The Steps to Homeownership
A Guide for First-time Homebuyers




                                    Harris Homebuyers Gui...
The Steps to Homeownership




        GETTING STARTED

           •     9 Easy Steps to Your Home Loan
           •     H...
The Steps to Homeownership




        GETTING STARTED

          •     Good Faith Estimate
          •     Appraisal and ...
The Steps to Homeownership



        9 Easy Steps to Your Home Loan
            1. Pre-qualification

            2. Choo...
The Steps to Homeownership



        Homeowner Advantages and Responsibilities

                 Advantages of homeowners...
The Steps to Homeownership



        Pre-qualification

                 Pre-qualification is the process of estimating
 ...
Pre-qualification




                    How much do I earn?

                      Monthly Income
                      ...
Pre-qualification




                    How much do I owe?

                      Monthly Payments

                    ...
Pre-qualification




                    How much money do I have available for the
                    downpayment, clos...
Pre-qualification



            Pre-Qualification Example:


                    How much can I borrow to purchase a home...
Savings and Advantages



        Rent vs. Own Comparison—Savings/Advantages


                                           ...
The Steps to Homeownership



        Affordable Mortgage Products and Programs

                  • Fixed rate and adjust...
The Steps to Homeownership



        Affordable Mortgage Products and Programs

                 • Housing expense paymen...
The Steps to Homeownership



        Harris Affordable Mortgage Products and Programs
         Harris offers a variety of...
The Steps to Homeownership



        Fixed Rate vs. ARM Comparison

                 Fixed Rate Mortgages

            • ...
The Steps to Homeownership



        Fixed Rate vs. ARM Comparison

                 Adjustable Rate Mortgages

         ...
The Steps to Homeownership



        What to Bring for an Application

                 Income

                 Assets: ...
The Application


        My Income

                   Income: How much money do I earn?
                                ...
The Application


        My Debts and Obligations

                  How much money do I owe?
                           ...
The Steps to Homeownership



        Credit Check

                 How have I paid my bills over time?

                ...
The Application


        My Assets

          How much money do I have available for the
             downpayment, closin...
Savings and Advantages



        Good Faith Estimate Example

                                Loan Type            Fixed ...
The Steps to Homeownership



        Appraisal and Insurance

               What is the value and condition of the prope...
The Steps to Homeownership



        Loan Approval and Closing

                 After your mortgage loan has been approv...
The Steps to Homeownership



        Consumer Advice

                 What is predatory lending?

                 Typic...
The Steps to Homeownership



        Consumer Advice
            How can I protect myself from a predatory lender?

     ...
The Harris Advantage


        Harris Advantages



  Friendly and knowledgeable Mortgage Specialists
  A variety of pro...
The Steps to Homeownership



        Pre-qualification and Pre-approval

                 Pre-qualification

            ...
The Harris Advantage


        Homeownership….We Make It Possible!


                               Over the past century,...
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Steps To Homeownership English

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Steps To Homeownership English

  1. 1. The Steps to Homeownership A Guide for First-time Homebuyers Harris Homebuyers Guide
  2. 2. The Steps to Homeownership GETTING STARTED • 9 Easy Steps to Your Home Loan • Homeowner Advantages and Responsibilities • Pre-qualification Example • Rent vs. Own Comparison • Affordable Mortgage Products and Programs • Fixed Rate vs. ARM Comparison • The Application Interview Harris Homebuyers Guide
  3. 3. The Steps to Homeownership GETTING STARTED • Good Faith Estimate • Appraisal and Insurance • Loan Approval and Closing • Consumer Advice • Harris Advantages • Pre-qualification and Pre-approval Harris Homebuyers Guide
  4. 4. The Steps to Homeownership 9 Easy Steps to Your Home Loan 1. Pre-qualification 2. Choose Your Loan 3. The Application 4. Income and Employment Verification 5. Credit Check 6. Asset Review 7. Appraisal and Hazard Insurance 8. Loan Approval 9. Loan Closing Harris Homebuyers Guide
  5. 5. The Steps to Homeownership Homeowner Advantages and Responsibilities Advantages of homeownership • Tax Savings • Financial Investment Responsibilities of homeownership • Utility Costs • Maintenance • Appliance repair/replacement • Possible structural repairs • Home improvements • Recordkeeping for federal income taxes Harris Homebuyers Guide
  6. 6. The Steps to Homeownership Pre-qualification Pre-qualification is the process of estimating the amount of mortgage you can afford. • How much do I earn? • How much do I owe? • How much do I have available for the downpayment, closing costs and reserves? • How much can I borrow to purchase a home? Harris Homebuyers Guide
  7. 7. Pre-qualification How much do I earn? Monthly Income Combined Gross Wages of All Borrowers (before tax deductions) $5,625.00 Alimony/Child Support -0- Harris Homebuyers Guide
  8. 8. Pre-qualification How much do I owe? Monthly Payments Auto Loans $550 Student Loans -0- Credit Card Payments $100 Alimony/Child Support -0- Harris Homebuyers Guide
  9. 9. Pre-qualification How much money do I have available for the downpayment, closing costs and reserves? Bank Accounts $5,000 Gift from Relative $5,000 Grant -0- Affordable Second Mortgage -0- Harris Homebuyers Guide
  10. 10. Pre-qualification Pre-Qualification Example: How much can I borrow to purchase a home? Loan Terms Product Harris Homebuyer AdvantageSM Loan Type Fixed Rate Interest Rate 6.625% Term 30 years Downpayment 5% Qualification Guidelines Monthly Housing Expense Ratio No Limit Monthly Recurring Debt Ratio 42% Maximum Purchase Price $195,000.00 Downpayment $9,750.00 Maximum Loan Amount $185,250.00 Monthly Mortgage Payment Principal and Interest $1,186.18 Real Estate Taxes $325.00 Hazard Insurance $40.00 Private Mortgage Insurance $120.00 Total Payment $1,671.18 Harris Homebuyers Guide
  11. 11. Savings and Advantages Rent vs. Own Comparison—Savings/Advantages Mortgage Rent Fixed Rate 6.625% 30 years $185,250.00 Principal and Interest Rent Monthly Payment $1,186.18 $1,200.00 Tax Bracket 28% 28% After the first year… 283.51 -0- Tax Savings $902.67 $1,200.00 Net Payment Harris Homebuyers Guide
  12. 12. The Steps to Homeownership Affordable Mortgage Products and Programs • Fixed rate and adjustable rate mortgage options • 1- to 4-unit owner-occupied properties • Annual household income limits • No downpayment or low downpayments • Gifts from relatives for downpayment or closing costs • Grants and second mortgages for downpayment and/or closing costs Harris Homebuyers Guide
  13. 13. The Steps to Homeownership Affordable Mortgage Products and Programs • Housing expense payment reserves • Minimum credit scores • Alternative credit sources • Expanded guidelines for qualification • Private Mortgage Insurance (PMI) • Borrower pre-purchase education • Closing cost discounts Harris Homebuyers Guide
  14. 14. The Steps to Homeownership Harris Affordable Mortgage Products and Programs Harris offers a variety of affordable mortgage products and programs for first-time homebuyers. • Harris Homebuyer AdvantageSM • Home PossibleSM • Harris Community CommitmentSM • Harris New Home RewardsSM • Alternative Identification MortgageSM Harris Homebuyers Guide
  15. 15. The Steps to Homeownership Fixed Rate vs. ARM Comparison Fixed Rate Mortgages • Interest rate and payment remain the same for the life of the loan. • Even if market conditions change, your interest rate and your payment will not be affected. Harris Homebuyers Guide
  16. 16. The Steps to Homeownership Fixed Rate vs. ARM Comparison Adjustable Rate Mortgages • Because the initial interest rate is lower than a fixed rate mortgage, your initial payment will be lower and you may qualify for a larger mortgage amount. • Your interest rate and your payment may increase or decrease during the life of the loan, depending on market conditions. • An ARM with a lower initial rate of interest and an adjustment period after five or seven years can save you money. Harris Homebuyers Guide
  17. 17. The Steps to Homeownership What to Bring for an Application Income Assets: Downpayment, Closing Costs and Reserves Debts and Obligations Property Harris Homebuyers Guide
  18. 18. The Application My Income Income: How much money do I earn? Borrower Co-Borrower Wages $ _______________ $ _______________ Overtime _______________ _______________ Bonus _______________ _______________ Commission _______________ _______________ Social Security _______________ _______________ Pension _______________ _______________ Disability _______________ _______________ Alimony _______________ Child Support _______________ Dividends/Interest _______________ _______________ Other _______________ _______________ Total $ _______________ $ _______________ Harris Homebuyers Guide
  19. 19. The Application My Debts and Obligations How much money do I owe? Borrower Co-Borrower Revolving Credit Card $ _______________ $ _______________ Revolving Credit Card _______________ _______________ Revolving Credit Card _______________ _______________ Revolving Credit Card _______________ _______________ Car Loan _______________ _______________ Student Loan _______________ _______________ Line of Credit _______________ _______________ Alimony _______________ _______________ Child Support _______________ _______________ Other _______________ _______________ Other _______________ _______________ Total $ _______________ $ _______________ Harris Homebuyers Guide
  20. 20. The Steps to Homeownership Credit Check How have I paid my bills over time? What is my credit score? How can I improve my credit score? What if I don’t have any established credit? Harris Homebuyers Guide
  21. 21. The Application My Assets How much money do I have available for the downpayment, closing costs and reserves? Borrower Co-Borrower Checking $ _______________ $ _______________ Savings _______________ _______________ Money Market _______________ _______________ Certificates of Deposit _______________ _______________ Stocks/Bonds _______________ _______________ Gift Funds _______________ _______________ Grant Funds _______________ _______________ Affordable Second Mortgage _______________ _______________ IRAs _______________ _______________ 401(k) _______________ _______________ Other _______________ _______________ Total $ _______________ $ _______________ Harris Homebuyers Guide
  22. 22. Savings and Advantages Good Faith Estimate Example Loan Type Fixed Rate Loan Term 30 years Loan Amount $185,250.00 Interest Rate Discount Points 6.625% -0- Appraisal $250.00 Credit Report $ 15.00 Discount Points -0 – Flood Certification $ 9.00 Tax Service Fee $ 55.00 $350.00 Underwriting Fee $400.00 Hazard Insurance Premium $475.00 Settlement/Closing Fee $905.00 Title Charges $100.00 Recording Fee Total $2,559.00 Harris Homebuyers Guide
  23. 23. The Steps to Homeownership Appraisal and Insurance What is the value and condition of the property that I want to purchase? • An appraisal is a written report that describes the property and estimates its value and marketability. • Most homebuyers purchase homeowner’s insurance which is a combination of coverage (hazard insurance and personal liability) Harris Homebuyers Guide
  24. 24. The Steps to Homeownership Loan Approval and Closing After your mortgage loan has been approved, the final step to homeownership is the loan closing. • All mortgage and legal documents are signed, all financial sums are paid, and ownership of the property is formally transferred. Harris Homebuyers Guide
  25. 25. The Steps to Homeownership Consumer Advice What is predatory lending? Typical predatory loan features include: • High interest rates • Broker fees • Unnecessary closing costs such as pre-paid life insurance • Unaffordable repayment terms Harris Homebuyers Guide
  26. 26. The Steps to Homeownership Consumer Advice How can I protect myself from a predatory lender? • Comparison shop • Choose a reputable lender • Don’t borrow more money than necessary • Choose a mortgage that meets your needs • Don’t buy services that you don’t need • Get the best terms that you qualify for • If you don’t understand something, ask questions until you are satisfied • Get financial counseling if you need it Harris Homebuyers Guide
  27. 27. The Harris Advantage Harris Advantages  Friendly and knowledgeable Mortgage Specialists  A variety of products and programs for first-time homebuyers  Free pre-qualifications  Free pre-approvals  Pre-approvals with 120-day Mortgage Interest Rate Price Protection Option  Local processing, underwriting, closing and servicing  Low closing costs  The Harris No Surprises Mortgage® guarantee  Over 225 convenient locations in Chicagoland and Indiana Harris Homebuyers Guide
  28. 28. The Steps to Homeownership Pre-qualification and Pre-approval Pre-qualification • Your Mortgage Specialist estimates how much money you can borrow to purchase a home and what your monthly mortgage payment will be. Pre-approval • A pre-approval is a formal application for a home loan. • Realtors and builders prefer to work with buyers who have been pre-approved for a mortgage before they begin shopping for home Harris Homebuyers Guide
  29. 29. The Harris Advantage Homeownership….We Make It Possible! Over the past century, Harris has helped thousands of families and individuals finance their first home. We can make homeownership possible for you, too! Thank you. Harris Homebuyers Guide
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