Use credit union home loan basics 2 28 12

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Use credit union home loan basics 2 28 12

  1. 1. MAKING HOME OWNERSHIPAFFORDABLE
  2. 2. Today YouWill LearnWhy You Should Buy a HomeWhy Your Credit is so ImportantWhy You Should Work ®with a REALTORThe Mortgage Process Getting Approved Loan Types & Products RefinancingThe Home-Buying Process 2
  3. 3. Pre-Qualification vs.Why Should You Buy A Home? Pre-Approval
  4. 4. Tightening Rental MarketReasons Average rents for a two bedroom apartment is $1,100 per month or more. to Buy Increasing Rentsvs. Rent Tax Benefits Good Investment — Particularly in California The average annual appreciation on real estate since 1975 is over 7.00% This figure includes the double digit negative appreciation we have experienced over the past three years 5
  5. 5. Renting ExampleAverage Rent Per $1,102 MonthTotal Rent per YearTotal Write Off $13,224 $66.12 Renting vs.Tax Write OffRenters Tax Credit $66.12 Owning (State) No Future Appreciation!
  6. 6. Home Ownership ExampleSale Price of Home $400,000Loan (96.5%) $386,000Monthly Payment $2,878.02(includes PITI)Total Payment/Year $34, 536.24 Renting Tax Write Off vs. OwningMortgage Interest $22, 645Property Taxes $ 5,000Total deductions $27, 645If a home appreciates only 5% peryear, value in 5 years would be:$510,513.00 Net 5-year gain will be of $110,512.63
  7. 7. Pre-Qualificationvs. Pre-Approval 9
  8. 8. Proposed Monthly PaymentEstimate on Borrower’s Income $4,333.33 P&I (1st TD): $2,072.00 What You Borrower’s Income $2,857.17 Insurance: $99.72Can Afford Other Income $0.00 Taxes: $416.67 MI: $289.50 Total Income $7,190.50 HOA Dues: $0.00 PITI & PMI: $2878.02 Other Debts: $200.00 Total Payment $3,078.02 Debt Ratio 40/42.8 10
  9. 9. Pre-Qualification vs. Pre-ApprovalPre-Approval: Mortgage Commitmentpending appraisal of the property Application Credit report pulled to verify scores 2 Years Federal Tax Returns with W-2’s 3 Months Bank Statements 2 Months of Current Pay-stubs 11
  10. 10. Pre-Qualification vs. Why Work with a Pre-Approval REALTOR ? ®
  11. 11. Why Work with a REALTOR ? ®Have Extensive Information About the Market MetroList Services Access & Other Agents Knowledge of AreaCan Help Find Home Best Suited for Your NeedsGood NegotiatorUnderstands Closing ProceduresChoose by Experience 13
  12. 12. Pre-Qualification vs. The Mortgage Process Pre-Approval
  13. 13. Getting ApprovedIncome Sufficient Income Housing Debt to Income Ratio Total housing payments divided by monthly gross income Total Debt to Income Ratio Total Monthly Payments Divided by Monthly Gross Income 15
  14. 14. LOAN-TO-VALUE (LTV) Amount of Down Payment Subtracted from Price is LTV 5% DOWN = 95% LTV MI - Mortgage Insurance Required on All Loans with Less Than 20% Down 16
  15. 15. Loan TypesConforming $50,000 To $417,000 As Low As 3.5% Down Will Require MI 20% Down = No MI 17
  16. 16. Jumbo Loans Private Investors $417,000 to $1,000,000 Minimum 20% down Asset Needed 680 Minimum credit score 18
  17. 17. Mortgage Loan ProductsFixed Rate Mortgages 15-Year 20-Year 30-YearAdjustable Rate Mortgages (ARM) 3/1 ARM 5/1 ARM 7/1 ARM 10/1 ARM 19
  18. 18. Mortgage JargonLoan-to-Value — The percentage of what the lien-holder owns vs. the borrowerOrigination or Lender’s Fees — Fee charge bylender to complete loanPoints — Percent of loan amountMI - Mortgage Insurance — Insurance written by aprivate company to protect lender against loss ifthe borrower defaultsRate Lock — A binding agreement to lock the rate;points may be applied to change rate 20
  19. 19. Pre-Qualification vs.The Home-Buying Process Pre-Approval
  20. 20. Home-Buying ProcessGet Pre-Approved Before You StartWork with a REALTOR®Tour Homes that Meet Your Needs CriteriaMake an Offer on the Home You Desire Make an Educated Offer by Reviewing All Comps in the Area with Your AgentDeal with Counteroffers as They ComeOpen Escrow (Your Agent Will CompleteThis For You) 22
  21. 21. Pre-Qualification vs. Questions? Pre-Approval

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