Redfin’s Mortgage Class
Redfin’s Marin Team
January 16, 2014

Host: Mark Biggins
@Redfin
facebook.com/Redfin
Slide 1 of 40
A Little Bit About Who We Are
Redfin is a real estate brokerage that has helped over 20,000
people buy or sell a home; 97%...
Understanding the Buying
Process

Slide 3 of 40
Are You Ready to Buy?
●
●
●
●

Do you have a family and need room to grow?
Do you expect to stay put for 5 or more years?
...
Overview of a Purchase
Research

Search

Offer

Closing

Neighborhoods

Define Preferences

Comparables

Earnest Money

Re...
Redfin.com - Benefits of MLS
Powered (Multiple Listing Service)
● All the homes for sale: 30% more listings
● You see what...
Real Estate Sites: What to Look For
● Has all the homes for sale
● Updated every 15 minutes
● Real-time sales data
● Insig...
Never Miss a Home

Slide 8 of 40
Understanding the
Market

Slide 9 of 40
Marin County Stats for Houses

Slide 10 of 40
Marin County Stats for Condos

Slide 11 of 40
Current Market: Low Inventory

Slide 12 of 40
Current Market: Rising Prices

Slide 13 of 40
Marin County Area Overview

Slide 14 of 40
Experience With Multiple Offers
This occurs when inventory is down and buyer interest is up

● 5 Tips for Winning in a Bid...
Mortgages

Slide 16 of 40
Get Pre-Approved Early
A pre-approval letter is a letter from a bank or a lender estimating
how much they'll lend you
● Es...
Getting Pre-Approved
Income
oSalary—Past 30 days
oHourly—Consistency and history
oSelf-employed—Two year average

Credit

...
Review Your Financial Situation
●
●
●
●
●
●
●

Pull credit report, look for errors
Establish comfort level for monthly pay...
Who Applies for the Loan?
●
●
●
●
●
●

Joint Applicants: All for one, one for all
No ―co-signors‖ allowed today
Parents ca...
Loan Amount Impact Criteria
● $417,000 -- Conforming Loan – Fannie/Freddie
► Lowest Rate for 30 fixed
► Desktop Approval A...
Show Stable Employment
Salaried Employee
 W2’s are historic – 2 year history
 Most recent paystubs – one month


Salary...
Loan for your Down Payment
 Conventional – 20% down payment
 Conventional – 5% for loans over $417,000

 Conventional –...
Organize Your Assets
Lenders Will Require 2 Months of Statements

●Liquid
► Do not move money around—hard to paper trail
►...
Review Your Debt | Credit History
Know Current Credit Score

Fix Errors

●Myfreecreditreport.com: pay
to get your score; n...
10-Minute Break

10 mins

5 mins

Let’s Get Started!

Slide 26 of 40

End
How much can you borrow?
Lenders tolerate more than most borrowers

●
●
●
●
●

Fannie Mae – 45-47% of gross monthly income...
Debt to Income Scenario
oEarns $10,000/month
oHas car payment $350
oWants to buy a home for
$750,000
oHas 20% down payment...
Low Down Payment Scenario
oEarns $6,500/month
oHas car payment $300
oWants to buy a home for
$500,000
oHas 10% down paymen...
Choose a Lender
Pre-Approval Letter is Critical

●Part of the offer
●Sellers want accountability, Local lenders preferred
...
Local Recommended Lenders

*In no way does Redfin
benefit financially from
recommending lenders
– we just think they’re
gr...
Questions to Ask Any Lender
● Please describe your mortgage banking experience?
● How many transactions do you close each ...
Rate Shopping
● Within a one hour period, call
your top three prospective
lenders and ask:
► What is your rate for:
 $417...
Understand Your Costs
Get a Good Faith Estimate
o Itemized List of Fees:
o Lender: Appraisal, Credit, Processing, Underwri...
Current Average Rates
Type of Loan

January 9, 2014

January 2, 2014

30-Year Fixed

4.51%

4.53%

15-Year Fixed

3.56%

3...
So What Now?
●
●
●
●
●
●
●

Make sure it’s the right time for you
Start browsing online
Check out our Home Buying Guide
Fi...
Future Events!

Slide 37 of 40
Thanks for Coming!
Questions? Get in touch:
Mark Biggins
mark.biggins@redfin.com

Check out our upcoming classes:
http://w...
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Redfin Mill Valley Mortgage Class 1.16.14

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  • Point out reviewsUpdating this page: This should be updated based on your Local Rec. Lender. Just go to the page click “Print Screen.” Come back to this page, click on the large image, click delete, and then right click and paste. Size the images so it fits the page. The right click again and click “Send to back.”
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  • Redfin Mill Valley Mortgage Class 1.16.14

    1. 1. Redfin’s Mortgage Class Redfin’s Marin Team January 16, 2014 Host: Mark Biggins @Redfin facebook.com/Redfin Slide 1 of 40
    2. 2. A Little Bit About Who We Are Redfin is a real estate brokerage that has helped over 20,000 people buy or sell a home; 97% would refer us to a friend. ● Customers, not commissions ● Informed decisions ● Right home for the right price  No obligation  Commission credit Slide 2 of 40
    3. 3. Understanding the Buying Process Slide 3 of 40
    4. 4. Are You Ready to Buy? ● ● ● ● Do you have a family and need room to grow? Do you expect to stay put for 5 or more years? Have you saved up a down payment? Can you rent for less? Slide 4 of 40
    5. 5. Overview of a Purchase Research Search Offer Closing Neighborhoods Define Preferences Comparables Earnest Money Real Estate Agents Saved Search Draft Offer Docs Inspection Mortgage Options Home Tours Negotiate Loan application Preapproval Open Houses Mutual Acceptance Title Review Consider your needs Appraisal Financing Approval Closing Slide 5 of 40
    6. 6. Redfin.com - Benefits of MLS Powered (Multiple Listing Service) ● All the homes for sale: 30% more listings ● You see what the agent sees: 4x the data ● Real-time market data: photos, details of just-sold homes Slide 6 of 40
    7. 7. Real Estate Sites: What to Look For ● Has all the homes for sale ● Updated every 15 minutes ● Real-time sales data ● Insights from agents ● Lots of data ● Mobile apps Slide 7 of 40
    8. 8. Never Miss a Home Slide 8 of 40
    9. 9. Understanding the Market Slide 9 of 40
    10. 10. Marin County Stats for Houses Slide 10 of 40
    11. 11. Marin County Stats for Condos Slide 11 of 40
    12. 12. Current Market: Low Inventory Slide 12 of 40
    13. 13. Current Market: Rising Prices Slide 13 of 40
    14. 14. Marin County Area Overview Slide 14 of 40
    15. 15. Experience With Multiple Offers This occurs when inventory is down and buyer interest is up ● 5 Tips for Winning in a Bidding War ► Make the competition eat your dust  Stay a step ahead of other buyers  Set up saved searches & instant alerts ► Get pre-approved with a local lender & get underwriter approval ► Start the conversation early ► Write a letter & appeal to the seller ► Know your limits Slide 15 of 40
    16. 16. Mortgages Slide 16 of 40
    17. 17. Get Pre-Approved Early A pre-approval letter is a letter from a bank or a lender estimating how much they'll lend you ● Establishes what you can afford & makes offer process go faster ● Good for 90 days, depending on lender Info needed: ● W-2, two pay-stubs, tax returns, bank statements Slide 17 of 40
    18. 18. Getting Pre-Approved Income oSalary—Past 30 days oHourly—Consistency and history oSelf-employed—Two year average Credit Assets o640 for FHA o680 for Conventional o720 for Rate Improvement o Down Payment o Closing Costs o Cash Reserves Slide 18 of 40
    19. 19. Review Your Financial Situation ● ● ● ● ● ● ● Pull credit report, look for errors Establish comfort level for monthly payment Pay down credit balances Don’t open any new lines of credit Don’t buy any big ticket items Source of money Current employment status Slide 19 of 40
    20. 20. Who Applies for the Loan? ● ● ● ● ● ● Joint Applicants: All for one, one for all No ―co-signors‖ allowed today Parents can be non-occupant co-borrowers Married people do not have to both be on the loan Once on the loan, always on the loan unless you refinance It is okay to be on ―‖title only‖ Slide 20 of 40
    21. 21. Loan Amount Impact Criteria ● $417,000 -- Conforming Loan – Fannie/Freddie ► Lowest Rate for 30 fixed ► Desktop Approval Available – instant ● $625,500 – High Balance Conforming Loan – ► For High Cost Areas ► Higher Rate ► Credit Score sensitive ● $625,501 and up – Jumbo Loan ► Highest Rate ► Portfolio Approval, guidelines vary ► Lots of review ► ARMs very popular Slide 21 of 40
    22. 22. Show Stable Employment Salaried Employee  W2’s are historic – 2 year history  Most recent paystubs – one month  Salary increases count immediately Self-Employed (most affected by lending changes)  Two Year History (Tax Years)  Same line of work (strategic) Hourly Wage Earner  Consistent hours over 1-2 year period  Verification of employment important Slide 22 of 40
    23. 23. Loan for your Down Payment  Conventional – 20% down payment  Conventional – 5% for loans over $417,000  Conventional – 10% down, up to 625,500  FHA – 3.5% down, up to 729,750  VA – 0-3% down, lenders vary as to loan limit Size of down payment affects seller perception Slide 23 of 40
    24. 24. Organize Your Assets Lenders Will Require 2 Months of Statements ●Liquid ► Do not move money around—hard to paper trail ► Large deposits and transfers are sourced ●Retirement Accounts (reserves) ► Consider a 401k Loan ► Provide all accounts to your lender ●Gift Funds ► Family members only Slide 24 of 40
    25. 25. Review Your Debt | Credit History Know Current Credit Score Fix Errors ●Myfreecreditreport.com: pay to get your score; no affect on scores ●Limit credit checks by lenders ●There are 3 bureaus, middle score counts ●With co-borrowers, lowest middle score counts ●Remove duplicates ●Resolve disputes ●Reduce credit card debt (33% of limit) ●Do not open, close, or change credit lines Slide 25 of 40 ●Do not make large purchases
    26. 26. 10-Minute Break 10 mins 5 mins Let’s Get Started! Slide 26 of 40 End
    27. 27. How much can you borrow? Lenders tolerate more than most borrowers ● ● ● ● ● Fannie Mae – 45-47% of gross monthly income Freddie Mac – 45-49% Jumbo Lenders – 43% PMI Carriers – 41% FHA – 50-52% Slide 27 of 40
    28. 28. Debt to Income Scenario oEarns $10,000/month oHas car payment $350 oWants to buy a home for $750,000 oHas 20% down payment o $10,000 x 45% = $4,500 o $4,500 – 350 (other debt) $600,000 Loan o30/Yr Fixed, 4.125% = Allowed $4,150/Month! = Qualified $3,814/Month! Slide 28 of 40 = $2,908 oProperty Taxes o1.25% on purchase price = $781 ($9,375/yr) oHomeowners Insurance = $125 ($1,500/yr) oTotal: $2,908+781+125
    29. 29. Low Down Payment Scenario oEarns $6,500/month oHas car payment $300 oWants to buy a home for $500,000 oHas 10% down payment o $6,500 x 41% = $2,665 o $2,665 – 300 (other debt) = Limit $2,365/Month! Slide 29 of 40 $450,000 Loan o 30/Yr Fixed, 3.875% = $2,116 o Property Taxes o 1.25% on purchase price = $520 ($6,250/yr) PMI = $203 o Homeowners Insurance = $100 ($1,200/yr) o Total: $2,116+520+100 +203 = Too High $2,939/Month!
    30. 30. Choose a Lender Pre-Approval Letter is Critical ●Part of the offer ●Sellers want accountability, Local lenders preferred Using Referrals to find your lender ●From Redfin’s partner lenders ●From friends who recently financed a home ●From Realtor Research Your Lender ●Check Yelp, Berkeley Parents Network, Google ●Schedule a meeting by phone or in person Slide 30 of 40
    31. 31. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders! Slide 31 of 40
    32. 32. Questions to Ask Any Lender ● Please describe your mortgage banking experience? ● How many transactions do you close each year and what % are purchase transactions? ● What does a "loan pre-approval― with your bank involve? ● Do you pre-underwrite my application, subject to the property address? ● Who handles your appraisals? ● Do you know your underwriter's first name? ● If I provide everything you request, how long will it generally take to get loan approval? ● Are you available on weekends or evenings if needed? Slide 32 of 40
    33. 33. Rate Shopping ● Within a one hour period, call your top three prospective lenders and ask: ► What is your rate for:  $417,000 and $625,500  Single Family Home  Assume 780 credit  Assume Owner Occupied  Assume 20% down payment (and what if I have 30% down?)  Assume no impounds  No points, no lender credits Slide 33 of 40 ● Then ask: ► What are the standard lender fees for this scenario? ► Can you close this in 30 days? ● Did you close your last three transactions on time? ● Did the homes appraise at or above the purchase price? ● Last ask: ● How can I learn more about you? (Realtors, web site, testimonials)
    34. 34. Understand Your Costs Get a Good Faith Estimate o Itemized List of Fees: o Lender: Appraisal, Credit, Processing, Underwriting, Points o Escrow: Title Insurance, Documents, Notary Public o Government: Recording fee, Transfer Tax o Prepaid Items: Mortgage Interest, Homeowner’s insurance, impounds Loan payments are made in arrears, so your next loan payment will not be for almost two months! Slide 34 of 40
    35. 35. Current Average Rates Type of Loan January 9, 2014 January 2, 2014 30-Year Fixed 4.51% 4.53% 15-Year Fixed 3.56% 3.55% 5/1 ARM 3.15% 3.05% 1-Year ARM 2.57% 2.56% Slide 35 of 40
    36. 36. So What Now? ● ● ● ● ● ● ● Make sure it’s the right time for you Start browsing online Check out our Home Buying Guide Find the right agent Look for a local lender and get pre-approved Start seeing homes in person Make an offer & close the deal Slide 36 of 40
    37. 37. Future Events! Slide 37 of 40
    38. 38. Thanks for Coming! Questions? Get in touch: Mark Biggins mark.biggins@redfin.com Check out our upcoming classes: http://www.redfin.com/buy-a-home/classes-and-events Slide 38 of 40

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