2009 Home Buying Seminar

Alain Pinel Realtors Burlingame, Ca Business 650-931-2957 [email_address] http://www.AimeeKlarich.com BUY A HOME ON THE PENINSULA IN 2009

Aimee Klarich Realtor ® http://www.AimeeKlarich.com Eileen Horan Mortgage Broker Guarantee Mortgage

How the Stimulus Plan benefits first time home buyers

Tax Credits available for home ownership

Why buy a home in 2009?

Steps for a successful home or condo purchase

Differences between owning a condo vs a single family home in San Mateo County

How to finance your home purchase?

State of the San Mateo County real estate market

2009 Peninsula Real Estate Forecast

Sat. June 6, 2009 11-12:30pm 1440 Chapin Ave Suite 100 Burlingame Ca 94010 RSVP to [email_address] or at www.PeninsulaFirstTimeBuyers.com

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com

Stimulus Plan benefits local buyers by enabling them to qualify for specific loan programs with lower interest rates.

$8000 First Time Home Buyer tax credit on purchases through 12/1/09 for qualified buyers.

California lawmakers approved a provision allocating funds for a tax credit of up to $10,000 for buyers of newly built homes.

San Mateo County is a Buyer’s Market giving home buyers more negotiation power than we have seen in years.

Mortgage rates remain historically low.

Eileen Horan Mortgage Broker Guarantee Mortgage

You build wealth as value appreciates

It can be a tax write-off

House expenses usually increase slower than renting

You have much more flexibility in how you use, decorate and make physical changes to your home

Pride of homeownership

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com The "American Recovery and Reinvestment Act of 2009," was signed by President Obama on February 17th. On the housing front, the good news is that the legislation resets the conforming loan limit cap at $729,750, up from $625,500. San Mateo County, San Francisco County and numerous other counties in California experienced a marked decrease in their conforming loan and FHA limits on Jan. 1, 2009 and the stimulus bill reinstates 2008 loan limits through Dec. 31, 2009. This means lower interest rates for those getting a loan between the $729,750 and $625,500. Eileen Horan Mortgage Broker Guarantee Mortgage

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com The bill also increases the first-time home buyer credit from $7,500 to $8,000, and removes the requirement that the credit be paid back if the buyer stays in the home for at least three years. It also extends the expiration date for the credit from July 1, 2009 to Dec. 1, 2009. Homebuyers must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009, to be eligible for the $8,000 credit. See Appendix for more details Eileen Horan Mortgage Broker Guarantee Mortgage

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com As part of the 2009 budget, California lawmakers approved a provision allocating state funds for a tax credit of up to $10,000 for buyers of newly built homes. To qualify for the $10,000 tax credit home buyers must purchase a new home between March 1, 2009 and March 1, 2010. See Appendix for more details Eileen Horan Mortgage Broker Guarantee Mortgage

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com Homeowners who currently do not qualify for aid under the federal housing-rescue plan still may qualify for tax credits on energy-efficient upgrades. Homeowners may qualify for up to $1,500 in tax credits for adding qualifying windows, doors, insulation, roofs, heating and cooling equipment, water heaters, and wood and pellet stoves. The installations must take place in 2009 or 2010 to qualify for the tax credit. Eileen Horan Mortgage Broker Guarantee Mortgage

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com Eileen Horan Mortgage Broker Guarantee Mortgage

$1000 per month in rent

5% annual rent increase

After 5 years you have spent $66,307 in rent.

Net equity gain: $ 0

You have nothing to show after spending all this money.

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com The rent you pay could build equity in your own real estate. Using this chart, find your month rental payment and you can determine how much money you are “giving away” in rent and interest (5%) over 10, 20, 30 years. Eileen Horan Mortgage Broker Guarantee Mortgage Rent plus 5% Earned Interest Rent 10 Years 20 Years 30 Years $ 800 $ 124,225 $ 328,826 $ 665,806 $ 1,000 $ 155,282 $ 411,033 $ 832,258 $ 1,200 $ 186,388 $ 493,240 $ 998,710 $ 1,400 $ 217,395 $ 575,447 $ 1,165,162 $ 1,600 $ 248,451 $ 657,653 $ 1,331,613 $ 1,800 $ 279,508 $ 739,860 $ 1,498,065 $ 2,000 $ 310,564 $ 822,067 $ 1,664,517 $ 2,200 $ 341,628 $ 904,274 $ 1,830,968 $ 2,400 $ 372,776 $ 986,480 $ 1,997,420 $ 2,600 $ 403,732 $ 1,068,636 $ 2,163,872 $ 2,800 $ 434,790 $ 1,150,894 $ 2,330,324 $ 3,000 $ 465,846 $ 1,233,100 $ 2,496,694

The government rewards homeownership through write-offs and deductions on your taxes.

Homeowner Deductions

Mortgage Interest Payments

Property Taxes

Discount points (closing costs)

It is customary in San Mateo County that buyers pay closing costs. This is negotiable.

Home Price

20% Down Payment

Home Mortgage

Interest Rate

Annual Interest Paid

Annual Property Tax

Total Deductions

$500,000

$100,000

$400,000

5.75%

23,000

6,250

$29,250

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com Eileen Horan Mortgage Broker Guarantee Mortgage Home No Home Annual Income $100,000 $100,000 Total Deductions $29,250 0 Taxable Income $70,750 $100,000 Tax Rate 28% 28% Annual Taxes $19,810 $28,000 Annual Savings 8,190 0

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com 2 Bedroom 1 Bath Condominium West Side San Mateo Purchase Price $340,000 Buyers Combined Annual Salary $65,000 (28% Tax Bracket) Eileen Horan Mortgage Broker Guarantee Mortgage Purchase Price $ 340,000 Minus Down Payment (10% down) 34,000 Loan Amount $ 306,000 Monthly Interest Payment (5.50% ) $ 1402 Property Taxes (Monthly Rate) $ 354 Monthly HOA Fees (Condominium) $ 320 Gross Monthly Payment $ 2076 Less Monthly Tax Savings (deduction of interest and property taxes) $ 491 Net Monthly Payment After Tax Benefit $ 1585 Rental Pricing for Unit $ 1,400 Difference Between Homeownership & Renting $ 185

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com Months of Inventory is used as an analytical tool in determining who holds the power in negotiations. Months of Inventory = # homes of sale/#homes sold Supply and Demand… Months of Inventory <4 = Seller Market Months of Inventory =4 = Flat Market Months of Inventory >4 = Buyer Market Eileen Horan Mortgage Broker Guarantee Mortgage

In Sept 07, months of inventory increased and moved the home market into a buyers market.* San Mateo County Single Family Homes * Cities within the county vary from the total. All reports are published Jan. 2009, based on data available at the end of Dec. 2008. All reports presented are based on data supplied by San Mateo County Association of Realtors. Neither the Associations nor their MLSs guarantee or are in anyway responsible for their accuracy. Data maintained by the Associations or their MLSs may not reflect all real estate activities in the market. Information deemed reliable but not guaranteed.

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com At an aggregate level, San Mateo County continues to be a buyers market. Months of Inventory based on closed sales was 4 last month vs 4.7 a year ago. Eileen Horan Mortgage Broker Guarantee Mortgage All reports are published Jan. 2009, based on data available at the end of Dec. 2008. All reports presented are based on data supplied by San Mateo County Association of Realtors. Neither the Associations nor their MLSs guarantee or are in anyway responsible for their accuracy. Data maintained by the Associations or their MLSs may not reflect all real estate activities in the market. Information deemed reliable but not guaranteed.

Inventory was down 25% to last year

Unit Sales were down 14% to last year

Most note worthy was the significant increase in pending sales: up 5% to last year.

Average Days On Market was 54 days vs 48 last year

Avg Sales Price vs. Original List Price: 93%

Median Sales Price: $728,000 (-14% to last year)

Each city, neighborhood and area shows a different picture. Schools, commute, weather are all key factors in the variances between cities and areas.

Eileen Horan Mortgage Broker Guarantee Mortgage All reports are published Jan. 2009, based on data available at the end of Dec. 2008. All reports presented are based on data supplied by San Mateo County Association of Realtors. Neither the Associations nor their MLSs guarantee or are in anyway responsible for their accuracy. Data maintained by the Associations or their MLSs may not reflect all real estate activities in the market. Information deemed reliable but not guaranteed.

What drove the 14% decrease in the median home price?

A significant increase in home sales below $500,000

A significant decrease in home sales above $1,000,000

In August of 07, months of inventory increased and moved the condo market into a buyers market.* * Cities within the county vary from the total county picture. San Mateo County Condos and Townhomes All reports are published Jan. 2009, based on data available at the end of Dec. 2008. All reports presented are based on data supplied by San Mateo County Association of Realtors. Neither the Associations nor their MLSs guarantee or are in anyway responsible for their accuracy. Data maintained by the Associations or their MLSs may not reflect all real estate activities in the market. Information deemed reliable but not guaranteed.

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com At an aggregate level, San Mateo County continues to be a buyers market. Months of Inventory based on closed sales was 4.5 last month vs 5.3 a year ago. Eileen Horan Mortgage Broker Guarantee Mortgage All reports are published Jan. 2009, based on data available at the end of Dec. 2008. All reports presented are based on data supplied by San Mateo County Association of Realtors. Neither the Associations nor their MLSs guarantee or are in anyway responsible for their accuracy. Data maintained by the Associations or their MLSs may not reflect all real estate activities in the market. Information deemed reliable but not guaranteed.

Inventory was down 21% to last year

Unit Sales were down 7% to last year.

Average Days on Market was 67 days vs 59 last year

Avg Sales Price vs. Original List Price: 92%

Median Sales Price: $420,000 (-21% to last year)

Each city, neighborhood and area shows a different picture. Schools, commute, weather are all key factors in the variances between cities and areas.

What drove the 21% decrease in the median condo & townhome sales price?

A significant increase in home sales below $500,000

A significant decrease in home sales between $500,000 - $1,000,000

LOCATION, LOCATION, LOCATION

Bridgeless commutes to San Francisco and Silicon Valley

Employment opportunities

No more land to build upon since we are flanked by the bay and the ocean

Moderate weather

Good schools

The foreclosure rate of existing homes is low vs other counties allowing the county to bounce back faster

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com Eileen Horan Mortgage Broker Guarantee Mortgage San Mateo County sub-prime loans are only 1.5% of total housing units. SOURCE: FirstAmerican CoreLogic, LoanPerformance Data, U.S. Census Bureau, and Federal Reserve Bank of New York Dec 07 CA Rank (% Sub-Prime Loans to total hsg units) County Num of Subprime ARMs % Total SP share of total hsg units % Already Reset % to Reset in 2009 % to Reset in 2010+ 1 San Bernardino 37,300 9.0% 70% 23% 7% 2 Riverside 36,700 8.7% 73% 20% 7% 3 San Joaquin 12,300 8.4% 77% 18% 5% 4 Merced 4,200 8.3% 76% 19% 5% 5 Kern 12,400 8.1% 70% 24% 6% 15 Sacramento 21,300 6.0% 79% 15% 5% 22 Los Angeles 79,200 3.7% 68% 24% 8% 32 San Diego 21,500 2.9% 74% 17% 9% 34 Orange 17,900 2.7% 72% 20% 8% 49 San Mateo 2,400 1.5% 75% 17% 8% 51 San Francisco 1,400 0.7% 71% 21% 7% TOTAL CALIFORNIA 364,800 4.1% 66% 17% 7%

Top 10 Answers from a Survey of 1000 Buyers by California Association of Realtors on advice they would give other home buyers.

1 Do your own homework on the Internet 2 Get a good understanding of the type of mortgage you are getting 3 Check the agent's references 4 Make sure the agent pre-qualifies homes before showing them to you 5 Get pre-qualified for a mortgage by more than one lender 6 Find out how frequently the agent is going to be in contact with you 7 Don't use the seller's agent 8 Make any agent you use prove they will negotiate hard for you 9 Get your financing locked in as soon as possible 10 Find out how fast the agent is going to get back to you

Lender: Qualifies buyer and provides the home financing.

Buyers Agent (Realtor ® ): Fiduciary responsibility to buyer(s)

Selling Agent (Realtor ® ): Fiduciary responsibility to seller(s)

Escrow Officer: Neutral 3rd party manager of the transaction

Appraiser: Hired by lender to confirm property values

Inspectors: Provide insight into the condition of a home

Initial Consultation and Planning: Lender or Realtor

Get Pre-Approved for a loan

Search for a Home

Find a Home

Submit an Offer and Negotiate

Final Agreement on Terms and Price

Open Escrow with a Title Company.

Deposit your earnest money deposit into Escrow Account

Appraisal and other further needed inspections and reports

Secure Home Insurance as a requirement of the lender

Removal of remaining contingencies

Final Inspection and Walk Through of Home

Secure loan funds. Deposit your remaining funds into escrow.

Record Deed of Title

You take possession of property

Meet with a Lender to see how much you qualify for.

Your qualifications are based on the following:

Credit

Income

Assets

The most important part of this is for you to decide how much you WANT to pay on a monthly basis.

It’s a fact: qualifying criteria has gotten tighter than in previous years.

Homebuyers need to pay more attention to their credit scores than they did before.

Credit history

Your credit score may impact your interest rate.

Your credit score may impact your down payment requirements.

But you don’t need perfect credit to buy a home.

For a down payment?

Source of Down Payment:

Checking/Savings

Money Market/Stocks

Gift Funds

Borrow from a 401k, 403b, etc.

Your money must be seasoned

For closing costs?

Appraisal

Processing and Underwriting

Title & Escrow

What are Pre-Paids?

Interim interest

Insurance

Impounds

Monthly Payment Expenses:

Your monthly payments include:

Principal & Interest.

Property Taxes

Insurance

Mortgage insurance - if your down payment is less than 20%.

Association fees - if applicable.

Your maximum monthly payment is calculated using:

Your housing monthly debt.

Your other debt

Again, the most important part is to be comfortable with the calculated monthly payment:

Repairs and maintenance costs are part of homeownership.

What type of documentation will be required?

2 pay stubs

2 years W2s and Federal Tax Returns

2 months bank statements

What type of product?

What kind of rate?

How long a term?

We’ll help you select the product type that meets your needs:

Conforming loans up to $417,000* for a single-family.

Jumbo Conforming loans $417,001 up to $729,750*

Jumbo loans greater than $729,750*.

Combination loans: conforming first + a second mortgage.

Government loans: FHA & VA.

*The conforming ceiling of $417,000 has been raised in high-cost housing markets starting 01/01/2009. The loan limit on these “conforming jumbo” loans varies by location but doesn’t exceed $729,750 in the continental U.S.

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com What kind of rate? Eileen Horan Mortgage Broker Guarantee Mortgage Fixed-Rate (FRM) Adjustable-Rate (ARM) 3,5,7,10 year ARM

Rate is usually higher than an ARM rate or a Hybrid.

The principal and interest portion of the mortgage payment stays the same through the entire term.

Stable, easy to budget.

May want to refinance if rates go lower.

Usually starts with a lower rate than an FRM or hybrid.

The rate may adjust every year, changing the monthly payment.

Rate may eventually be higher than the rate for a fixed-rate loan.

The shorter the term of the fixed portion, the lower the interest rate

Interest only during the fixed years are optional

Aimee Snodgrass Klarich Realtor ® http://www.AimeeKlarich.com How long a term? Eileen Horan Mortgage Broker Guarantee Mortgage 40-Year 30-Year 15-Year

Rate is higher.

Payments are lower because they are spread out for a longer period.

Easier to qualify for a larger loan amount.

Pay more interest and it takes longer to build equity.

Rate is lower than a 40-year, higher than 15-year.

Payments are higher than a 40-year, but lower than a 15-year.

Pay less interest than a 40-year, but more than 15-year.

Rate is lower.

Payments are higher.

Pay the least amount of interest over the life of the loan.

Initial Consultation and Planning: Lender or Realtor ®

Select Your Team of Professionals

Search for a Home

Find a Home

Things to consider…

How well does the agent know the market you are considering? How will the agent help focus your search?

How well does he or she listen to you?

Do you feel that the agent will be respectful of your desires, enabling (not forcing) you to make your own decisions?

Do you feel they will negotiate hard for you?

Do you feel a rapport?

Are they clear on their services and expectations?

Per the survey of Home Buyers from CAR:

Check references

What online services does the Realtor provide?

Meet with a Realtor®

Discuss present and future housing needs and wishes

Single Family Home, Condo or Townhome

Number of bedrooms and bathrooms

Home square footage and lot size

One story vs two story

Desired neighborhoods

Location vs. commute to work/school

Desired amenities (garage, laundry, pool, etc)

Your family size- current and projected

Hobbies or special needs to accommodate

Preferred condition of the property (fixer upper?)

Any non-negotiable points for you

Current housing and terms of current contracts

Learn and discuss types of sales

Aimee’s Buyer Services Packet in Appendix

Initial Consultation and Planning: Lender or Realtor ®

Select Your Team of Professionals

Search for a Home

Find a Home

Know the sales history of similar sold properties within the area over the past 3-4 months.

Compare sale and list price

Months of Inventory

Days on market

Know the current property offer and disclosure packet activity, if any

Know the property condition and short-term repair expenses (including HOA Assessments)

Know the seller's situation and motivation for selling.

Examples of other things to negotiate on other than price:

Closing Costs

Repairs

30 day rent backs

Know your financing options and have your pre-approval letter from your lender for the exact offer price

Your offer will be written on a Purchase Contract by your Realtor.

Traditionally, the accepted deposit (earnest money) is 3% of the offer price.

The down payment and amount financed will be determined.

Understand what is included with the purchase of the home as in fixtures & appliances and negotiate accordingly.

Decide on needed inspections and contingencies to be negotiated into the contract

Examples of Contingencies

Financing

Appraisal

Property Condition

The close of escrow date will need to also be negotiated

The lender will most often influence the closing date so your lending partner must be involved during the negotiation process

Traditionally done by your Realtor.

Deposit your earnest money deposit into the Escrow Account

Complete appraisal and inspections

Secure home insurance as a requirement of the lender

Remove contingencies (if all is satisfactory)

You take possession of the property

Recession through mid--2009

Improved outlook in second half 2009

Weak job picture, unemployment rate up

Inflation no longer a concern – for now

Permanent Stimulus Package in 2009

CRITICAL CONCERN : How soon will financial system stabilize and enable economic activity to return to normal? Once the market turns around, the fed level to slow inflation will be increased interest rates.

Aimee Klarich Realtor ® http://www.AimeeKlarich.com Eileen Horan Mortgage Broker Guarantee Mortgage Saturday April 4, 2009 11-12:30pm Saturday May 2, 2009 11-12:30pm Location: 1440 Chapin Ave Suite 100, Burlingame Ca 94010 RSVP to [email_address] or www.PeninsulaFirstTimeBuyers.com

Alain Pinel Realtors Burlingame, Ca Business 650-931-2957 [email_address] http://www.AimeeKlarich.com