Los Angeles February 16 203 k loan class

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Los Angeles February 16 203 k loan class

  1. 1. How to Finance YourHomeFebruary 16, 2012 Norwalk, CAFollow: @RedfinLALike: http://www.facebook.com/RedfinLASlide 1 of 27
  2. 2. Working with RedfinSlide 2 of 27
  3. 3. Working With Redfin is Different Service ► Advocates: client-satisfaction bonuses, not commissions ► Transparency: informed decisions ► Best Agents: The right home for the right price No obligation ► Switch Redfin agents ► Pause and re-start your search any time ► Tour on your schedule and pace Refund ► We’ll refund a portion of the commission back to you The Best Results ► Service: 97% would recommend us to a friendSlide 3 of 27
  4. 4. How Commissions Work We refund back part of our commission to you! • Subject to lender approval • Applied to closing costs • Refund is tax-freeSlide 4 of 27
  5. 5. Partners in the Process AGENT TOUR Responsible for your success COORDINATOR Writes your offer Schedules tours Handles negotiations Prepares paperwork TRANSACTION ASSOCIATE AGENT COORDINATOR Takes you to see homes Prepares paperwork Sees 50+ homes a week Works with escrowSlide 5 of 27
  6. 6. A Little Bit About What We Do Redfin is a brokerage that’s using technology and a customer-service focus to change the real estate game in the consumer’s favor. ● What: a brokerage ● How we are different: ► Technology ► Customer-service ● Why: we want to change the gameSlide 6 of 27
  7. 7. What We Have AccomplishedRedfin is a real estate brokerage that has helped over 20,000people buy or sell a home; 97% would refer us to a friend.● Customers, not commissions● Informed decisions● The right home for the right price No obligation Get back a portion of our commissionSlide 7 of 27
  8. 8. MortgagesSlide 8 of 27
  9. 9. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 9 of 27
  10. 10. Get Pre-Approved ● A pre-approval letter is a letter from a bank or a lender estimating how much theyll lend a borrower ● Help you establish how much you can afford and makes offer process go faster ● Information needed: ► W-2, two pay-stubs, tax returns (get them ready), bank statements ● The process only takes a few days while banks get everything verified ● The approval is good for 90 days, depending on lender ● Ask for a few different amounts ● Redfin asks that you get pre-approved before your third tourSlide 10 of 27
  11. 11. Facts on Getting Pre-Approved ● Applications are usually free and credit checks should not cost more than $20 ● If you get multiple credit checks from multiple lenders within a 30 day period, this will only count as one credit check against your credit score ● The application does not bind you to a lender, loan or rate ● You will get a better idea of any other action items you need to complete before you can buy ● Gives you a chance to discuss different financing options ● Your pre-approval stays valid for 60 to 90 days – the lender determines the time ● Required by sellers to consider offersSlide 11 of 27
  12. 12. Organize Your Assets● Get ready for the down payment ● Cash accounts (liquid funds) ● 401(k), stocks, other investments ● Gift funds? (Max. allowed varies) ● Move funds around before you start shoppingSlide 12 of 27
  13. 13. Review Your Debt● Pull credit report, look for errors● Figure out how much monthly income goes towards paying off debt: 28 – 33% healthy● Pay down balances to 1/3rd of credit available● Don’t open any new lines of credit● Don’t buy any big ticket items● Co-borrower will need to do the sameSlide 13 of 27
  14. 14. Start Shopping for LendersCompile a list of 2-3 lenders & brokersGood sources include:● Redfins partner lenders● Referrals from friends, family & co-workers● Banks or credit unions you have accounts with● A large, national bank with an advertised rate● Your real estate agent● Online review sites, such as Yelp● BEWARE OF OUT OF STATE LENDERS!!!Slide 14 of 27
  15. 15. Comparing GFE Results● Gather Good Faith Estimates (loan quotes) ► A minimum of three, more is better ► Compare similar loans Program (FHA, conventional) Timeframe (same day)● Compare costs side-by-side ► Discount & origination points ► Interest rates ► Insurance premiums (FHA, PMI) ► APR (interest rates + fees + points + PMI)Slide 15 of 27
  16. 16. Make Your Decision● When possible, get a loan commitment● Lock your interest rate (30 - 60 days)● Make alternative funds liquid (401k, stock)Good news! Loan payments are made in arrears, soyour first loan payment won’t be for two months.You’ll have one month of no payments.Slide 16 of 27
  17. 17. Where Are Rates Headed? Type of Loan February 7, 2013 January 31, 2013 30-Year Fixed 3.53% 3.53% 15-Year Fixed 2.77% 2.81% 5/1 ARM 2.63% 2.70% 1-Year ARM 2.53% 2.59%Slide 17 of 27
  18. 18. Where Are Rates Headed?Slide 18 of 27
  19. 19. Renovation FinancingSlide 19 of 27
  20. 20. Renovation Financing● Renovation Financing allows a homeowner to purchase a property and finance repairs/improvements into one loan. There are various types of renovation financing depending on the scope of the work to be completed. A homeowner can finance lender required repairs or basic aesthetic improvements. Here are some of the common renovations we see: ► Kitchen remodel ► Bath remodel ► Flooring upgrades ► Roof repair/replacement ► Exterior Painting ► Copper Re-pipe ► Foundation Repair ► Electrical Panel UpgradesSlide 20 of 27
  21. 21. Renovation Financing (cont)● Here are a few key components of renovation financing: ► Rehab Amount: sum of cost of repairs, administrative fees, inspection fees, etc ► Acquisition Cost: Sum of purchase price plus Rehab AmountNote: Down payment is based on the acquisition price.Slide 21 of 27
  22. 22. FHA 203k Rehabilitation Loan● Minimum Down payment: 3.5%● Maximum Rehab amount: No limit● Structural repairs allowed: Yes● Independent Inspector required: Yes● Occupancy Allowed: Owner Occupied Only● Property Type: 1 – 4 units, condos*● *there are restrictions on condosSlide 22 of 27
  23. 23. FHA 203k Streamline● Minimum Down payment: 3.5%● Maximum Rehab amount: $35,000● Structural repairs allowed: No● Independent Inspector required: No● Occupancy Allowed: Owner Occupied Only● Property Type: 1 – 4 units, condos*● *there are restrictions on condosSlide 23 of 27
  24. 24. Home Path Renovation Loan● Minimum Down payment: 3%*● Maximum Rehab amount: $35,000● Structural repairs allowed: No● Independent Inspector required: No● Occupancy Allowed: Owner Occupied, 2nd Home, Investor● Property Type: Fannie Mae Owned 1 – 4 units, condos*● *Down Payment varies with OccupancySlide 24 of 27
  25. 25. Conventional HomestyleRenovation Loan● Minimum Down payment: 5%*● Maximum Rehab amount: No limit● Structural repairs allowed: Yes● Independent Inspector required: Yes● Occupancy Allowed: Owner Occupied Only● Property Type: 1 – 4 units, condos● *Down Payment varies with OccupancySlide 25 of 27
  26. 26. Next Class! Home Buying Class February 19, 2012 6:00 pm – 9:00pm Long Beach Marriotthttp://www.redfin.com/buy-a-home/classes-and-eventsSlide 26 of 27
  27. 27. Check out our local pages!Slide 27 of 27

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