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Redfin's Marin Mortgage Class 8.14.13
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Redfin's Marin Mortgage Class 8.14.13

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  • [REQUIRED]
  • [REQUIRED – Updated every time]- We should color match the city name to the color of the line the graph, likewise for 20-city
  • [REQUIRED – Updated every time]
  • [REQUIRED – Updated every time]
  • [REQUIRED – Updated every time]Agents should use this slide to talk about what they’re seeing on the streetTell some stories!
  • Point out reviewsUpdating this page: This should be updated based on your Local Rec. Lender. Just go to the page click “Print Screen.” Come back to this page, click on the large image, click delete, and then right click and paste. Size the images so it fits the page. The right click again and click “Send to back.”
  • Chart:http://www.mortgagenewsdaily.com/mortgage_rates/charts.aspPrediction:http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index.aspxWill rates rise or remain relatively unchanged? Experts and Bankrate analysts predict where mortgage rates are headed over the next week.This week (July 5-11), 31 percent of the panelists believe mortgage rates will rise over the next week or so; 38 percent think rates will fall; and 31 percent believe rates will remain relatively unchanged (plus or minus 2 basis points). Read more: Rate Trend Index - Mortgage Rate Trends - Bankrate.com http://www.bankrate.com/news/rate-trends/mortgage.aspx#ixzz2097YRlM8
  • Chart:http://www.mortgagenewsdaily.com/mortgage_rates/charts.aspPrediction:http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index.aspx

Transcript

  • 1. Slide 1 of 29 How to Finance Your Home August 14, 2013 Host: Mark Biggins Redfin’s Marin County Team Follow: @Redfinbayarea Like: http://www.facebook.com/Redfinbayarea
  • 2. Slide 2 of 29 A Little Bit About Who We Are Redfin is a real estate brokerage that has helped over 20,000 people buy or sell a home; 97% would refer us to a friend. ● Customers, not commissions ● Informed decisions ● Right home for the right price  No obligation  Commission credit
  • 3. Slide 3 of 29 Understanding the Buying Process
  • 4. Slide 4 of 29 Are You Ready to Buy? ● Do you have a family and need room to grow? ● Do you expect to stay put for 5 or more years? ● Have you saved up a down payment? ● Can you rent for less?
  • 5. Slide 5 of 29 Overview of a Purchase Research Neighborhoods Real Estate Agents Mortgage Options Preapproval Consider your needs Search Define Preferences Saved Search Home Tours Open Houses Offer Comparables Draft Offer Docs Negotiate Mutual Acceptance Closing Earnest Money Inspection Loan application Title Review Appraisal Financing Approval Closing
  • 6. Slide 6 of 29 Understanding the Market
  • 7. Slide 7 of 29 0.00 50.00 100.00 150.00 200.00 250.00 20 City Composite San Francisco Case-Shiller: San Francisco Area v. 20-City
  • 8. Slide 8 of 29 Story of 2013: Low Inventory
  • 9. Slide 9 of 29 Story of 2013: Rising Prices
  • 10. Slide 10 of 29 Marin County Area Overview
  • 11. Slide 11 of 29 Mortgages
  • 12. Slide 12 of 29 Getting Pre-Approved Income oSalary—Past 30 days oHourly—Consistency and history oSelf-employed—Two year average Assets o Down Payment o Closing Costs o Cash Reserves Credit o640 for FHA o680 for Conventional o720 for Rate Improvement
  • 13. Slide 13 of 29 Who Applies for the Loan? ● Joint Applicants: All for one, one for all ● No ―co-signors‖ allowed today ● Parents can be non-occupant co-borrowers ● Married people do not have to both be on the loan ● Once on the loan, always on the loan unless you refinance ● It is okay to be on ―‖title only‖
  • 14. Slide 14 of 29 Loan Amount Impact Criteria ● $417,000 -- Conforming Loan – Fannie/Freddie ► Lowest Rate for 30 fixed ► Desktop Approval Available – instant ● $625,500 – High Balance Conforming Loan – ► For High Cost Areas ► Higher Rate ► Credit Score sensitive ● $625,501 and up – Jumbo Loan ► Highest Rate ► Portfolio Approval, guidelines vary ► Lots of review ► ARMs very popular
  • 15. Slide 15 of 29 Show Stable Employment Salaried Employee  W2’s are historic – 2 year history  Most recent paystubs – one month  Salary increases count immediately Self-Employed (most affected by lending changes)  Two Year History (Tax Years)  Same line of work (strategic) Hourly Wage Earner  Consistent hours over 1-2 year period  Verification of employment important
  • 16. Slide 16 of 29 Loan for your Down Payment  Conventional – 20% down payment  Conventional – 5% for loans under $417,000  Conventional – 10% down, up to 625,500  FHA – 3.5% down, up to 729,750  VA – 0-3% down, lenders vary as to loan limit Size of down payment affects seller perception
  • 17. Slide 17 of 29 Organize Your Assets Lenders Will Require 2 Months of Statements ●Liquid ► Do not move money around—hard to paper trail ► Large deposits and transfers are sourced ●Retirement Accounts (reserves) ► Consider a 401k Loan ► Provide all accounts to your lender ●Gift Funds ► Family members only
  • 18. Slide 18 of 29 Review Your Debt | Credit History Know Current Credit Score ●Myfreecreditreport.com: pay to get your score; no affect on scores ●Limit credit checks by lenders ●There are 3 bureaus, middle score counts ●With co-borrowers, lowest middle score counts Fix Errors ●Remove duplicates ●Resolve disputes ●Reduce credit card debt (33% of limit) ●Do not open, close, or change credit lines ●Do not make large purchases
  • 19. Slide 19 of 29 How much can you borrow? Lenders tolerate more than most borrowers ● Fannie Mae – 45-47% of gross monthly income ● Freddie Mac – 45-49% ● Jumbo Lenders – 43% ● PMI Carriers – 41% ● FHA – 50-52%
  • 20. Slide 20 of 29 Debt to Income Scenario oEarns $10,000/month oHas car payment $350 oWants to buy a home for $750,000 oHas 20% down payment o $10,000 x 45% = $4,500 o $4,500 – 350 (other debt) = Allowed $4,150/Month! $600,000 Loan o30/Yr Fixed, 4.125% = $2,908 oProperty Taxes o1.25% on purchase price = $781 ($9,375/yr) oHomeowners Insurance = $125 ($1,500/yr) oTotal: $2,908+781+125 = Qualified $3,814/Month!
  • 21. Slide 21 of 29 Low Down Payment Scenario oEarns $6,500/month oHas car payment $300 oWants to buy a home for $500,000 oHas 10% down payment o $6,500 x 41% = $2,665 o $2,665 – 300 (other debt) = Limit $2,365/Month! $450,000 Loan o 30/Yr Fixed, 3.875% = $2,116 o Property Taxes o 1.25% on purchase price = $520 ($6,250/yr) PMI = $203 o Homeowners Insurance = $100 ($1,200/yr) o Total: $2,116+520+100 +203 = Too High $2,939/Month!
  • 22. Slide 22 of 29 Choose a Lender Pre-Approval Letter is Critical ●Part of the offer ●Sellers want accountability, Local lenders preferred Using Referrals to find your lender ●From Redfin’s partner lenders ●From friends who recently financed a home ●From Realtor Research Your Lender ●Check Yelp, Berkeley Parents Network, Google ●Schedule a meeting by phone or in person
  • 23. Slide 23 of 29 Questions to Ask Any Lender ● Please describe your mortgage banking experience? ● How many transactions do you close each year and what % are purchase transactions? ● What does a "loan pre-approval― with your bank involve? ● Do you pre-underwrite my application, subject to the property address? ● Who handles your appraisals? ● Do you know your underwriter's first name? ● If I provide everything you request, how long will it generally take to get loan approval? ● Are you available on weekends or evenings if needed?
  • 24. Slide 24 of 29 Rate Shopping ● Within a one hour period, call your top three prospective lenders and ask: ► What is your rate for:  $417,000 and $625,500  Single Family Home  Assume 780 credit  Assume Owner Occupied  Assume 20% down payment (and what if I have 30% down?)  Assume no impounds  No points, no lender credits ● Then ask: ► What are the standard lender fees for this scenario? ► Can you close this in 30 days? ● Did you close your last three transactions on time? ● Did the homes appraise at or above the purchase price? ● Last ask: ● How can I learn more about you? (Realtors, web site, testimonials)
  • 25. Slide 25 of 29 Understand Your Costs Get a Good Faith Estimate o Itemized List of Fees: o Lender: Appraisal, Credit, Processing, Underwriting, Points o Escrow: Title Insurance, Documents, Notary Public o Government: Recording fee, Transfer Tax o Prepaid Items: Mortgage Interest, Homeowner’s insurance, impounds Good news! Loan payments are made in arrears, so your next loan payment will not be for almost two months!
  • 26. Slide 26 of 29 Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!
  • 27. Slide 27 of 29 Current Average Rates Type of Loan August 8, 2013 August 1, 2013 30-Year Fixed 4.40% 4.39% 15-Year Fixed 3.43% 3.43% 7/1 ARM 3.19% 3.18% 5/1 ARM 2.62% 2.64%
  • 28. Slide 28 of 29 Where Are Rates Headed?
  • 29. Slide 29 of 29 After Class… Please fill out the survey handed out at the beginning of class. We’d love to get your feedback on how the class could improve. To get even more info on the home buying process, check out our home buying guide: http://redfin.com/home-buying-guide