1
The Global Wealth Homeownership and Wealth
Education Initiative
Credit Building Steps
1 Order credit
report
2 Correct errors
3 Be on time!
4 Use credit wisely
5 Create
nontraditional
cre...
MORTGAGE BASICS
BASIC MORTGAGE MATH
BASIC MORTGAGE MATH
PITI
DEBT RATIO =
__________________
TOTAL MONTHLY INCOME
BASIC MORTGAGE MATH
Cash Required
Funds required at closing.
Total Closing Costs
+ Down Payment
___________________
CASH R...
BASIC MORTGAGE MATH
Down Payment
Home Sales Price
- Loan Amount
__________________
Down Payment
BASIC MORTGAGE MATH
The maximum amount a lender will
loan based on constraints including
income, debt and available cash.
...
WHAT IS THE
MORTGAGE
LANGUAGE?
MORTGAGE DEFINITIONS YOU
SHOULD KNOW….
PRINCIPAL-is the amount of money that
you actually borrow or the amount of the
loan...
MORTGAGE TERMS YOU
SHOULD KNOW
ADJUSTABLE RATE MORTGAGE -
means your rate will increase or
decrease once or twice a year.
...
MORTGAGE TERMS YOU
SHOULD KNOW
DOWNPAYMENT REQUIREMENT- is the
lenders lowest allowable down payment
and is part of the pu...
Repayment Terms are:
30 year fixed-mortgage
20 year fixed mortgage
15 year fixed mortgage
How do you choose the right
Mortgage?
 How many years do you expect to
live in your home?
 How important it it to be fre...
How do you choose the right
Mortgage?
 How many years do you expect to
live in your home?
 How important it it to be fre...
FEATURES OF A FIXED-RATE
MORTGAGE
 Most poplar
 Best chance to keep
monthly mortgage
payments low
Advantages of Fixed-Rate
Mortgages
 Interest Rate will remain the same for the life
of the loan.
 Monthly mortgage payme...
THE LENDING PROCESS
Loan Terms You Should Know:
Annual Percentage Rate – shows costs of
loan expressed as a yearly interest rate.
Commitment L...
LOAN TERMS YOU SHOULD
KNOW:
Conventional Mortgage – any mortgage that
is not insured by the Federal Government
Debt-to-Inc...
LOAN TERMS YOU SHOULD
KNOW:
Down payment – part of the purchase price
that the borrower pays in cash.
Earnest Money – Mone...
21
Money
Management
22
 Writing down your goals
 Easily visible
 Keep it simple
 30 Day Challenge
 Review and adjust
 Fail to plan – Pla...
23
What Kind of Spender Are You?
 The Miser - hoarding, stingy person
 The Conservative - moderate, cautious
 The Caref...
24
30 Days to Success
 Live Normal for 30 days
 Track each expense – keep every receipt
 Evaluate after 30 days
 Creat...
25
Why Manage Your Money?
 Prepares you for large expenses
 Identifies wasteful spending
 Keeps control of financial fu...
26
Three Steps to Planning a Budget
1. Write down your income
2. Write down your monthly expenses
3. Decide what to do wit...
27
What are Some Money
Management Tips?
 Plan according to current income
 Plan ahead for six months
 Include spending ...
28
Tips for Savers
 Pay yourself first
 Open a savings account
 Save change at end of day
29
Review the Plan
 Is your budget working?
 Are all family members able to follow it?
 Which costs always seem to be o...
30
What Are Ways to Make Money
Management Easier?
 Carry written reminders of goals with you
 Carry as little cash as po...
31
Spending Pie Chart (1)
Desired
Living
Entertainment
Savings/Investmen
t
Retirement
60%
15%
10%
15%
32
Spending Pie Chart
Actual
Living
Installment
Entertainment
Savings/Investmen
t
60%
18%
20%
-2%
33
Credit
Management
34
Why is Good Credit
Important?
 To rent, buy or purchase things you
want or need
 To save money by borrowing at a
lowe...
35
What is Credit?
 What is it?
 Why Should I Care?
 Who Else Cares?
36
Who Can Access Your Report?
 Creditors
 Collection agencies
 Insurance companies
 Employers
 Those you give permis...
37
Do You Know Your Score?
 What is a „Credit Score‟?
 How do I get one?
 How do I make it better?
38
What Is Credit Scoring?
 Payment history
 Outstanding debt
 Credit history
 Types of credit
 Credit inquiries
39
Components of the ‘Score’
 History
 Debts
 Age
 Inquiries
 Credit Mixture
40
Credit Scoring (FICO)
 700 Approved
 650-699 DU Approval
 620-649 Man Review
 500-580 Sub Prime
41
The 4 C’s of Credit
 Credit
 Capacity
 Collateral
 Capital
42
What Are Common Credit
Problems?
 No credit
 Negative credit history
 High debt
43
Credit Management
 Credit Affects:
 Finance
 Employment
 Insurance
 Know your score
 Monitor often
 Limit Access...
44
Protecting Yourself
 Identity Theft
 Maintaining Privacy
 Opting Out
 Keep Checking
45
How Long Does Information Stay?
 Bankruptcy 10 years
 Judgments 7 years
 Tax Lien 7 years
 Collection, Charge-Off 7...
46
What Are the Main Credit
Bureaus?
 Experian
www.experian.com
(888) EXPERIAN (397-3742)
 Trans Union
www.tuc.com
(800)...
47
Equal Credit Opportunity Act
 Prevents lender‟s discrimination
on the basis of age, sex, race,
marital status, religio...
48
Fair Credit Billing Act
 Provides right to question if you
think your credit card bill is
wrong within 60 days
 Requi...
49
Fair Credit Reporting Act
 Protects your rights to know
what is in your credit report
and to fix mistakes
50
Credit Summary
 Credit is a useful tool
 Order your report
 Correct mistakes and fix
problems
 Protect your credit ...
51
Foreclosure
Process
52
Foreclosure Process
 California Process
 Judicial
 Non-judicial
 Foreclosure Process Flowchart
 Alternatives
 Los...
53
BUYING FORECLOSURES
 When to buy foreclosures
 Before the auction (Pre-foreclosure)
 At the auction
 After the auct...
54
What Are My Alternatives?
 Special forbearance
 Mortgage modification
 Partial claim
 Pre-foreclosure sale
 Deed-i...
55
Precautions
 Don‟t sign papers you don‟t fully understand
 Make sure you get all promises in writing
 Beware of any ...
56
Main Points to Remember
 Make your monthly payments on time.
 Contact your mortgage lender immediately and be
honest ...
57
Protecting
Your
Investment
58
Protecting Your Investment
 Types of Insurance
 Homeownership Tips
Your Community
1. Police
2. Fire
3. Others in your...
59
Types of Insurance
 Hazard Insurance
 Flood Insurance
 Special Hazard Insurance
 Mortgage Insurance
60
 Referred to as “Fire”
Insurance
 Required by the Lender
 Protects against hazards such
as fires or storms
HAZARD IN...
61
Liability Protection
 Legal responsibility for any injuries or
property damage the owner or a family
member causes to ...
62
Homeowner’s Insurance Features
 Dwelling coverage
 Other structures
 Personal property
 Loss of use
 Personal liab...
63
FLOOD INSURANCE
 Required by lender if the property is
located in a flood zone
 Generally not covered under hazard or...
64
MORTGAGE INSURANCE
 Protects the lender in case the
borrower defaults and the lender
must foreclose
 Generally requir...
65
TITLE INSURANCE
Usually required by the lender protect
the lender against any problems
with legal ownership of the prop...
66
MORTGAGE LIFE INSURANCE
 Life insurance policy that pays off the
borrowers mortgage in the event of
death
 Allows fam...
67
HOME WARRANTY POLICY
 Protects the homeowner in the event of
costly repairs
 Covers items such as heating, plumbing,
...
68
Know Your Community
 Meet your neighbors
 Read weekly community newspapers
 Accept the Welcome Wagon
 Visit city, t...
69
Know Your Community
 Police Department
Where is the nearest station
 Fire Station
Which station services your area
 ...
WELCOME HOME
FOLLOW THESE SIMPLE INSTRUCTIONS TO
GET YOUR ONLINE HOMEBUYER EDUCATION
CERTIFICATION
1. ONCE YOU COMPLETE TH...
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The Global Wealth Homeownership and Wealth Education Initiative

  1. 1. 1 The Global Wealth Homeownership and Wealth Education Initiative
  2. 2. Credit Building Steps 1 Order credit report 2 Correct errors 3 Be on time! 4 Use credit wisely 5 Create nontraditional credit 6 Manage money
  3. 3. MORTGAGE BASICS BASIC MORTGAGE MATH
  4. 4. BASIC MORTGAGE MATH PITI DEBT RATIO = __________________ TOTAL MONTHLY INCOME
  5. 5. BASIC MORTGAGE MATH Cash Required Funds required at closing. Total Closing Costs + Down Payment ___________________ CASH REQUIRED
  6. 6. BASIC MORTGAGE MATH Down Payment Home Sales Price - Loan Amount __________________ Down Payment
  7. 7. BASIC MORTGAGE MATH The maximum amount a lender will loan based on constraints including income, debt and available cash. Home Sales Price x Loan to Value (LTV)% ______________________ Maximum Loan Amount
  8. 8. WHAT IS THE MORTGAGE LANGUAGE?
  9. 9. MORTGAGE DEFINITIONS YOU SHOULD KNOW…. PRINCIPAL-is the amount of money that you actually borrow or the amount of the loan that is still unpaid INTEREST- is the charge for using the lenders money. FIXED-RATE MORTGAGE LOAN- means you will always pay the same rate on interest
  10. 10. MORTGAGE TERMS YOU SHOULD KNOW ADJUSTABLE RATE MORTGAGE - means your rate will increase or decrease once or twice a year. TERM- is the amount of time you have to repay the loan. POINTS - refer to the type of fee the lender may charge.
  11. 11. MORTGAGE TERMS YOU SHOULD KNOW DOWNPAYMENT REQUIREMENT- is the lenders lowest allowable down payment and is part of the purchase price that the buyer pays in cash. CLOSING COST-are the expenses buyers and sellers pay to transfer ownership of a home.
  12. 12. Repayment Terms are: 30 year fixed-mortgage 20 year fixed mortgage 15 year fixed mortgage
  13. 13. How do you choose the right Mortgage?  How many years do you expect to live in your home?  How important it it to be free of mortgage debt before facing long term financial commitments?  How comfortable are you with the certainty of a fixed mortgage payment versus a payment that can change over time.?
  14. 14. How do you choose the right Mortgage?  How many years do you expect to live in your home?  How important it it to be free of mortgage debt before facing long term financial commitments?  How comfortable are you with the certainty of a fixed mortgage payment versus a payment that can change over time.?
  15. 15. FEATURES OF A FIXED-RATE MORTGAGE  Most poplar  Best chance to keep monthly mortgage payments low
  16. 16. Advantages of Fixed-Rate Mortgages  Interest Rate will remain the same for the life of the loan.  Monthly mortgage payments will be stable  Predictable monthly mortgage payments
  17. 17. THE LENDING PROCESS
  18. 18. Loan Terms You Should Know: Annual Percentage Rate – shows costs of loan expressed as a yearly interest rate. Commitment Letter – stating your loan has been approved. Contingency – events that must happen prior to closing.
  19. 19. LOAN TERMS YOU SHOULD KNOW: Conventional Mortgage – any mortgage that is not insured by the Federal Government Debt-to-Income Ratio- Percentage of total debt payments to income. Deed- legal document conveying property Discount Point – equivalent to 1% of the purchase price.
  20. 20. LOAN TERMS YOU SHOULD KNOW: Down payment – part of the purchase price that the borrower pays in cash. Earnest Money – Money put down by a potential buyer to show that he or she is serious Equity – owner’s financial interest in a property.
  21. 21. 21 Money Management
  22. 22. 22  Writing down your goals  Easily visible  Keep it simple  30 Day Challenge  Review and adjust  Fail to plan – Plan to fail Keys to Successful Money Management
  23. 23. 23 What Kind of Spender Are You?  The Miser - hoarding, stingy person  The Conservative - moderate, cautious  The Carefree - spends without care  The Big Spender – very generous  The Over spender - spending beyond limits
  24. 24. 24 30 Days to Success  Live Normal for 30 days  Track each expense – keep every receipt  Evaluate after 30 days  Create 30 day financial spending plan  Can‟t Fail – simply adjust!
  25. 25. 25 Why Manage Your Money?  Prepares you for large expenses  Identifies wasteful spending  Keeps control of financial future  Encourages savings  Strengthens loan application  Helps to accomplish goals
  26. 26. 26 Three Steps to Planning a Budget 1. Write down your income 2. Write down your monthly expenses 3. Decide what to do with leftover money
  27. 27. 27 What are Some Money Management Tips?  Plan according to current income  Plan ahead for six months  Include spending money for all  Keep record-keeping simple  Set money aside for emergencies  Get consensus from entire family  Pay yourself first at least 10% of take-home pay
  28. 28. 28 Tips for Savers  Pay yourself first  Open a savings account  Save change at end of day
  29. 29. 29 Review the Plan  Is your budget working?  Are all family members able to follow it?  Which costs always seem to be over budget?  Are we getting closer to reaching our goals?
  30. 30. 30 What Are Ways to Make Money Management Easier?  Carry written reminders of goals with you  Carry as little cash as possible  Use direct deposit  Put items on layaway  Buy only what you need
  31. 31. 31 Spending Pie Chart (1) Desired Living Entertainment Savings/Investmen t Retirement 60% 15% 10% 15%
  32. 32. 32 Spending Pie Chart Actual Living Installment Entertainment Savings/Investmen t 60% 18% 20% -2%
  33. 33. 33 Credit Management
  34. 34. 34 Why is Good Credit Important?  To rent, buy or purchase things you want or need  To save money by borrowing at a lower interest rate  To obtain a job  To lease rental property
  35. 35. 35 What is Credit?  What is it?  Why Should I Care?  Who Else Cares?
  36. 36. 36 Who Can Access Your Report?  Creditors  Collection agencies  Insurance companies  Employers  Those you give permission  You
  37. 37. 37 Do You Know Your Score?  What is a „Credit Score‟?  How do I get one?  How do I make it better?
  38. 38. 38 What Is Credit Scoring?  Payment history  Outstanding debt  Credit history  Types of credit  Credit inquiries
  39. 39. 39 Components of the ‘Score’  History  Debts  Age  Inquiries  Credit Mixture
  40. 40. 40 Credit Scoring (FICO)  700 Approved  650-699 DU Approval  620-649 Man Review  500-580 Sub Prime
  41. 41. 41 The 4 C’s of Credit  Credit  Capacity  Collateral  Capital
  42. 42. 42 What Are Common Credit Problems?  No credit  Negative credit history  High debt
  43. 43. 43 Credit Management  Credit Affects:  Finance  Employment  Insurance  Know your score  Monitor often  Limit Access  Seek Professional Help
  44. 44. 44 Protecting Yourself  Identity Theft  Maintaining Privacy  Opting Out  Keep Checking
  45. 45. 45 How Long Does Information Stay?  Bankruptcy 10 years  Judgments 7 years  Tax Lien 7 years  Collection, Charge-Off 7 years  Most Adverse Info 7 years  Inquiries 2 years
  46. 46. 46 What Are the Main Credit Bureaus?  Experian www.experian.com (888) EXPERIAN (397-3742)  Trans Union www.tuc.com (800) 916-8800  Equifax www.equifax.com (800) 685-1111
  47. 47. 47 Equal Credit Opportunity Act  Prevents lender‟s discrimination on the basis of age, sex, race, marital status, religion or national origin  Requires written disclosure of reason for denial within 30 days
  48. 48. 48 Fair Credit Billing Act  Provides right to question if you think your credit card bill is wrong within 60 days  Requires creditor to begin research within 30 days  Requires creditors to supply an answer within 90 days
  49. 49. 49 Fair Credit Reporting Act  Protects your rights to know what is in your credit report and to fix mistakes
  50. 50. 50 Credit Summary  Credit is a useful tool  Order your report  Correct mistakes and fix problems  Protect your credit rating  Manage your debts, so they don‟t manage you
  51. 51. 51 Foreclosure Process
  52. 52. 52 Foreclosure Process  California Process  Judicial  Non-judicial  Foreclosure Process Flowchart  Alternatives  Loss Mitigation  Modification  Deed in Lieu of Foreclosure  Repayment Plan  Pre-foreclosure Sale
  53. 53. 53 BUYING FORECLOSURES  When to buy foreclosures  Before the auction (Pre-foreclosure)  At the auction  After the auction (REO)
  54. 54. 54 What Are My Alternatives?  Special forbearance  Mortgage modification  Partial claim  Pre-foreclosure sale  Deed-in-lieu of foreclosure
  55. 55. 55 Precautions  Don‟t sign papers you don‟t fully understand  Make sure you get all promises in writing  Beware of any loans you are not formally released from liability of your mortgage debt and contracts of sale  Check with an attorney or your mortgage company before entering into any deals involving your home
  56. 56. 56 Main Points to Remember  Make your monthly payments on time.  Contact your mortgage lender immediately and be honest about your financial situation.  Have a plan to cure delinquency  Arrange an appointment with a HUD-approved housing counseling agency www.hud.gov
  57. 57. 57 Protecting Your Investment
  58. 58. 58 Protecting Your Investment  Types of Insurance  Homeownership Tips Your Community 1. Police 2. Fire 3. Others in your community
  59. 59. 59 Types of Insurance  Hazard Insurance  Flood Insurance  Special Hazard Insurance  Mortgage Insurance
  60. 60. 60  Referred to as “Fire” Insurance  Required by the Lender  Protects against hazards such as fires or storms HAZARD INSURANCE
  61. 61. 61 Liability Protection  Legal responsibility for any injuries or property damage the owner or a family member causes to other people  Protection of the other structures and the homes contents  Living expenses, if displaced HOMEOWNER’S INSURANCE
  62. 62. 62 Homeowner’s Insurance Features  Dwelling coverage  Other structures  Personal property  Loss of use  Personal liability  Medical payments coverage  Deductible
  63. 63. 63 FLOOD INSURANCE  Required by lender if the property is located in a flood zone  Generally not covered under hazard or homeowners insurance policy  Protects during heavy rain, failed dams and inadequate drainage systems
  64. 64. 64 MORTGAGE INSURANCE  Protects the lender in case the borrower defaults and the lender must foreclose  Generally required if the downpayment is less than 20% of the purchase price.
  65. 65. 65 TITLE INSURANCE Usually required by the lender protect the lender against any problems with legal ownership of the property
  66. 66. 66 MORTGAGE LIFE INSURANCE  Life insurance policy that pays off the borrowers mortgage in the event of death  Allows family to continue to live in the property  Always optional
  67. 67. 67 HOME WARRANTY POLICY  Protects the homeowner in the event of costly repairs  Covers items such as heating, plumbing, air conditioning  Annual Premium (renewable)  Flat fee per service  Buyer may request seller provide policy
  68. 68. 68 Know Your Community  Meet your neighbors  Read weekly community newspapers  Accept the Welcome Wagon  Visit city, town hall and library  Volunteer for special events  Attend neighborhood association meetings
  69. 69. 69 Know Your Community  Police Department Where is the nearest station  Fire Station Which station services your area  Hospital Where is the nearest hospital  Elected Officials Who are your representatives
  70. 70. WELCOME HOME FOLLOW THESE SIMPLE INSTRUCTIONS TO GET YOUR ONLINE HOMEBUYER EDUCATION CERTIFICATION 1. ONCE YOU COMPLETE THE PRESENTATION CLICK FIRST TIME HOMEBUYER MORTGAGES TO PAY FOR YOUR CERTIFICATE 2. ONCE YOU PAY CLICK FIRST TIME HOMEBUYER MORTGAGES AND TAKE EXAM 3. ONCE EXAM IS COMPLETE, CLICK EMAIL, TO EMAIL YOUR EXAM 4. YOUR CERTIFICATE WILL BE EMAILED TO YOU AND YOUR LOAN OFFICER WITHIN 24 HOURS 70

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