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Redfin's Free Mortgage Class - Seattle, WA


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Redfin's Free Mortgage Class - Seattle, WA

  1. 1. How to Finance Your Home Laura Pugmire Redfin North Seattle Team November 13, 2013 Seattle, WA @Redfin Slide 1 of 18
  2. 2. Laura Pugmire: North Seattle ● Specialize in: First Time Home Buyers, Condos, Town Houses, Single Family ● Services: Ballard, Greenwood, Broadview, Shoreline ● Lives in North Seattle Enough about me! Meet my team… Slide 2 of 18
  3. 3. North Seattle Team Robin McCue Ballard, Phinney Ridge, Fremont Jon Aslin North Seattle Tami Ritoch Shoreline, Lake Forest Park, North Seattle Christy Kim North Seattle James Redmond Jr. Ballard, Wallingford, Fr emont Slide 3 of 18
  4. 4. Working with Redfin Slide 4 of 18
  5. 5. A Little Bit About Who We Are Redfin has refunded more than $100 Million to customers and reached $8 Billion in home sales; 97% would refer us to a friend. ● Customers, not commissions ● Informed decisions ● Right home for the right price  No obligation  Commission credit Slide 5 of 18
  6. 6. Your Redfin Credit Slide 6 of 18
  7. 7. Make Sure They’re a Good Fit Click here when you decide See all deals & reviews Slide 7 of 18
  8. 8. Partners in the Process AGENT Responsible for your success Writes your offer Handles negotiations TRANSACTION COORDINATOR Prepares paperwork Works with escrow Slide 8 of 18 TOUR COORDINATOR Schedules tours Prepares paperwork ASSOCIATE AGENT Takes you to see homes Sees 50+ homes a week
  9. 9. Mortgages Slide 9 of 18
  10. 10. Mike Mercer, MLO-175644 Partner Sarah Riley, MLO-180007 Loan Officer Slide 10 of 18
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  12. 12. Review Your Financial Situation ● Pull credit report, look for errors ● Establish comfort level for monthly payment ● Figure out how much monthly income goes towards debt typically 28 – 40% healthy ● Pay down credit balances to 1/3rd of high limit ● Don’t open any new lines of credit ● Don’t buy any big ticket items ● Determine source of funds ● Current employment status Slide 12 of 18
  13. 13. Get Pre-Approved ● A pre-approval letter is a letter from a bank or a lender estimating ● ● ● ● ● ● how much they'll 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 tour Slide 13 of 18
  14. 14. 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 offers Slide 14 of 18
  15. 15. 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 shopping Slide 15 of 18
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  17. 17. FICO and how it affects lending ● Review your report right away! ● Lender credit pulls are from all three bureaus and pulled different for a mortgage then other pulls ● You can have your credit pulled by 3 different companies for the purpose of financing within 90 days and it will count as one pull ● Scores are used to give accurate rates as well as mortgage insurance quotes. ● Pricing improves at each of the below levels ► 690,720,740,780 ● Lenders can give you advice on what you can do to bump your score. Slide 17 of 18
  18. 18. Conventional 3% Down VS. FHA 3.5% Down • Lower Down Payment • Lower Monthly Mortgage insurance • No additional up front financed in mortgage insurance • Mortgage insurance is not for the life of the loan and can be eliminated after 5 years and 80% loan to value. • Mortgage Insurance options • Split premiums • Buyout Slide 18 of 18
  19. 19. Loan Limits and Minimum Down Payment Requirements ● Conforming Loan up to $417,000 ► Minimum 3% Down ● High Balance Loan $417,001 to $506,000 ► Minimum 10% Down ● FHA High Balance Loan $417,001 to $567,500 ► Minimum 3.5% Down ● Jumbo Loan $506,001 and UP ► Minimum 20% Down Slide 19 of 18
  20. 20. Understand Your Costs ● ● ● ● ● ● Get a Fee Worksheet with an itemized list of Fees Lender: Processing, Underwriting and Points Escrow: Title insurance, Documents, Notary Government: Recording fee, Transfer Tax Other Third Party: Appraisal, Credit, Flood insurance Pre-paid Items- These are not a cost to do the loan they are reserves collected for your escrow account to pay your taxes and insurance. Slide 20 of 18
  21. 21. Choosing a Lender ● Pre-Approval is Critical ► The pre-approval is part of the offer ► Sellers want accountability, Local Lenders preferred • Questions to Ask any Lender • Is my underwriter and funder local or out of state? • Please describe your mortgage banking experience? • Do you pre-underwrite my application, subject to the property address? • If I provide everything you request, how long will it take to close my loan? • Are you available on weekends or evenings if needed? Slide 21 of 18
  22. 22. Big Box Bank Credit Union Broker Mortgage Banking Slide 22 of 18
  23. 23. Where Are Rates Headed? Type of Loan October 10, 2013 October 3, 2013 30-Year Fixed 4.23% 4.22% 15-Year Fixed 3.31% 3.29% 5/1 ARM 3.05% 3.03% 1-Year ARM 2.64% 2.63% Slide 23 of 18
  24. 24. 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 24 of 18
  25. 25. 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, so your first loan payment won’t be for two months. You’ll have one month of no payments. Slide 25 of 18
  26. 26. Winning The DEAL ● ● ● ● ● Negotiating Strategies MM Deal Example Lender Calling Listing Agent on your behalf Amount of Down Payment Ability to Close Quickly Slide 26 of 18
  27. 27. Additional Loan Programs ● VA ► ● ● ● ● ● ● Available for veterans, active-duty personnel, reservists/National Guard members and some surviving spouse. USDA ► Available for rural properties with NO down payment and minimal monthly mortgage insurance. FHA 203K ► The costs associated with rehabilitation and improving a home can be included in the financing of a purchase, or in the refinancing of a current home. HomePath ► Allows a buyer to purchase a Fannie Mae owned property with a low down payment, no lender-requested appraisal, and the option to avoid mortgage insurance. Home Advantage ► Down payment assistance programs for FHA loans. Funds can be used for down payment as well closing costs. For first time homebuyers My Community ► Conventional loan program for first time homebuyers. Minimal down payment with reduced mortgage insurance options. MCC ► Tax credit for first time home buyers for the life of the loan. Slide 27 of 18
  28. 28. After Class… Please fill out the survey that was handed out at the beginning of class. We appreciate the feedback! Check out our upcoming classes and events at: Questions? Get in touch: Laura Pugmire Slide 28 of 18