SF Mortgage Class October 17, 2012

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SF Mortgage Class October 17, 2012

  1. 1. How to Finance YourHome San Francisco, CA October 17, 2012 Follow: @RedfinSanFrancisco Like: http://www.facebook.com/RedfinFranciscoSlide 1 of 19
  2. 2. Working with RedfinSlide 2 of 19
  3. 3. Working With Redfin is Different● Service ► Advocates: client-satisfaction bonuses, not commissions ► Transparency: informed decisions ► Best Agents: The right home for the right price● No obligation ► Switch Redfin agents ► Pause and re-start your search any time ► Tour on your schedule and pace● Refund ► We’ll refund a portion of the commission back to you● The Best Results ► Service: 97% would recommend us to a friendSlide 3 of 19
  4. 4. How Commissions Work • Applied to closing costs • Refund is tax-freeSlide 4 of 19
  5. 5. MortgagesSlide 5 of 19
  6. 6. Getting Pre-Approved Income oSalary—Past 30 days oHourly—Consistency and history oSelf-employed—Two year average Credit Assets o 660 for FHA o Down Payment o 680 for Conventional o Closing Costs o 720 for Rate Improvement o Cash ReservesSlide 6 of 19
  7. 7. Show Stable EmploymentSalaried Employee o W2’s are historic o Most recent paystubs o Salaryincreases count immediatelySelf-Employed o Two Year History (Tax Years) o Same line of work (strategic)Hourly Wage Earner o Consistent hours over 1-2 year period Slide 7 of 19
  8. 8. Organize Your Assets Lenders Will Require 2 Months of Statements ●Liquid ► Do not move money around—hard to paper trail ●Retirement Accounts ► Consider a 401k Loan ●Gift Funds ► Family members onlySlide 8 of 19
  9. 9. Review Your Debt | Credit HistoryKnow Current Credit Score Know Your Debt Tolerance●Mycreditreport.com: pay to get ●Cost of rentingyour score; no affect on scores ●Tax benefits of home ownership●Use your mortgage lender’s report;limit multiple checks ●Budget considerationsFix Errors Lender Tolerance May Be●Remove duplicates Different●Resolve disputes ●45% DTI, Fannie Mae●Reduce credit card debt (33%) ●43% DTI, Jumbo●Do not open, close, or change ●50% DTI, FHAcredit lines●Do not make large purchases Slide 9 of 19
  10. 10. Pre-approval ScenariooEarns $6,500/month $400,000 LoanoHas car payment $300 o30/Yr Fixed, 3.75%oWants to buy a home for = $1,852$500,000 oProperty TaxesoHas 20% down payment o1.41% on purchase price o $6,500 x 45% = $2,925 = $588 ($7,050/yr) o $2,925 – 300 (other oHomeowners Insurance debt) = $100 ($1,200/yr) oTotal: $1852+588+100= Allowed $2,625/Month! = Qualified $2,540/Month!Slide 10 of 19
  11. 11. Choose a LenderPre-Approval Letter is Critical●Part of the offer●Sellers want accountability, Local lenders preferredUsing Referrals to find your lender●From Redfin’s partner lenders●From friends who recently financed a home●From RealtorResearch Your Lender●Check Yelp, Berkeley Parents Network, Google●Schedule a meeting by phone or in personSlide 11 of 19
  12. 12. 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 underwriters 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?Slide 12 of 19
  13. 13. Rate Shopping● Within a one hour period, call ● Then ask: your top three prospective ► What are the standard lender lenders and ask: fees for this scenario? ► What is your rate for: ► Can you close this in 30 days? $417,000 and $625,500 ● Did you close your last three Single Family Home transactions on time? Assume 780 credit ● Did the homes appraise at or Assume Owner Occupied above the purchase price? Assume 20% down ● Last ask: payment (and what if I ● What do Realtors say about have 30% down?) you? Assume no impounds No points, no lender credits Slide 13 of 19
  14. 14. Understand Your CostsGet 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 first loan payment will not be for almost two months! Slide 14 of 19
  15. 15. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 15 of 19
  16. 16. Redfin Open BookSlide 16 of 19
  17. 17. Current Average Rates Type of Loan October 4, 2012 October 11, 2012 30-Year Fixed 3.36% 3.39% 15-Year Fixed 2.69% 2.70% 5/1 ARM 2.72% 2.73% 1-Year ARM 2.57% 2.59%Slide 17 of 19
  18. 18. Where Are Rates Headed?Slide 18 of 19
  19. 19. After Class…Please fill out the survey handed out at the beginning ofclass. We’d love to get your feedback on how theclass could improve.To get even more info on the home buying process,check out our home buying guide:http://redfin.com/home-buying-guideSlide 19 of 19

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