First Time Homebuyers Seminar

30
Heading Home A Seminar for First-time Homebuyers PRESENTED BY: First Call Mortgage “Call us First, you’ll be glad you did!” AND The NH Home Team – ReMax Properties, Kelsey Nippe, Realtor

Transcript of First Time Homebuyers Seminar

Page 1: First Time Homebuyers Seminar

Heading HomeA Seminar for First-time Homebuyers

PRESENTED BY:

First Call Mortgage

“Call us First, you’ll be glad you did!”AND

The NH Home Team – ReMax

Properties, Kelsey Nippe, Realtor

Page 2: First Time Homebuyers Seminar

On Your Way to Your First Home

• Buying a home is a big step.Buying a home is a big step.

• Choose a home and a financing Choose a home and a financing program that’s right for you.program that’s right for you.

• Look into various mortgage options Look into various mortgage options and what they cost.and what they cost.

• Select a loan program that fits your Select a loan program that fits your budget, lifestyle and goals.budget, lifestyle and goals.

2

Page 3: First Time Homebuyers Seminar

Why Buy Instead of Rent?

• Buying a home can be a Buying a home can be a wise investment.wise investment.

• Typically homes increase in value Typically homes increase in value over time.over time.

• You can build ownership interest – You can build ownership interest – this is known as this is known as equityequity..

• Interest paid on a home mortgage Interest paid on a home mortgage is typically tax deductible*.is typically tax deductible*.

*Consult Your Tax Advisor Regarding Deductibility of Interest*Consult Your Tax Advisor Regarding Deductibility of Interest

3

Page 4: First Time Homebuyers Seminar

Where Do I Begin?

• Apply for mortgage Apply for mortgage pre-approvalpre-approval..

• Put together a personal “home team” Put together a personal “home team” of experts:of experts:– An experienced real estate agent or builderAn experienced real estate agent or builder

– A knowledgeable loan officerA knowledgeable loan officer

• Learn more about the home Learn more about the home buying process.buying process.

• Ask yourself some key questions.Ask yourself some key questions.

4

Page 5: First Time Homebuyers Seminar

How to Begin?It’s as Easy as 1, 2, 3.

1 Apply for mortgage pre-approval.Apply for mortgage pre-approval.

2 Put together a personal “home team”Put together a personal “home team”of experts:of experts:– An experienced real estate agent or builderAn experienced real estate agent or builder

– A knowledgeable loan officerA knowledgeable loan officer

3 Learn more about the home Learn more about the home buying process.buying process.

5

Page 6: First Time Homebuyers Seminar

THE BASICSTHE BASICS

The Basics

Page 7: First Time Homebuyers Seminar

How Much HomeCan I Afford?

• To determine your maximum mortgage amount, To determine your maximum mortgage amount, lenders look at:lenders look at:– Your credit historyYour credit history

– Available cash for down payment and closing costsAvailable cash for down payment and closing costs

– Your incomeYour income

– Your existing debt and financial obligationsYour existing debt and financial obligations

• Your maximum mortgage amount, plus your Your maximum mortgage amount, plus your planned down payment, equals your home-purchase planned down payment, equals your home-purchase price range.price range.

7

Page 8: First Time Homebuyers Seminar

How Important Is My Credit?

• A history of paying monthly payments on time indicates A history of paying monthly payments on time indicates you are likely to make mortgage you are likely to make mortgage payments on time.payments on time.

• Your credit score, (e.g., a FICO score) can be a factor in Your credit score, (e.g., a FICO score) can be a factor in the kind of mortgage program for which the kind of mortgage program for which you may qualify.you may qualify.

• Your credit history can also affect:Your credit history can also affect:– The amount required for a down paymentThe amount required for a down payment

– The amount of money you can borrow in relation to The amount of money you can borrow in relation to your incomeyour income

– The interest rate you are offeredThe interest rate you are offered

• If you haven’t already, obtain a copy of your If you haven’t already, obtain a copy of your credit report.credit report.

8

Page 9: First Time Homebuyers Seminar

To Establish or Improve Your Credit Rating

• Use credit to purchase low priced items. Use credit to purchase low priced items. Make a few, prompt minimum payments, then Make a few, prompt minimum payments, then pay off the balance.pay off the balance.

• Collect alternative credit records, such as paid receipts Collect alternative credit records, such as paid receipts and cancelled checks for rent and and cancelled checks for rent and utility payments.utility payments.

• Try to pay off outstanding loans or credit card debts.Try to pay off outstanding loans or credit card debts.

• Consider closing some credit card accounts.Consider closing some credit card accounts.

If you have no established credit history, or If you have no established credit history, or less-than-perfect credit, there are loan programs less-than-perfect credit, there are loan programs that can help you buy a home.that can help you buy a home.

9

Page 10: First Time Homebuyers Seminar

How Much Do I Need for a Down Payment?

• Today’s flexible mortgage programs make Today’s flexible mortgage programs make down payments less of a challenge.down payments less of a challenge.

• Some homebuyers may be eligible for down Some homebuyers may be eligible for down payment assistance.payment assistance.

• You may be able to buy a home with very low or You may be able to buy a home with very low or no down payment.no down payment.

• Loans with down payments of less than 20% typically Loans with down payments of less than 20% typically require mortgage insurance.require mortgage insurance.

• Most programs also require funds equal to 1-2 Most programs also require funds equal to 1-2 month’s loan payments in reserve after closing.month’s loan payments in reserve after closing.

10

Page 11: First Time Homebuyers Seminar

What About Closing Costs?

• Generally, closing costs equal between Generally, closing costs equal between 3% and 7% of the home purchase price.3% and 7% of the home purchase price.

• ““Prepaids” must be collected at closing to cover Prepaids” must be collected at closing to cover the future month’s taxes, interest and insurance.the future month’s taxes, interest and insurance.

• Most loan programs allow you to finance your other Most loan programs allow you to finance your other closing costs.closing costs.

• Some programs allow all or partial closing costs to be Some programs allow all or partial closing costs to be paid by home sellers or other sources.paid by home sellers or other sources.

11

Page 12: First Time Homebuyers Seminar

How Large a Loan Can I Be Approved For?

• Lenders use a debt-to-income ratio to determine Lenders use a debt-to-income ratio to determine the loan amount for which you may qualify.the loan amount for which you may qualify.

• Typically, the anticipated housing payment is Typically, the anticipated housing payment is compared to gross earnings and debt.compared to gross earnings and debt.

• Many loan programs offer expanded guidelines that Many loan programs offer expanded guidelines that qualify applicants for higher loan amounts.qualify applicants for higher loan amounts.

• Once you know your maximum loan amount, it’s up Once you know your maximum loan amount, it’s up to you to decide if it’s right for you.to you to decide if it’s right for you.

12

Page 13: First Time Homebuyers Seminar

What Does My Mortgage Payment Include?

• Usually your monthly mortgage payment is Usually your monthly mortgage payment is made up of four amounts – often referred to as PITI:made up of four amounts – often referred to as PITI:– PPrincipalrincipal

– IInterestnterest

– TTaxesaxes

– IInsurancensurance

• Certain funds may be held in an escrow account to Certain funds may be held in an escrow account to pay tax and insurance bills, as they come due.pay tax and insurance bills, as they come due.

13

Page 14: First Time Homebuyers Seminar

MAKING CHOICES

MAKING CHOICESMaking Choices

Page 15: First Time Homebuyers Seminar

Government Loans

• Government loans are backed by federal or state Government loans are backed by federal or state agencies. In general, they answer the needs of agencies. In general, they answer the needs of first-time homebuyers by offering:first-time homebuyers by offering:– More flexible credit guidelinesMore flexible credit guidelines

– Allowance for smaller or no down paymentsAllowance for smaller or no down payments

• Types of government loans include FHA, VA and Types of government loans include FHA, VA and State Bond Programs.State Bond Programs.

15

Page 16: First Time Homebuyers Seminar

Conventional Loans

• Conventional* loans, which are not backed by Conventional* loans, which are not backed by the government, suit the needs of both first-time the government, suit the needs of both first-time and move-up homebuyers.and move-up homebuyers.

• Types of conventional loans include:Types of conventional loans include:– Conforming (loan amounts up to $300,700)Conforming (loan amounts up to $300,700)

– Jumbo (loan amounts over $300,750)Jumbo (loan amounts over $300,750)

*Conventional loan limits in Hawaii and Alaska are higher.*Conventional loan limits in Hawaii and Alaska are higher.

16

Page 17: First Time Homebuyers Seminar

New, More Flexible Loan Programs

• New programs and enhanced features are New programs and enhanced features are continuously developed to help make home continuously developed to help make home ownership more accessible.ownership more accessible.

• For example, one new program features the following For example, one new program features the following expanded guidelines:expanded guidelines:– Low or no down payment requirementsLow or no down payment requirements

– Flexible credit termsFlexible credit terms

– Allowance for less-than-perfect credit, Allowance for less-than-perfect credit, including bankruptciesincluding bankruptcies

– Secondary, stated income may be eligible to qualifySecondary, stated income may be eligible to qualify

– Reserves not requiredReserves not required

17

Page 18: First Time Homebuyers Seminar

Which Type of Loan is Right for Me?

• Each of the home loan categories we have Each of the home loan categories we have covered offers a range of financing options.covered offers a range of financing options.

• By working with an experienced mortgage specialist, By working with an experienced mortgage specialist, together you can select a program that best suits together you can select a program that best suits your budget needs and financial goals.your budget needs and financial goals.

18

Page 19: First Time Homebuyers Seminar

Make it a Point to Ask About Points

• Always ask if the quoted interest rate reflects Always ask if the quoted interest rate reflects payment of points.payment of points.

• One point equals 1% of the loan amount.One point equals 1% of the loan amount.

• Often, you can lower your interest rate by paying a Often, you can lower your interest rate by paying a fee in points.fee in points.

• The more points you pay, the more you can discount The more points you pay, the more you can discount your interest rate.your interest rate.

19

Page 20: First Time Homebuyers Seminar

The Annual Percentage Rate is Key

• Always ask for the Annual Percentage Rate (APR) Always ask for the Annual Percentage Rate (APR) in addition to the interest rate.in addition to the interest rate.

• The APR is the total finance charge on your loan, The APR is the total finance charge on your loan, over the term of the loan.over the term of the loan.

• The APR is usually higher than the quoted The APR is usually higher than the quoted interest rate.interest rate.

• The APR reflects the true cost of a mortgage loan as The APR reflects the true cost of a mortgage loan as a yearly rate.a yearly rate.

20

Page 21: First Time Homebuyers Seminar

Know When to Lock and When to Float

• Always ask how long a lender will guarantee the Always ask how long a lender will guarantee the quoted interest rate.quoted interest rate.

• Typically, lenders guarantee a rate for rate-lock Typically, lenders guarantee a rate for rate-lock periods of 30-120 days.periods of 30-120 days.

• Usually, you can float the rate and lock in anytime up Usually, you can float the rate and lock in anytime up to five days before closing.to five days before closing.

• Ask about available rate lock and float options, and Ask about available rate lock and float options, and the cost of these options.the cost of these options.

• Will these options accommodate your home buying Will these options accommodate your home buying needs? The decision is yours.needs? The decision is yours.

21

Page 22: First Time Homebuyers Seminar

THE PROCESSTHE PROCESSThe Process

Page 23: First Time Homebuyers Seminar

What Can I Expect at Application?

• Give yourself the advantage: apply for a loan Give yourself the advantage: apply for a loan pre-approval before beginning your home search.pre-approval before beginning your home search.– Determine exactly how much home you can afford.Determine exactly how much home you can afford.

– Complete the application and credit review stages of the Complete the application and credit review stages of the mortgage process.mortgage process.

23

Page 24: First Time Homebuyers Seminar

What Can I Expect at Application?

• You may be asked to provide documents or You may be asked to provide documents or letters that verify any income you want to use for letters that verify any income you want to use for loan qualification.loan qualification.

• Confirm down payment and closing cost amounts in Confirm down payment and closing cost amounts in bank or other asset accounts.bank or other asset accounts.

• Clarify any incorrect items on your credit report.Clarify any incorrect items on your credit report.

• Verify you have debts that are not listed on your Verify you have debts that are not listed on your credit report.credit report.

24

Page 25: First Time Homebuyers Seminar

Can Somebody Please Make the Mortgage Process Go Faster?

• We Can! And we do it every day!We Can! And we do it every day!

• You may be eligible for our time saving, streamlined You may be eligible for our time saving, streamlined documentation program.documentation program.

• You can look forward to personal attention and a You can look forward to personal attention and a rapid and affordable loan process.rapid and affordable loan process.

25

Page 26: First Time Homebuyers Seminar

So What Happens Next

• Take a four-step walk through to closing.Take a four-step walk through to closing.– ProcessingProcessing

– DecisioningDecisioning

– Pre-closingPre-closing

– ClosingClosing

You become the proud owner of your new home!You become the proud owner of your new home!

26

Page 27: First Time Homebuyers Seminar

HELPING HANDSHELPING HANDS

Helping Hands

Page 28: First Time Homebuyers Seminar

The Seminar Is Done But You’ve Just Begun

• You can now approach your first home purchase as an You can now approach your first home purchase as an educated consumer. Talk to prospective lenders about key educated consumer. Talk to prospective lenders about key points:points:– Pre-approval programsPre-approval programs

– A copy of your credit reportA copy of your credit report

– Down payment and closing cost optionsDown payment and closing cost options

– Payment of pointsPayment of points

– Interest rate vs. APRInterest rate vs. APR

– Rate-lock length and costRate-lock length and cost

– Mortgage program offeringsMortgage program offerings

• Listen carefully to answers. They’ll help you choose the Listen carefully to answers. They’ll help you choose the home mortgage provider that’s right for you, your needs, home mortgage provider that’s right for you, your needs, and your goals.and your goals.

28

Page 29: First Time Homebuyers Seminar

Let’s Get There Together

Now that you’re on your way to a home of your own, Now that you’re on your way to a home of your own, you can count on your real estate agent or builder you can count on your real estate agent or builder and your and your (Insert Your Company Name)(Insert Your Company Name) mortgage mortgage specialist to be your personal “home team”. specialist to be your personal “home team”. We’re ready to work with you through each step We’re ready to work with you through each step of the process as you realize your very own of the process as you realize your very own American dream!American dream!

29

Page 30: First Time Homebuyers Seminar