Mortgage Class - San Siego - 12.14.2011


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Mortgage Class - San Siego - 12.14.2011

  1. 1. ATTENTION WORKSHOP PRESENTER: Presenter notes are available for this presentation. To view the presenter notes, go to the top tool bar and select “View” and then “Notes Page” from the drop-down menu. To print the notes, select “Print” under “File” in the popup box. In the “Print what” area in the lower left, select “Notes Pages” from the drop-down box and then click “OK”. You need to customize the Title Slide with your information. Delete this slide before your Workshop presentation. You can show mortgage rates in a historical context with EZO flyer #106366. We recommend this as a handout.For additional information, please contactMarketing Program Manager Cindy Lui at: 650-242-2308 or via email at presentation is Easy Order #102824. Delete this slide before presenting 0
  2. 2. Buying a Home inToday’s MarketMarc SchurerHome Mortgage ConsultantNMLSR ID 448062Sara Masey/Redfin
  3. 3. Marc SchurerHome Loans for 10+ yearsOver 1,000 loans1 year with a broker, 8 years with BofA, 2 years with Wells FargoFather of 2 childrenUCLA alumni
  4. 4. Welcome! Thank you for coming. Let’s begin with introductions. Make yourself comfortable. Don’t be shy about asking questions. By attending this workshop, you are taking an important step toward buying a home -- for the first time, or as a move-up, second home, or investment buyer. 3
  5. 5. Homeownership Works! Homeownership may be one of the most important investments you’ll make in your lifetime. that’s still true today! 4
  6. 6. Why can Homeownership be a good investment? 5
  7. 7. After you’ve paid off your loan. . . . . .you’ll own your home free and clear 6
  8. 8. Housing prices have increased an average of almost 5.0% per year Percent Change in U.S. Home Prices Since 1975 Source: FHFA, May 25, 2011. Most recent data as of 6/30/2011 7
  9. 9. And add to that. . . potential tax advantages* for homeownership Interest paid on most mortgages is deductible for most homeowners. Property taxes are deductible for most homeowners. For most homeowners, there are no capital gains taxes when a primary residence is sold.*See your tax advisor 8
  10. 10. Six Key Questions Is now a good time to buy a home? Is my credit good enough to qualify? How much money will I need? What type of mortgage financing should I get? What is the homebuying process? Why Wells Fargo? 9
  11. 11. Is Now A Good Time ToBuy A Home? Wells Fargo Home Mortgage Homebuyer Workshop 10
  12. 12. Today is an unprecedented time to buy a home. Affordability has never been better 129 178 Average, 1990 - present 2011 1QtrSource: National Association of Realtors®, US Housing Affordability Index, four-quarter movingaverage through 2011’s First Quarter. The index assumes standard underwriting criteria and a 20%down payment . Most recent data as of 6/30/11. 11
  13. 13. Today is a buyer’s market Sellers are more willing to make concessions. Home prices have generally come down, improving affordability. Mortgage rates are near their lowest levels in at least two generations. Overall, good opportunities exist for financially qualified first-time homebuyers, second-home buyers, and investors. 12
  14. 14. Is My Credit Good Enoughto Qualify? Wells Fargo Home Mortgage Homebuyer Workshop 13
  15. 15. Lender requirements have tightenedYou need to pay attention to your credit score Your score may impact the terms of your loan, including: -- interest rate -- down payment requirement -- required level of documentation 14
  16. 16. Even those with strong credit scores need to provide more documentationA responsible lender wants you in a loan you can re-pay 15
  17. 17. What makes creditless-than-perfect? Limited credit history Excessive debt Slow payments Legal judgments Past foreclosure or bankruptcy New credit accounts Numerous credit applications Errors But having credit problems isn’t necessarily the end of the story… 16
  18. 18. It May Be Possible to Buy a Home with Less than Perfect Credit Work with us to see if you qualify …and if you don’t, learn what you can do to help you qualify to buy a home in coming years 17
  19. 19. How Much Money Will INeed? Wells Fargo Home Mortgage Homebuyer Workshop 18
  20. 20. Three times to ask this question: When considering your down payment When determining closing costs When comparing your mortgage payment to your monthly income 19
  21. 21. Lenders ARE asking for larger down payments… …but qualified buyers do not need a 20% down payment to buy a house Programs like FHA and VA loans are available with smaller down payments 20
  22. 22. How much down payment? Depends on: Your credit score The type of property Property use primary residence, second home, or investment Local market conditions higher down payments are required in areas with weak housing markets 21
  23. 23. The trade-off: The larger the down payment: the smaller your monthly principal and interest payment will be the smaller many of your loan costs will be 22
  24. 24. Your closing costs Points are funds you can pay at closing to lower your interest rate over the life of the loan One point = 1% of the loan amountYou can usually select from given point-and-ratecombinations on your mortgage loan. For example, at any one time, a zero-point loan may have one rate, a half-point loan would have a lower rate, and a one-point loan would have an even lower rate. 23
  25. 25. Your closing costs Should you pay points to lower your interest rate? It depends on your circumstances – particularly your cash on hand and how long you expect to stay in your house. 24
  26. 26. Compare Apples to Apples Every interest rate is associated with a point amount – zero, a half-point, a full point, etc. When comparing rates, get the whole story -- Compare rates with the same number of points charged. 25
  27. 27. Your Mortgage Payment consists of: Principal: Pays back the loan Charged on the Interest: outstanding balance Plus property taxes, homeowners insurance, and, if applicable, mortgage insurance 26
  28. 28. A Good Rule of ThumbYour monthly mortgage payment should be No more than 28% of your before-tax monthly income 27
  29. 29. What Type of MortgageFinancing Should I Get? Wells Fargo Home Mortgage Homebuyer Workshop 28
  30. 30. Back to the basics: Real estate should be a long-term investment 29
  31. 31. How do ARMs Work?The initial rate is usually lower than the rate ona comparable long-term fixed-rate loan. But, at specified periods, the interest rate is subject to change, to adjust for financial conditions. That means your monthly mortgage payment changes as well. 30
  32. 32. How do ARMs Work? On a 5/1 ARM, the initial rate is set for the first 5 years. At the beginning of the 6th year, and every year after that, the rate is reset according to your loan agreement. What will your new rate be? Margin New rate, subject to A fixed percentage amount, annual and called a “margin,” is added to Market lifetime the “index rate,” which is the Index Rate adjustment interest rate on a widely traded caps financial security.Remember: The interest rate on an ARM loan may increase over the life of the loan. In lender advertising, this concept is described as: “Interest rates may increase after consummation.” 31
  33. 33. An Illustration of ARMs Lifetime Upper Limit, or Cap Margin Margin Margin Initial Rate Margin Market Market Index Market Margin Initial Index Market Rate Rate Index Index Market Rate Rate Index Rate Lifetime Lower Rate Limit Years Year Year Year Year Year 1-5 6 7 8 9 10Your interest rate – and your monthly mortgage payment– can vary over the years, depending oninterest rates in the financial market. In Year 7, the interest rate is theInterest rate caps limit how high and how low your interest upper limit,rate can change at each adjustment. ARMs have caps for the not the indexinitial (not shown), annual (not shown) and lifetime (shown in rate plus the marginred) rate adjustments. These limit how much the rate canchange whenever the rates reset. 32
  34. 34. Questions to ask • What is the term of the loan? • What is the interest rate? • Is the rate fixed or adjustable? • When are the payments due? • What happens if I make a late payment? • Are taxes and insurance included in my monthly payment? • What will my closing costs be? What’s included?Wells Fargo will work with you to ensureyou understand the answers to these questions. 33
  35. 35. Get pre-approved for your loan first – before house-hunting This determines the upper limit of your price range Borrow only as much as you feel comfortable borrowing 34
  36. 36. One option: Get a PriorityBuyer® pre-approval from Wells Fargo Reliable in clearly specified loan amounts and terms on official Wells Fargo letterhead It shows that you’re a serious homebuyer – you’ve already completed the application, the credit check, and the first loan-decision phase A PriorityBuyer pre-approval is the shortest distance between the opening offer and the closing tableA PriorityBuyer® preapproval is based on our preliminary review of credit information onlyand is not a commitment to lend. We will be able to offer a loan commitment uponverification of application information, satisfying all underwriting requirements andconditions, and providing an acceptable property, appraisal, and title report. Not available onnonconforming products. 35
  37. 37. Let’s discuss any special needsyou may have We have a full product line to meet your circumstances: Renovation loans to make improvements or rehab foreclosures New construction loans FHA and VA loan programs 36
  38. 38. Accelerate the Process of paying down your debt Example: $150,000 loan at 4.5% for 30 years. Biweekly schedule: Loan is paid off more than 4 years early, saving $20,430 in interest expense Interest, Regular Monthly Schedule ($760.03 paid every month) Interest, Biweekly Schedule ($380.01 paid every two weeks) 37
  39. 39. What Is theHomebuying Process? Wells Fargo Home Mortgage Homebuyer Workshop 38
  40. 40. What is the Homebuying Process?1. Work with a professional “homebuyer team”2. Financing, financing, financing… Get it right!3. Shop with your real estate agent4. Make your best offer 39
  41. 41. What is the Homebuying Process?5. Finalize your financing6. Home inspections, appraisal, and insurance7. Ensure you meet conditions of your loan approval8. Final walk-through inspection9. Close on your new home! 40
  42. 42. Building Long-term FinancialSecurity A home is an investment in personal and financial well-being Homeownership isn’t a get-rich quick scheme – it may be a steady way to build wealth over time It’s critical to get the financing right That’s why you should work with Wells Fargo 41
  43. 43. Why Wells Fargo? Wells Fargo Home Mortgage Homebuyer Workshop 42
  44. 44. Why Wells Fargo? Wells Fargo Home Mortgage prides itself on its Fair & Responsible Lending and Servicing Principles We offer a broad menu of mortgage options Wells Fargo Home Mortgage is the nation’s #1 lender to homebuyers1 For more than 155 years, the Wells Fargo name has stood for reliability, integrity and pioneering innovations that help people manage their money and grow their assets. Our Vision To satisfy our customers’ financial needs and help them succeed financially.1. Based on 2009 year-end statistics by Inside Mortgage Finance 3/11/11. 43
  45. 45. Why Wells Fargo?Wells Fargo’s goal is not only to helpcustomers into homes, but also tokeep them there. We value our customers and offer free services to help you: Make on-time payments – automatically Pay less interest – automatically Make managing your money easy and routine Our Vision To satisfy our customers’ financial needs and help them succeed financially. 44
  46. 46. We’re happy to answeryour questions. . . Thank you for attending! Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2011 Wells Fargo Bank, N.A. All rights reserved. NMLSR ID 399801. 45