This presentation will give you all the information you need to know to purchase a new home.

1. FIRST TIME HOMEBUYERS
SEMINAR
Everything you need to
know to make buying
your first home easy and
affordable.
Presented by:
11811 North Frwy, Suite 500
Houston, Tx 77060
(832)434-6299

2. Understanding your Home
Purchase: Did you know?
“You are buying
a home…it’s
just a matter of
who you are
buying a home
for…you or your
landlord.”

3. WHY BUY?
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Tax deductions
Stable housing
costs
Appreciation on
your investment
Gain equity
You control your
property

4. ARE YOU READY TO BUY?

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Steady income
Pay bills on time
Low to medium debt
Down payment
available
Ability to pay
mortgage

5. WHAT TYPE OF HOME?

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Type of community
New Home
Resale Home
Fixer-Upper
Features
#
of Bedrooms
 # of Bathrooms
 Garage, etc…

6. Understanding your Home
Purchase: Tips to Get a Loan

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Your home is
your first and
best investment.
It is the only
investment you
buy with money
you are already
spending.

7. Understanding your Home
Purchase: Tips to Get a Loan
How much home can you afford?
Traditional method:
 1/4th of Monthly Income for house
payment
 1/3rd of Monthly Income for house
payment plus other debts

8. Understanding your Home
Purchase: Tips to Get a Loan

25%+3%=28%
(max. House Payment)

33%+3%=36%
(max. Payment + debts)

9. Understanding your Home
Purchase: Tips to Get a Loan

House Payment
Monthly principle &
interest payment
 Plus 1/12th of taxes on
property
 Plus 1/12th of
insurance premiums

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Homeowner’s
insurance
Flood insurance
Mortgage
insurance

10. Understanding your Home
Purchase: Tips to Get a Loan

House Payment example:

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$150,000 loan @ 5% for 30 years = $961.48
Property taxes $3395 a year/12 = 282.91
Flood insurance $540 a year/12 = 45.00
Mortgage insurance $250 yr./12 = 20.83
Total house payment a month= $1310.22
(change price, interest rate, number of years,
insurance premiums, mortgage insurance)

11. Understanding your Home
Purchase: Tips to Get a Loan
Qualifying (Traditional Method)
example:
Gross monthly income $4000
1. X 28% = $1120 max. payment
2. X 36% = $1440 (payment + debts)
(qualify for whichever is lower)

12. Understanding your Home
Purchase: Tips to Get a Loan

Major Types of Loans
 Conventional
 FHA
 VA

13. Understanding your Home
Purchase: Tips to Get a Loan


Qualifying: Credit Score Method
“FICO” score
 721-850
= A++
 700-720 = A+
 660-699 = A
 620-659 = A 580-619 = B
 579 >
= C/D

14. Understanding your Home
Purchase: Tips to Get a Loan

Past Payment Performance = 35%
(on time/late/reasons)

Credit Utilization
= 30%
(balance/total credit)

Credit History
= 15%
(length/recent changes)

Types of Credit
= 10%
(finance co/bank or regular loan)

Inquires on account
= 10%

15. Understanding your Home
Purchase: Tips to Get a Loan
1.
2.
3.
4.
5.
Never pay late
Keep balance low
Do not use consumer finance co.
Do not make unnecessary inquires
Do not take out unnecessary credit

16. Understanding your Home
Purchase: Tips to Get a Loan
1.
2.
3.
4.
Check for errors on reports
Challenge wrong information
Pay off balances as soon as
possible
Do not use one credit card to pay
off another within 30-45 days of
applying for a loan (both balances
may show up on report)

17. Understanding your Home
Purchase: Tips to Get a Loan
1.
Always pay on time
(set-up bank draft for minimum payment…
then make extra payment on payday)
1.
2.
3.
Consider co-borrowers
Consider Gifts
Ask for Help & Advice

18. Understanding your Home
Purchase: Tips to Get a Loan
Alternative Financing Choices:
Be on Guard!!

internet offers

contract for deeds

owner “financing”

“B” & “C” Lenders

19. Understanding your Home
Purchase: Tips to Get a Loan
“No credit? Bad credit? No problem!”
“If it sounds to good to be true…it is”

20. Understanding your Home
Purchase: Tips to Get a Loan
Free Credit Report:
As of June 1, 2005
https://www.annualcreditreport.com
Experian
TransUnion
Equifax

21. WHY BE PRE-APPROVED?
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You know what you can afford
before you begin to shop
Shows sellers you are serious about
buying
Can make an offer as soon as you
find the home you want

22. DOCUMENTS FOR
PRE-APPROVED?
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Pay stubs (2-3 months)
W-2 forms (2 years)
List of long term debt
Recent bank statements
Tax returns (2 years)
Proof of any additional income

23. HOW YOUR REALTOR CAN HELP

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Guides you through
the process, buying
or building
Knows the
community
Can provide you
with lists of homes
that meet your
requirements

24. HOW YOUR REALTOR CAN
PROTECT YOU
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Seller is represented
by the listing Realtor
Listing Realtor is
bound to protect and
represent the seller
A buyer’s agent would
be bound to protect
and represent you
(the buyer)

25. BEGIN LOOKING FOR HOMES

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Compare to list of
“must haves”
Imagine your furniture
– will it fit?
What is the state of
repair (or disrepair)?
Imagine it in all
seasons
Ask your Realtor to
point out the pros &
cons

26. WHEN YOU’VE FOUND THE HOME
YOU WANT

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Determine amount
you’re willing to
offer
Decide how much
earnest money
you’ll put down

27. DETERMINING THE AMOUNT OF
THE OFFER
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What are comparable
homes selling for
What is the home’s
condition
How long has the home
been on the market
What are the financing
terms
What is the seller’s
situation
Rely on your Realtor for
guidance
Be prepared to negotiate

28. ABOUT THE EARNEST MONEY

Usually between 1-5% of
the purchase price

If offer is accepted,
earnest money becomes
part of your down
payment or closing cost

If offer is rejected, the
money is returned to you

If you back out of the deal,
you forfeit the money

29. MAKING THE OFFER

Your Realtor will assist you
in making the offer, which
will include:
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Legal description of
property
Amount of earnest money
Down payment and
financing details
Proposed closing date
Price you are offering
Length of time offer is
valid
Details of the deal

30. HOME INSPECTION

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Contracts should be
contingent upon it
Professional inspector
evaluates safety and
condition of the home
Includes structure,
construction and
mechanical systems

31. CLOSING COSTS INCLUDE
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Escrow fees
Property taxes
Interest
Loan origination fee
Recording fees
Survey fee
Appraisal
Homeowners insurance
Mortgage insurance (if
applicable)
Title insurance
Loan discount points
First payment to escrow account
Documentation prep fees

32. ON CLOSING DAY
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Closing agent will list
money you owe seller and
money seller owes you
Seller will provide proofs of
any warranties or
inspections
You’ll read documentation
& sign on the dotted line
You’ll pay all closing costs
and receive a settlement
statement
The deed will then be
recorded

33. Understanding your Home
Purchase: Tips to Get a Loan
Congratulations
you are now a
homeowner!