Information for First Time Homebuyers of real estate. Take the mystery out of buying your first home.

1. First Time Home Buyer Seminar Presented By... &

2. First Time Home Buyer Seminar Objective & Payoff To educate the first time home buyer so that they can confidently move forward in the home buying process. Topics Covered:  Prequalifying for a mortgage  Credit reports and scores  Applying for a mortgage  Gift Funds  Good Faith Estimate

4. Affordability & Price Range When you prequalify for a loan your credit report will be pulled. You will be asked to provide some basic information such as monthly income and debts. This information is then used to determine how much you can afford to pay monthly on your mortgage loan. Knowing this allows you to focus your house hunting efforts on a particular price range of homes thus saving you time!

7. Credit Score A credit score is a number that represents the likelihood that a person will repay a debt. It is used as a tool by lenders to evaluate risk.

8. There are three Credit Bureaus that collect and report credit history information on consumers. They are.... Equifax Experian TransUnion Mortgage lenders pull a tri-merged credit report which combines the information from all three of the bureaus. Each Bureau generates a credit score based on the information found in their particular database. The median score from the three bureaus is the one that is used for qualifying for the mortgage loan.

9. Five Parts To Your Credit Score

10. 1. Payment History  35% Impact Paying debt on time and in full has the greatest positive impact on your credit score. 2. Outstanding Balance  30% Impact The ratio between the outstanding balance and available credit 3. Credit History  15% Impact A longer credit history will increase your score 4. Type of Credit  10% Impact A mix of auto loans, credit cards and mortgages is more positive than credit cards only 5. Inquiries  10% Impact Shopping for new loans and credit cards in a short amount of time is negative

12. Preparing to Apply for a Mortgage Loan Begin to Gather these items.... Income * Earnings Statements: W-2 forms, recent pay stubs * If self-employed, 2 years tax returns and P&L statement * Additional income: social security, overtime, bonus, interest veteran’s benefits, child support, etc.... Assets * 2-3 months statements for checking & savings accounts (all pages) * Most recent statements for all stock or investment accounts (all pages) * Most recent statements for any retirement accounts (all pages) Debts * A credit report will be pulled and the loan officer will notify you if any additional documentation is needed * Documentation if alimony or child support payments are made

13. Continued... Property * Copy of purchase contract * Copy of cancelled deposit check Other * Drivers license or valid state ID * Employment information for the past 2 years (including contact info) * Residential street address for the past 2 years * Contact info for landlord if applicable * Complete copy of signed divorce decree and related documents * Documents regarding child support if paying or receiving * Any court documents relating to any bankruptcy action * Gift Letter statement if any gift funds are used for the transaction

14. Gift Funds Both FHA and Conventional loans allow for gift funds. Requirements for FHA Loans No Limit – All of the down payment and closing costs can be from a gift Acceptable Donor – Family, employer, charitable organization, etc... Donor cannot be anyone involved in the transaction Document the Transfer – provide documents from each step of the transfer Proof of Source – evidence the funds came from an account the donor owns Signed Gift letter – must state the gift amount, repayment is not required, the donor’s information and that the money is not from any person that is a party to this transaction

16. FHA Property Requirements The Basic rule FHA abides by is that the property must be habitable and safe for the occupants

17. FHA will permit “as-is” appraisals on properties when minor property deficiencies exist. Repairs for minor cosmetic items is not mandatory . Examples of items NOT requiring repair Missing Handrails Cracked window glass Cracked or damaged exit doors Minor plumbing leaks Defective floor covering Insect / organism damage Worn-out countertops Damaged wall and ceiling materials Poor workmanship Crawl space with debris Lack of all-weather driveway surface Examples of items REQUIRING repair Leaking or worn out roofs Evidence of structural problems Defective paint surfaces in homes built before 1978 Repairs

18. Additional FHA Property Requirements Appliances If Appliances are present, they must be in working order and meet all local codes. If they have been removed they must either be replaced or the appraiser must adjust the value of the property to reflect the missing items. Heating and Cooling FHA does not require a property to have a cooling system. They do require that properties above the freezing line (Lee County) have a heating system. Regardless, if either are present they must be fully operational and in good condition. Pool FHA requires any home with a pool to have a working pump that is able to circulate water. They also require that the water level be high enough that the pump can work. Water clarity is not a requirement, but FHA does state that the quality of the water must not pose a health or safety risk.