This document provides information about buying a first home, including: - Historical home price appreciation rates and how home values can rise, fall, or stay the same. - Calculations showing the potential returns from home appreciation over 20 years at 3% and 1.5% rates. - Factors that influence long-term housing demand and supply such as population growth and new home construction. - Costs of owning, selling, and buying a home. - Tax benefits of home ownership like mortgage interest and property tax deductions. - First-time homebuyer tax credits available until November 2009.

1. YOUR LOGO GOES
HERE!!
Buying Your First Home

2. Housing & Mortgage Markets are
Like Florida After a Hurricane!

3. Is Housing a Good Investment?
• Home Price Risks
– Home Values Will Go
Up
– Home Values Will Go
Down
– Home Values Will Stay
the Same

4. Year Median Home Price Appreciation
1989 $94,000
1990 $96,400 2.55%
1991 Median Housing $101,400 Prices
5.19%
1992 $104,000 2.56%
1993 $107,200 3.08%
1994 $111,300 3.82%
1995 $114,600 2.96%
1996 $119,900 4.62%
1997 $126,000 5.09%
1998 $132,800 5.40%
1999 $138,000 3.92%
2000 $143,600 4.06%
2001 $153,100 6.62%
2002 $165,000 7.77%
2003 $178,800 8.36%
2004 $195,400 9.28%
2005 $219,600 12.38%
2006 $221,900 1.05%
2007 $219,000 -1.31%
2008 $198,100 -9.54%
2009-May $173,000 -12.67%
Average Rate of Appreciation 3.26%

5. Assuming It Costs The Same or Less
to Rent vs. Own (after tax)
• $200,000 House
• 20% Down Payment = $40,000 Investment
• 3% Annual Appreciation Over 20 Years:
– $361,222 Home Value
– $161,222 Gain
– 8.41% Annual Rate of Return
• 1.5% Annual Appreciation Over 20 Years:
– $269,371 Home Value
– $69,371 Gain
– 5.16% Annual Rate of Return

6. Assuming it Costs The Same or
More to Rent vs. Buy (after tax)
• $200,000 House
• 20% Down Payment = $40,000 Investment
• 3% Annual Appreciation Over 20 Years:
– $361,222 Home Value
– $161,222 Gain
– $76,291 Additional Equity Through Principal Reduction
– 10.17% Annual Rate of Return
• 1.5% Annual Appreciation Over 20 Years:
– $269,371 Home Value
– $69,371 Gain
– $76,291 Additional Equity Through Principal Reduction
– 7.98% Annual Rate of Return

7. Long Term Housing Needs
Demand for Homes
• 3 million more people
each year
– 1.27% avg. annual
population growth since
the year 1900
• 1.3 to 1.5 million
household formation
per year
• 1.4 million per year was
the 30-year average
Supply of Homes
• 300,000 homes
demolished per year
• 1.6 – 1.8 million new
units needed to keep up
with population and
replace demolished
homes

8. Housing Starts
Year Housing Starts
2000 1.6 million
2001 1.7 million
2002 1.7 million
2003 1.9 million
2004 2.0 million
2005 2.1 million
2006 1.8 million
2007 1.3 million
2008 < 1.0 million
2009 forecast < 1.0 million
10-year Sum 16.1 million
Could lead to housing shortage?

9. Is this a good time to buy?
• Warren Buffet:
– “I buy on the assumption that they could close the market
the next day and not reopen it for five years.”
– “The dumbest reason in the world to buy a stock is because
it’s going up.” [buy value]
• Imagine going shopping a department store, and getting all
emotional and buying all you can when prices are rising. Then,
when prices are falling because of a blow-out sale, you stay
away from the store, or worse, you go back to the store and sell
everything at rummage sale prices that you bought before at a
high price. That is what people do every day in the real estate
market.

10. Understanding the Costs of
Owning a Home
• Mortgage payment (PITI)
– Principal
– Interest
– Property Taxes
– Home Insurance
– Mortgage Insurance (if less than 20% down)
– Condo and homeowner association dues
• Repairs and Maintenance
• Landscaping
• Furniture / Draperies / Housing Decorations

11. Understanding the Costs of
Selling a Home
Sales Price $200,000
Real Estate Commissions (6%) ($12,000)
Real Estate Transfer Taxes ($2,000)
Title Insurance ($2,000)
Mortgage Pay-off ($160,000)
Net Sales Proceeds $24,000

12. Understanding the Costs of
Buying a Home
3.5% Down
Payment
10% Down
Payment
20% Down
Payment
Purchase Price $200,000 $200,000 $200,000
Down Payment $7,000 $20,000 $40,000
Closing Costs* $2,500* $2,500* $2,500*
Mortgage Points* $1,930* $1,800* $1,600*
Upfront MIP* $3,378* - -
Pre-paid Items $2,000 $2,000 $2,000
Total Cash Needed to Close $16,808 $26,300 $46,100
Total Cash Needed to Close
$9,000 $22,000 $42,000
(with seller paid costs)
* Can be paid by seller!

13. Have the Seller Pay Points and Closing
Costs on Your Behalf
• In most cases lenders will allow the seller to pay 3% -
6% of the purchase price in points and closing costs on
your behalf
• Why would the seller do this?
– Makes their home more affordable to more buyers
– Sell their home quicker
• Why important to you?
– Reduces your cash required to close
– Seller-paid points are 100% tax deductible to you!
– Lowers your monthly payments and dramatically
reduces the long-term costs of owning the home

14. Seller-Paid Points
Lower Purchase Price Seller-Paid Points
List Price $225,000 $225,000
Purchase Price $200,000 $212,000
Down Payment % 20% 20%
Down Payment $ $40,000 $42,400
Mortgage LTV 80% 80%
Mortgage Balance $160,000 $169,600
Points Paid by Seller % - 5%
Points Paid by Seller $ - $8,480
Mortgage Interest Rate 5.50% 4.25%
Mortgage Payment $908 $834
Monthly Payment Savings - $74
Pmnt Savings Over Life of Loan - $26,640
Closing Costs $2,500 $2,500
Pre-paid Items $2,000 $2,000
Closing Costs Paid By Seller - $2,500
Your Down Payment & Costs $44,500 $44,400

15. Seller-Paid Points Save You Much More
Money than a Lower Purchase Price!
Lower Purchase Price Seller-Paid Points
Interest Paid Over 5 Years $42,444 $34,470
Savings Over 5 Years - $7,974
Interest Paid Over 10 Years $81,081 $65 ,255
Savings Over 10 Years - $15,826
Interest Paid Over 30 Years $167,047 $130,759
Savings Over 30 Years - $36,288
Plus, points are fully deductible to you even when paid by seller!!

16. Understanding the Tax Benefits
of Home Ownership
Rent Own*
Before Tax Payment $1,250 $1,554
Principal - $211
Interest** - $885**
Mortgage Insurance** - $88**
Property Taxes** - $300**
Home Insurance - $70
Tax Benefit (25% tax bracket) - ($318)
After Tax Payment $1,250 $1,236
* Assumes 96.5% FHA Financing on $200k purchase price
** These items are generally tax deductible – see a CPA for details.

17. Understanding the First-Time
Homebuyer Tax Credit
• Like a gift certificate to IRS Restaurant that you can
turn in and redeem for cash immediately after
closing!
• Not owned a home in the last three years
– Single - $75k / $95k
– Married - $150k / $170k
• January 1, 2009 – November 30, 2009
– $8,000
– Repaid only if you sell the home within 3 years

18. First-Time Homebuyer Tax Credit: More
Rules…
• Married couples - both must be first-time buyers
• No purchases from related parties
– Spouse, Ancestors, Lineal descendants
• Unmarried FTHB can split credit “in any reasonable
manner” - generally based on ownership % and/or $$
contributions to the purchase price; total credit cannot
exceed $8,000
– Of the buyers, only the ones who are qualified FTHB
can claim the credit (income, whether owned a
home, etc.)
– Co-purchasers and Co-signors OK!

19. Are You 62 or Older? You May Want to Consider
a Reverse Mortgages for Your Home Purchase
• Higher loan and value limits - $625,500
– Expires at the end of 2009
– $417,000 in 2010
• Can Be Used to Purchase 1-4 Unit Properties
• How does It Work?
– Buyers Age 62 and Older
– 30% - 35% Down Payment
– No Income or Credit Qualification
– NO MORTGAGE PAYMENTS for the rest of
your lives!

20. Can’t Qualify Now? Participate in Our
“Tenant-to-Homeowner Program”
• Rent-to-Own
• Investors
– Willing and able to invest $40,000 - $50,000
– Timeframe is 3-4 years
– Qualified for NOO financing
• Tenant-Home Buyers
– Willing and able to re-establish credit within 2-3 years
– Likely to qualify for FHA or conventional financing in 2-3
years
– Willing to contribute 5% toward non-refundable deposit

21. CMPS® Professionals: Committed
Qualified & Equipped to Focus on Life
Issues in YOUR WORLD
• College Funding - Four years, including room and board;
PER CHILD
– $84k = public
– $148k = private
– $196k = Ivy League
• Retirement Planning
– Average LE = 79
• Elder-Care Issues
– 4.9 million Americans with Alzheimer’s disease
– 27% of adult Americans care financially for elderly friends or
relatives
Bottom Line: This Decision Will Impact Your Life for Years to Come!

22. Next Steps: How Can I Help?
• Schedule meeting to review your situation
• Help me understand your timelines, goals and
objectives
• Develop a home buying budget that meets your
housing and cash flow needs
• Discuss and select the home buying and mortgage
planning strategies that make the most sense for
your situation