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Crawford And Associates Mortgage 101Seminar
 

Crawford And Associates Mortgage 101Seminar

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    Crawford And Associates Mortgage 101Seminar Crawford And Associates Mortgage 101Seminar Presentation Transcript

    • Crawford & Associates Presents Mortgage 101
    • SEMINAR AGENDA
      • How to find a lender and a mortgage that is right for you
      • Conforming vs. Alternative lenders
      • The rights of the borrower and the lender
      • Importance of good credit
      • Income and employment
      • Appraisal / loan to value (LTV)
    • RENT
      • Monthly 1,440
      • Insurance 30
      • Total 1,470
      • Yearly Cost 17,640
      • Tax Benefits 0
      • Net Cost 17,640
      • Net Cost / Month $1,470
      • Total Cash Needed to Rent
      • $ 1,440 X 4 = $5,880
        • 2 Months Security
        • Realtor Fee
        • 1 st Month’s Payment
      OWN Monthly 1,220 Taxes 133 Hazard Insurance 80 Total 1,433 Yearly Cost 17,196 Tax Benefits (approx) 5,441 Net Cost 11,755 Net Cost / Month $979 Total Cash Needed to Own 5,400 Down Payment 12,000 Closing Costs (typically 6-7%) 9,000 Contribution $8,400 Needed to Own
    • Mortgage Types and Terms
      • Mortgage Types:
      • Fixed Rate
      • Adjustable Rate
      • Balloon Mortgage
      • Interest Only
      • Two popular terms are:
      • 15 Year Mortgage (builds equity and pays off quicker, has a higher monthly payment)
      • 30 Year Mortgage (lower monthly payment with longer commitment)
    • WHAT IS CREDIT WORTHINESS?
      • Mortgage/Rent Payment History
      • Debt Payment History
      • Total Debt
      • Debt Balance Vs. Credit Limit
      • Collections
      • Bankruptcies & Judgments
    • CREDIT REPORT
      • Reporting Agencies
        • Equifax
        • Experian
        • Trans union
      • Scores range from 400-850
      • Factors affecting scores are listed on report
      • Available online for nominal fee
      • Verify that paid debts report accurately
    • Credit scores are compiled using models based on your credit history. Your score directly affects the rate you receive. If you have a higher credit score, you will generally receive lower rates. Scores generally range 400-850. Credit Scores 30 year loans based on credit scores are: 720-850 Payment on $100K loan: $626.55 700-719 675-699 620-674 560-619 500-559 Payment on $100K loan: $863.71 . Over $235 more per month!!!! In compiling credit scores credit bureaus look at the following items: 1) What is your track record ? ( Approx 35% of your score) 2) How much credit is too much credit (Approx. 30% of your score) 3) How established is your credit (Approx. 15% of your score) 4) Are you taking on new debt (Approx 10% of your score) 5) Is your credit a “healthy mix”? (Approx 10% of your score) More information is located on your credit score handout and http://www.myfico.com
    • Principal and Interest Taxes and Insurance
      • Front End Debt to Income Ratio (DTI)
      • Included in the ratio are :
      • Mortgage Principal and Interest Payments
      • Tax and Insurance payments on your property
      • Conforming Lenders (banks, credit unions) look at this ratio to determine how much of a loan you can afford. They allow up to 28% of your gross (pretax) income.
      • Alternative lenders do not look at this ratio.
      • Back End Debt to Income Ratio (DTI)
      • Included in this ratio are your:
      • Mortgage Principal and Interest Payments
      • Tax and Insurance payments on your property
      • Auto Loans
      • Credit Card Debts
      • Student Loans, etc
      • Conforming Lenders allow up to 36% of your income for this ratio.
      • Alternative lenders typically can go higher depending on your qualifications.
    • INCOME AND EMPLOYMENT
      • Ability To Pay
      • Time At Job
      • Time In Your Field
      • Additional Income
    • APPRAISAL WHAT IS MY HOME WORTH?
      • Appraiser compares your home to other properties
      • Makes adjustments (for example, comparable property has a garage and you do not)
      • Small variances
      • Obtain a copy (once you pay for it)
      • Verify accuracy based on your knowledge
      • Loan to value is based on appraised value, if inflated it could jeopardize your selling the house in the future
    • LOAN TO VALUE (LTV)
      • Loan amount as A percentage Of home value
      • LTV takes into consideration all mortgages or liens on the property. It could include home improvement loans, tax liens and 1st & 2nd mortgages
      LOAN $IZE
    • What is Home Equity and Loan to Value? (LTV). The value of your home divided by the loan amount is LTV. The area in color is home equity $100K purchase price $97K mortgage, $3K down 97% LTV (3% Equity ( $3K)) Private Mortgage Insurance (PMI) required by conforming lenders PMI not required by many alternative lenders. 5 yrs later: Home appreciated to $120K $90K mortgage balance 90/120= 75% LTV ( 25% Equity ($30K). No PMI required (LTV in excess of 80%) 18 yrs later: Home appreciated to $175K $50K mortgage balance 50/175= 28%LTV (72% Equity. ($126K) 30 yrs later: Home appreciated to $275K $0K mortgage balance 0/275= 0%LTV (100% Equity. ($275,000)
    • Responsibilities of the Borrower
      • Escrow Accounts (Paying your Taxes and Insurance)
      • Making payments on time
      • What is a “Grace Period”?
      • Payment Options (Internet, Phone Payments, Automatic Payments)
      • When Emergencies Occur
    • The Crawford & Associates Dwight Crawford, C.M.C. LLO 704-542-7937 [email_address]
    • BROUGHT TO YOU BY
      • Crawford & Associates