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

  • 1. Crawford & Associates Presents Mortgage 101
  • 2. 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)
  • 3. 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
  • 4. 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)
  • 5. WHAT IS CREDIT WORTHINESS?
    • Mortgage/Rent Payment History
    • Debt Payment History
    • Total Debt
    • Debt Balance Vs. Credit Limit
    • Collections
    • Bankruptcies & Judgments
  • 6. 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
  • 7. 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
  • 8. 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.
  • 9. INCOME AND EMPLOYMENT
    • Ability To Pay
    • Time At Job
    • Time In Your Field
    • Additional Income
  • 10. 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
  • 11. 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
  • 12. 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)
  • 13. 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
  • 14. The Crawford & Associates Dwight Crawford, C.M.C. LLO 704-542-7937 [email_address]
  • 15. BROUGHT TO YOU BY
    • Crawford & Associates