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OC Mortgage Class November 14, 2012


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OC Mortgage Class November 14, 2012

  1. 1. How to Finance YourHomeNovember 14, 2012 Orange CountyFollow: @RedfinOCLike: 1 of 21
  2. 2. Working with RedfinSlide 2 of 21
  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 21
  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 21
  5. 5. Partners in the Process AGENT TOUR Responsible for your success COORDINATOR Writes your offer Schedules tours Handles negotiations Prepares paperwork TRANSACTION FIELD AGENT COORDINATOR Takes you to see homes Prepares paperwork Sees 50+ homes a week Works with escrowSlide 5 of 21
  6. 6. MortgagesSlide 6 of 21
  7. 7. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 7 of 21
  8. 8. 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 8 of 21
  9. 9. 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 as long as your finances constant (check with your lender to see if they have limits on this) ● Being pre-approved is required by sellers to consider offersSlide 9 of 21
  10. 10. 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 10 of 21
  11. 11. 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 11 of 21
  12. 12. 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 12 of 21
  13. 13. 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 13 of 21
  14. 14. 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 14 of 21
  15. 15. Where Are Rates Headed? Type of Loan November 8, 2012 November 1, 2012 30-Year Fixed 3.40% 3.39% 15-Year Fixed 2.69% 2.70% 5/1 ARM 2.73% 2.74% 1-Year ARM 2.59% 2.58%Slide 15 of 21
  16. 16. Where Are Rates Headed?Slide 16 of 21
  17. 17. Make Your Decision ● When possible, get a loan commitment ● Make alternative funds liquid (401k, stock) Good news! Loan payments are made in arrears, so your first loan payment won’t be for two months.Slide 17 of 21
  18. 18. NEW! Express Loan ProgramRight now in Orange County, 84% of offers are multipleoffer situationsBy using this program you will be able to offer:· Little to No Loan Contingency· Reduced Appraisal Contingency· 21 Day Close· Reduced Risk for the SellerSlide 18 of 21
  19. 19. Express Loan ProgramHow It Works:● Step 1: Certified Lender takes you through the underwriting process. This usually happens in your first 10-14 days of escrow. You will need to submit all your financial and other documentation to the lender. Once you have full underwriter approval, it indicates to the seller that pending a clean title and appraisal, your lender is ready to fund the loan.● Step 2 : Your offer is made with terms that most, if any, other buyers financing their home can compete with.● Step 3 : Upon opening escrow your appraisal will be ordered as a rush. This is a $100 fee which is covered by your Certified Lender.● Step 4 : Upon a clear title and appraisal at or above the purchase price, escrow closes in 21 days or less. Get Started Right Away!Slide 19 of 21