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  • 1. Heading Home A Seminar for First-time Homebuyers PRESENTED BY: Vartkes Hovsepian Lentegra Mortgage Group
  • 2. On Your Way to Your First Home
    • Buying a home is a big step.
    • Choose a home and a financing program that’s right for you.
    • Select a home and a loan program that fits your budget, lifestyle and goals.
  • 3. Why Buy Instead of Rent?
    • Buying a home can be a wise investment.
    • Typically homes increase in value over time.
    • You can build ownership interest – known as equity .
    • Interest paid on a home mortgage is typically tax deductible*. *Consult Your Tax Advisor Regarding Deductibility of Interest
  • 4. How to Begin? It’s as Easy as 1, 2, 3.
    • Apply for mortgage pre-approval.
    • Put together a “home team” of experts:
      • An experienced real estate agent or builder
      • A knowledgeable loan officer
    • Learn more about the home buying process.
  • 5. THE BASICS THE BASICS The Basics
  • 6. How Much Home Can I Afford?
    • To determine your maximum mortgage amount, lenders look at:
      • Your credit history
      • Available cash for down payment and closing costs
      • Your income
      • Your existing debt and financial obligations
    • Max mortgage amount + down payment = your home-purchase price range.
  • 7. How Important Is My Credit?
    • Your credit score will be a key factor in the kind of mortgage program for which you may qualify.
    • Your credit history can also affect:
      • The amount required for a down payment
      • The amount of money you can borrow in relation to your income
      • The interest rate you are offered
    • Obtain a copy of your credit report.
  • 8. Why is My Credit History So Important?
    • A history of paying monthly payments on time indicates you are likely to make mortgage payments on time.
    • A history of not over-borrowing on revolving accounts indicates you are good at managing the credit that is extended to you.
    • A credit history that is free of “derogatory” events, such as bankruptcies and collections indicates responsible handling of debt.
    • There are loan programs available for those with less than perfect credit, but they cost more.
  • 9. To Establish or Improve Your Credit Rating
    • Use credit to purchase low priced items. Make a few, prompt minimum payments.
    • Always pay bills on time.
    • Don’t use more than 50% per account of your available credit. (Don’t “max out”.)
    • Don’t necessarily close unused accounts.
    • Be patient. Some credit blemishes can only be repaired with time.
    • If you have no established credit history, or less-than-perfect credit, there are loan programs that can help you buy a home.
  • 10. How Much Do I Need for a Down Payment?
    • Today’s flexible programs make down payments less challenging.
    • Some homebuyers are eligible for assistance.
    • You may be able to buy with little or no down payment.
    • Loans with down payments less than 20% typically require mortgage insurance.
    • Most programs require funds equal to 1-3 month’s housing payments “in reserve” after closing.
  • 11. What About Closing Costs?
    • Closing costs typically run between 3% and 7% of the purchase price.
    • “ Prepaids” must be collected at closing to cover the current month’s interest and future month’s taxes and insurance.
    • Some loan programs allow you to finance your closing costs.
    • Some programs allow all or partial closing costs to be paid by home sellers or other sources.
  • 12. How Large a Loan Can I Be Approved For?
    • Lenders use a debt-to-income ratio to determine the loan amount for which you may qualify.
    • The anticipated housing payment is compared to gross earnings and debt.
    • Many programs offer expanded guidelines that qualify applicants for higher amounts.
    • Once you know your maximum loan amount, it’s up to you to decide if it’s right for you.
  • 13. What Does My Housing Payment Include?
    • Your monthly “housing payment” is made up of four amounts – often referred to as “PITI”:
      • P rincipal
      • I nterest
      • T axes
      • I nsurance*
    • Funds to pay your tax and insurance bills, as they come due, are held in escrow.
    • * For condos, replace the insurance amount with your condo fee
  • 14. Are There Special Programs for Me?
    • Many lenders offer special programs for first time buyers*
    • Often these are programs targeted at low income borrowers and/or for properties in low-income areas. You may not qualify for these.
    • Some programs do not allow first time buyers or require you to attend a home-buying class.
    • * You are a “first time buyer” if you have not owned a property for at least three (3) years.
  • 15. MAKING CHOICES MAKING CHOICES Making Choices
  • 16. Government Loans
    • Government loans are backed by federal or state agencies. In general, they answer the needs of first-time homebuyers by offering:
      • More flexible credit guidelines
      • Allowance for smaller or no down payments
    • Types of government loans include FHA, VA and State Bond Programs.
  • 17. Conventional Loans
    • Conventional* loans, which are not backed by the government, suit the needs of both first-time and move-up homebuyers.
    • Types of conventional loans include:
      • Conforming (loan amounts up to $417,000 for a single family)
      • Jumbo (higher amounts)
      • *Conventional loan limits in Hawaii and Alaska are higher.
  • 18. New, More Flexible Loan Programs
    • New programs and enhanced features are continuously developed to help make home ownership more accessible.
    • For example, one new program features:
      • Low or no down payment requirements
      • Flexible credit terms
      • Allowance for less-than-perfect credit, including bankruptcies
      • Secondary, stated income may be eligible to qualify
      • Reserves not required
  • 19. Which Type of Loan is Right for Me?
    • Each home loan category offers a range of financing options.
    • Work together with your mortgage specialist to select a program that best suits your budget needs and financial goals.
  • 20. Make it a Point to Ask About Points
    • One point equals 1% of the loan amount.
    • Often you can lower your interest rate by paying points.
    • Your mortgage specialist can help you determine whether it is truly beneficial to you to pay points.
    • Sometimes paying points is the only way to qualify for the financing you need.
  • 21. Know When to Lock and When to Float
    • Lenders allow borrowers to lock in their interest rate for periods of 30-120 days.
    • Often you can wait to lock up to five days before closing.
    • While you are waiting for your loan to close, rates may come down … or they may go up. Think about your risk tolerance.
    • The decision about when to lock a rate is yours. Simply inform your mortgage specialist.
  • 22. THE PROCESS THE PROCESS The Process From A Buyer’s Perspective
  • 23. Get Pre-Approved
    • Give yourself the advantage: apply for a loan pre-approval early in the process, even before you begin looking at homes.
      • Determine your price range so you can narrow down your home search
      • Complete the application and credit review stages of the mortgage process
  • 24. Gather Your Documentation
    • You may be asked to provide:
    • Paystubs/W2’s to verify your income*
    • Bank account or other asset statements
    • Documentation to help resolve errors on your credit report
    • Verification of debts not listed on your credit report
    • * For self-employed borrowers, a letter from your accountant replaces paystubs.
  • 25. Offer Accepted? Apply for Your Loan!
    • Once you have an accepted offer on a property, you can formally begin the loan application.
    • Discuss options with your loan specialist.
    • Sign the application and disclosures and be prepared to provide necessary documents.
    • Your loan specialist will need a copy of your signed Purchase & Sale Agreement (P&S) and copies of your deposit check(s).
  • 26. Can Somebody Please Make the Mortgage Process Go Faster?
    • We Can! And we do it every day!
    • You may be eligible for our time saving, streamlined documentation program.
    • You can look forward to personal attention and a rapid and affordable loan process.
  • 27. So What Happens Next
    • Take a four-step walk through to closing.
      • Processing (gathering documents and submitting to a lender)
      • Decisioning (underwriting)
      • Pre-closing (tying up loose ends; preparing documents)
      • Closing (sign, sign, sign!)
    • You become the proud owner of your new home!
  • 28. HELPING HANDS HELPING HANDS Helping Hands
  • 29. Let’s Get YOU There Together
    • Now that you’re on your way to a home of your own, you can count on your real estate agent or builder and your Lentegra mortgage specialist to be your personal “home team”.
    • We’re ready to work with you through each step of the process as you realize your very own American dream!
  • 30. Do You Need an Attorney?
    • The lender will assign an attorney to handle the closing on their behalf.
    • The attorney makes sure you will have clean title to the property and that your purchase is properly recorded, among other things.
    • You are not required to hire one, but you may want to have an attorney review your purchase documents and answer questions.
    • Buyers can use the same attorney as the lender. Attorneys typically discount their fee to you when they are doing both.
  • 31. Who Else is Involved?
    • An appraiser will formally evaluate the property to assure the lender that the price makes sense.
    • You may wish to hire a building inspector to determine if the building is in good shape.
    • Some buyers choose to have a pest inspector check the property for insect damage.
  • 32. The Seminar Is Done But You’ve Just Begun
    • You can now approach your first home purchase as an educated consumer.
    • Remember these key points:
      • Build your “homebuying team”
      • Check your credit report
      • Assemble your documents
      • Get preapproved and determine your price range
      • Discuss financing options with your mortgage specialist (Pay points? Rate lock period? Type of mortgage program?)
  • 33.