is the remaining loan balance and term? What is the estimated annual income tax deduction for mortgage interest (based on 28% tax bracket)? -- Refer to Workbook Chapter 6 Table of Contents

19. Introductory Module - Real Estate and Mortgage Slide 18 29.00 REM 99,164.64 BAL 7,969.81 AMRT 835.36 AMRT 8,805.17 AMRT 2,231.55 DED AMORTIZATION StepsKeysDisplay Clear Calculator  0.00 Enter Loan Amount  100,000.00 Enter Interest  8.00 % Enter Term  30.00 Find P&I Payment  733.76 Set Payment Range  1-12 Find Total Interest  7,969.81 Find Total Principal  835.36 Find Total Int & Prin  8,805.17 Find Remaining Bal  99,164.64 Find Remaining Term  29.00 Find Tax Ded (28%)  2,231.55 Do Not Clear Calculator Amortize for the 1st year or period: StepsKeysDisplay -- Refer to Workbook Chapter 6 733.76 P+I Table of Contents

20. Introductory Module - Real Estate and Mortgage Slide 19 28.00 REM 98,259.94 BAL 7,900.48 AMRT 904.70 AMRT 8,805.17 AMRT 2,212.13 DED AMORTIZATION Set Range (2 nd Year)  13-24 Find Total Interest  7,900.48 Find Total Principal  904.70 Find Total Int & Prin  8,805.17 Find Remaining Bal  98,259.94 Find Remaining Term  28.00 Find Tax Ded (28%)  2,212.13 Amortize for the 2nd year or period: StepsKeysDisplay Set Range (3 rd Year)  *25-36 … Amortize for the 3rd year or period: StepsKeysDisplay * Repeated presses of the  key will automatically move to the next year, calculating the same sequence for every year for the life of the loan -- Refer to Workbook Chapter 6 Table of Contents

21. Introductory Module - Real Estate and Mortgage Slide 20 QUALIFYING The Qualifier Plus IIIx and Qualifier Plus IIIfx have two qualifying ratio keys. Press  and it displays 28.00-36.00 (default). As a rule, this is the standard conventional conforming ratio. Press  and it displays 29.00-41.00 (default), which represents the more generous ratio typically found on government-backed loans, such as FHA and VA. Example: With a combined annual income of $60,000 and monthly debt of $400, the buyers have $5,000 down and a loan at 5% for 30 years. Taxes run 1.25%, insurance is 0.5% and PMI is 0.6%. HA dues are $40 monthly. For what loan amount and price do the buyers appear to qualify? What is the estimated PITI payment? -- Refer to Workbook Chapter 7 Table of Contents

22. Introductory Module - Real Estate and Mortgage Slide 21 QUALIFYING StepsKeysDisplay Clear Calculator  0.00 Enter Annual Inc  60,000.00 Enter Monthly Debt  400.00 Enter Down Pmt  5,000.00 Enter Interest  5.00 % Enter Term  30.00 Enter Tax*  1.25 % Enter Insurance*  0.50 % Enter Mortgage Ins*  0.60 % Enter HA Dues  40.00 Display Ratios  28.00-36.00 Find Qual Loan Amt  184,631.02 Find Price w/ Down  189,631.02 Find Total Payment  TTL 1,400.00 Do Not Clear Calculator -- Refer to Workbook Chapter 7 * If you are using a Qualifier Plus IIIfx, you will need to press  , , and/or  to enter tax, insurance and/or mortgage insurance. 28.00-36.00 184,631.02 MAX 189,631.02 1,400.00 TTL Table of Contents

23. Introductory Module - Real Estate and Mortgage Slide 22 241,407.25 1,750.00 TTL 28.00-36.00 231,407.25 MAX QUALIFYING StepsKeysDisplay But, what if their income increased to $75,000 and they also increased their down payment to 10%? Enter New Income  75,000.00 Enter New Dn Pmt  10,000.00 Display Ratios  28.00-36.00 Find Qual Amt  231,407.25 Find Price w/ Down  241,407.25 Find Total Payment  TTL 1,750.00 Do Not Clear Calculator -- Refer to Workbook Chapter 7 Table of Contents

24. Introductory Module - Real Estate and Mortgage Slide 23 28.00-36.00 237,792.85 MAX 1,750.00 TTL 20.00 59,448.21 297,241.06 QUALIFYING StepsKeysDisplay If they put 20% down instead of only $10,000, and eliminated mortgage insurance, what could they qualify for? How much money will be required for the down payment to equal 20%? Enter New Down Pmt  20.00 % Delete Mortgage Ins*  0.00 Display Qual 1 Ratios  28.00-36.00 Find Qual Loan Amt  237,792.85 Find Price w/ Down  297,241.06 Display Down Pmt %  20.00 % Display Down Pmt $  59,448.21 Find Total Payment  TTL 1,750.00 -- Refer to Workbook Chapter 7 * If you are using a Qualifier Plus IIIfx, you will need to press  , , and/or  to enter tax, insurance and/or mortgage insurance. Table of Contents

25. Introductory Module - Real Estate and Mortgage Slide 24 QUESTIONS Questions? Thank you for your attendance and participation. Good Luck! Table of Contents

26. Introductory Module - Real Estate and Mortgage Slide 25 06-10-04 THU