Buying A Home In Todays Market

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Buying A Home In Today’s Market Making Smart Moves January 6, 2010 Jonathan Osman Keller Williams Realty (704) 960-1725 Ext 100 Presented By: Liz Ciardi Wells Fargo Home Mortgage (704) 756-4059

Welcome!
Thank you for coming.
Let’s begin with introductions.
Make yourself comfortable.
Don’t be shy about asking questions.
By attending this workshop, you are taking an important step toward buying a home---for the first-time, or as a move-up, second home, or investment buyer.

This workshop will answer key questions:
Is this a good time to buy a home?
Is my credit good enough to qualify?
How much money will I need?
What type of mortgage financing should I get?
What is the home buying process?
Why Wells Fargo?

Question #1 Is this a good time to buy a home? “ Don’t worry about timing the market in real estate. It’s time in the market that will matter for you.” — David Bach #1 best selling author and financial coach

For most people, homeownership can still be a solid long-term investment.
Homeowners make an investment in their home every month they pay down their mortgage. Renters don’t.
This chart shows that, over time, homeowners have accumulated greater wealth than renters.

Through the end of 2007, the average home price in the U.S. has increased by 532% from 1975.
Remember—you have to live somewhere !—owning is usually more advantageous than renting over the long term .

While we have national averages, we don’t have a “national housing market.”
All real estate is local.
What counts is what’s happening right here.
In our market:
Home prices are flat.
Housing inventory is high.
Time on the market is increasing.
Sellers are already negotiating.

It’s a buyer’s market.
Sellers are more willing to make concessions.
Prices in many areas have come down, improving affordability.
Overall, good opportunities exist for financially qualified first-timers, second-home buyers, and investors.
Tax advantages* for homeowners (not renters).
Interest on monthly payments is deductible for most homeowners.
Property taxes are deductible for most homeowners.
For most homeowners, there are no capital gains when a primary residence is sold.
The government wants you to buy a home!
*See your tax advisor

Even though rates have declined in the last decade, interest rates may rise again. Is this a good time to buy a home? Mortgage rates remain historically low

ACTION ITEMS Work With a Home Mortgage Consultant To:
Use our Rent vs. Buy calculator if you still rent.
Use our Priority Buyer ® program to help you determine your purchase power.
Find a Real Estate Agent who can provide you with historical and local pricing information.
Any Questions?

Question #2: Is my credit good enough? “ Your credit score is ... the Holy Grail... Knowing how you rate is essential knowledge for anyone even thinking of getting a mortgage.” — David Bach #1 best selling author and financial coach

Is my credit good enough?
It’s a fact: qualifying criteria have gotten somewhat tighter than in previous years.
Homebuyers need to pay more attention to their credit scores than they did before .
Credit history reflects your record of paying obligations on time.
Your credit score may impact your interest rate.
Your credit score may impact your down payment requirements.
Your credit score may impact the amount of documentation you provide .
But you don’t need perfect credit to buy a home.

Is my credit good enough?
What makes credit less-than-perfect?
Some causes can be solved relatively quickly.
Others take more time.
You may still qualify with a less-than-perfect credit score.
The best way to find out is through a personal consultation with a Home Mortgage Consultant.
Past foreclosure or bankruptcy
Frequency of new accounts opened
Many new credit applications
Errors
Limited history
Excessive debt
Slow payments
Legal judgments

Learn your credit score – we can help you do that.
Request a Priority Buyer ® Pre-approval if you’re ready to go!
Determine next steps if your credit score is too low. Our Purchase Plan will provide instructions to help you repair your credit.
Any Questions?

Question #3 How much money do I need? “ When it comes to investing in real estate, the bottom line isn’t how much houses cost. It’s how much you can afford to spend.” — David Bach #1 best selling author and financial coach

How much money do I need?
For a down payment?
For closing costs?
For my monthly payments?

Down Payment Options :
Low down payment programs are still available in some markets and may help you buy a home sooner.
A larger down payment can help you get lower monthly mortgage payments.
How much of a down payment is required may be impacted by factors such as:
Your credit score.
The type of property.
Whether the home will be your primary residence, second home or investment property.
Wells Fargo offers down payment options to serve various homebuyer needs.

How much money do I need? Monthly Payment Illustration: $150,000 purchase price. FIND THE PURCHASE PRICE(s) FOR YOUR MARKET IN THE APPENDIX The higher your down payment, the lower your monthly payment. 8. Assumes a 30-year fixed-rate mortgage with a 5% interest rate. Mortgage insurance is generally required if the down payment is less than 20% and is not included in the monthly payments above. 5% 15% 20% % Down Payment $764.97 $142,500 $7,500 $684.45 $127,500 $22,500 $644.19 $120,000 $30,000 Monthly Principal and Interest 8 Mortgage Amount Down Payment in Dollars

Monthly payment is smaller.
May be easier to qualify.
20% or more down avoids mortgage insurance.
Interest rate may be lower.
Buy the home sooner.
Use any savings for other things, including home improvements.
Benefits of making a larger down payment Benefits of making a lower down payment

Closing Cost Information :
Typical closing costs:
$1,800 plus any discount, origination and pre-paids
Total closing cost is approximately 3% of average home price of $150,000 or approximately $4,500.
What are the fees?
Discount
Origination
Survey
Appraisal
Title
What are Pre-Paids?
Interim interest
Escrow account for taxes, homeowners insurance, private mortgage insurance

Monthly Payment Expenses:
Your monthly payments include:
Principal & Interest.
Taxes (real estate) and Insurance (homeowner’s).
Mortgage insurance - if your down payment is less than 20%.
Association fees - if applicable.
Your maximum monthly payment is calculated using:
The parameters of the mortgage product you select.
Your qualifying monthly income.
Your total monthly debt.
Be comfortable with the calculated monthly payment:
Repairs and maintenance costs are part of homeownership.

Determine the amount & source of down payment money:
Personal savings, gifts from parents, family.
Down payment assistance programs.
Secondary financing.
Determine the amount & source of closing costs:
Personal savings, gifts from parents, family.
Seller concessions.
Wells Fargo’s Closing Cost$aver sm program.
Determine the monthly payment amount for which you qualify.

Question #4 What type of mortgage should I get? “ There are literally thousands of different kinds of mortgages to choose from. The question is, which one is the right fit for you?” — David Bach #1 best selling author and financial coach

What type of mortgage should I get?
What type of product?
What kind of rate?
How long a term?
What kind of payments?
What type of documentation?

We’ll help you select the product type that meets your needs:
Conforming loans up to $417,000* for a single-family.
Jumbo loans greater than $417,000.
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 through the end of 2008. The loan limit on these “conforming jumbo” loans varies by location but doesn’t exceed $729,750 in the continental U.S.

We have product types for special needs:
Renovation loans to make improvements or rehab foreclosures.
New construction loans.
Reverse mortgages to finance second homes for 62 years or older.
Wells Fargo’s Home Opportunities SM for low-to-moderate income buyers and first-time homebuyers.
FHA loan programs.

What type of mortgage should I get? What kind of rate?
Usually starts with a rate that is lower than an FRM but higher than an ARM.
Rate & payments are fixed for 3, 5, 7, or 10 years.
After that period, the rate may adjust annually changing the monthly payment.
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.
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.
Hybrid ARM Adjustable-Rate (ARM) Fixed-Rate (FRM)

What type of mortgage should I get? How long a term? NOTE: A Preferred Payment Plan sm can reduce the interest and increase your equity, no matter what term you choose—we’ll show you how!
Rate is lower.
Payments are higher.
Pay the least amount of interest over the life of the loan.
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 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.
15-Year 30-Year 40-Year

What type of mortgage should I get? What type of payment? Added bonus Benefits Frequency How $ Applied Monthly for # Yrs. Monthly or Semi-monthly. Biweekly or Weekly. Monthly.
Make extra principal payments at any time.
Smart budget tool.
May provide increased disposable income and may allow you to maximize savings/investment contributions.
Lower payments.
No equity is built until principal payments are made.
Interest Only.
Half or quarter payment tied to pay date; generates a 13 th monthly payment per year, which is applied to principal and accelerates loan payoff.
Build equity faster.
Own home sooner.
Save on interest.
Make extra principal payments at any time.
Designed to pay off loan at end of term.

What type of mortgage should I get? 1-In certain circumstances, you may be required to provide documentation. Please ask a Wells Fargo Home Mortgage consultant for details. Depending on their specifics, programs that do not require the standard information and documents may result in higher interest rates and Annual Percentage Rates than a traditional mortgage program.
What type of documentation will be required?
Items such as employment checks, tax statements, W-2 forms and bank statements help verify that you can qualify for the loan amount requested. “Full doc” may provide you with a lower interest rate.
Some buyers with good credit can avoid providing limited documentation.
In some circumstances, you may be required to provide documentation. Depending on the loan program, the interest rate and APR may be higher than with full documentation 1 .

Gain a full understanding of your options.
Many buyers have multiple options for financing.
Others have more limited options.
Discuss each facet of the mortgage product thoroughly:
Product – Conventional, FHA.
Rate – ARM, fixed.
Term – 40, 30, 15 years.
Payment frequency.
Documentation type.
Look beyond rates and shop based on your needs.
Your mortgage should accommodate both your financial needs and your wealth-building goals.

Question #5 What is the home buying process? “ The fact is that home buying is both easier and more straightforward than most people realize.” — David Bach #1 best selling author and financial coach

Set the stage for an easier process.
Find professionals you can trust.
Ask questions and express your concerns up front.
Learn what to expect — and what will be expected of you.
The right people will walk you through, talk you through — and see you through!

Start with a pre-approval.
The Wells Fargo Priority Buyer ® pre-approval.
It’s reliable pre-approved financing in clearly specified loan amounts and terms on official Wells Fargo letterhead.
You know you’re setting yourself as a serious buyer who has already completed the application, credit check, and first decision phase.
Priority Buyer ® is the shortest distance between the opening offer and the closing table.

Determine the right financing for you.
How Wells Fargo can help.
Your loan scenario is run through a decision engine: you may qualify for instant approval!
We identify and explain each of the products and features.
We explain the documentation you need to provide.
At any time from application up to a specified number of days before closing, your range of rates can be “locked”.
Questions?

When you find the home to buy…
Your real estate agent will guide you.
Your agent can give you information about recent sales of similar homes and help you determine the amount to offer for the home.
You will be required to make an “earnest money” deposit to show the home seller you are serious.
Negotiating.
Your offer may also include a proposed closing date, down payment amount and conditions that need to be met prior to sale (such as required repairs).
Sometimes the offer is accepted immediately. Sometimes you may need to negotiate.
Your real estate agent will be your go-between and advisor during negotiations.

Offer accepted?
Get Ready to Close!
Your pre-approval must now become an official approval, so let your lender know:
The home’s property address.
The agreed-upon purchase price.
Your final down payment amount.
You’ll receive a Good Faith Estimate that states the estimated cost of your loan. You will also receive a Truth in Lending with your estimated monthly mortgage payment.

Final pre-closing details.
Have the home inspected to identify any repairs the home may need.
Major repairs can become a negotiating point.
We will have your home appraised to determine its fair market value.
Other details.
You will be required to purchase title insurance for the lender. You can purchase title insurance to cover any claims against your ownership—this is optional.
We will order a title search to ensure the seller has clear claim to the home.
You also need to purchase homeowner’s insurance to protect against property damage. Ask about making convenient arrangements through Wells Fargo Insurance, Inc.
Some properties also need flood insurance.
Insurance is available through Wells Fargo Insurance, Inc. Insurance products are not FDIC insured.

You’re almost home!
Have you met all the conditions of your loan approval?
Have you received your estimate of how much money you’ll need to close? Did you get certified checks?
Have you made your final “walk through” inspection?
Has the seller removed all belongings from the home and left it in agreed-to condition?
Proceed to the closing table...

Congratulations on your new home!
Carefully review all documents associated with the home sale.
Pay all closing costs in full with a certified check.
Sign all loan and title documents and take ownership!
Receive the keys.
Move on in!!
Questions ?

After closing…
Consider signing up for a FREE automated payment option (which can also be done at closing).
Monthly.
Biweekly---with the extra payment that builds equity.
Weekly—with the extra payment that builds equity.
Sign up for online servicing —the best online customer experience in the industry 1.
Your mortgage may help you qualify for Wells Fargo’s top-of-the-line PMA® Package or a Complete Advantage® Package.
We stay in touch to help you with any future needs .
Don’t hesitate to call us if you have any questions or have a payment problem.
1 Based on findings by Change Sciences Research, Customer Experience Benchmarks and Best Practices: Winning Mortgage Customer Online (April 2007)

Request a PriorityBuyer ® pre-approval before you leave, or set up an appointment.
Obtain a customized First Home ® Purchase Plan.
Find a Real Estate Agent.
“ I strongly recommend you take the time NOW — before you start looking at homes — to work with a mortgage advisor to get pre-approved.” — David Bach #1 best selling author and financial coach

Why Wells Fargo?
We have a broad menu of product options.
We are the nation’s #1 retail mortgage lender in loans for homebuyers 1 .
Wells Fargo is committed to building lifetime customer relationships.
Fair & Responsible Lending isn’t just a policy – it’s the moral fabric upon which we operate.
Wells Fargo Home Mortgage prides itself on its Fair & Responsible Lending & Servicing Principles. 1 Based on yearend 2006 purchase activity volume and market share statistics by Inside Mortgage Finance 3/30/07. Our Vision : Satisfy our customers’ financial needs and help them succeed financially.

Why Wells Fargo? Wells Fargo Home Mortgage prides itself on its Fair & Responsible Lending & Servicing Principles.
Wells Fargo’s goal is not only to get customers into homes, but also to keep them there.
We value our customers and offer free services to help you:
Make on-time payments – automatically.
Pay off your mortgage faster – automatically.
Make managing your money easy and routine.

A home is an investment in personal and financial well-being.
Take this opportunity to sit down with a home mortgage consultant.
Apply for Priority Buyer ® mortgage preapproval.
Or create a customized First Home ® Purchase Plan.
Comfort... Security... A Legacy For Future Generations. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. (c) 2008 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. Insurance products are not FDIC insured.

APPENDIX: Attention Presenter : choose the most appropriate price point for your market from the following slides and substitute for slide #19.

How much money do I need for a down payment? Monthly Payment Illustration: $80,000 purchase price. The higher your down payment, the lower your monthly payment. 8. Assumes a 30-year fixed-rate mortgage with a 6.25% interest rate. Mortgage insurance is generally required if the down payment is less than 20% and is not included in the monthly payments above. 5% 15% 20% % Down Payment 468 $76,000 $4,000 $419 $68,000 $12,000 $394 $64,000 $16,000 Monthly Principal and Interest 8 Mortgage Amount Down Payment in Dollars

How much money do I need for a down payment? The higher your down payment, the lower your monthly payment. Monthly Payment Illustration: $150,000 purchase price. 8. Assumes a 30-year fixed-rate mortgage with a 6.25% interest rate. Mortgage insurance is generally required if the down payment is less than 20% and is not included in the monthly payments above. 5% 15% 20% % Down Payment $877 $142,500. $7,500. $785 $127,500. $22,500. $739 $120,000. $30,000. Monthly Principal and Interest 8 Mortgage Amount Down Payment in Dollars

How much money do I need for a down payment? The higher your down payment, the lower your monthly payment. Monthly Payment Illustration: $200,000 purchase price. 8. Assumes a 30-year fixed-rate mortgage with a 6.25% interest rate. Mortgage insurance is generally required if the down payment is less than 20% and is not included in the monthly payments above. 5% 15% 20% % Down Payment $1,170 $190,000 $10,000 $1,047 $170,000 $30,000 $985 $160,000 $40,000 Monthly Principal and Interest 8 Mortgage Amount Down Payment in Dollars

How much money do I need for a down payment? The higher your down payment, the lower your monthly payment. Monthly Payment Illustration: $300,000 purchase price. 8. Assumes a 30-year fixed-rate mortgage with a 6.25% interest rate. Mortgage insurance is generally required if the down payment is less than 20% and is not included in the monthly payments above. 5% 15% 20% % Down Payment $1,755 $285,000 $15,000 $1,570 $255,000 $45,000 $1,478 $240,000 $60,000 Monthly Principal and Interest 8 Mortgage Amount Down Payment in Dollars

How much money do I need for a down payment? The higher your down payment, the lower your monthly payment. Monthly Payment Illustration: $500,000 purchase price. 8. Assumes a 30-year fixed-rate mortgage with a 6.25% interest rate. Mortgage insurance is generally required if the down payment is less than 20% and is not included in the monthly payments above. 5% 15% 20% % Down Payment $2,925 $475,000 $25,000 $2,617 $425,000 $75,000 $2,463 $400,000 $100,000 Monthly Principal and Interest 8 Mortgage Amount Down Payment in Dollars

Buying A Home In Todays Market

by The Charlotte House Hunter Group

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