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2010 Seminar In A Box


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2010 Seminar In A Box

  1. 1. First Time Home Buyers Seminar Presented by Tessa Rider
  2. 2. Who is Primary Residential Mortgage, Inc? <ul><li>Founded in 1998 </li></ul><ul><li>Headquarters in Salt Lake City, Utah </li></ul><ul><li>250 offices nationwide in 47 states </li></ul><ul><li>More than 1,900 employees </li></ul><ul><li>A variety of loan products </li></ul><ul><li>from the nation’s top lenders: </li></ul><ul><ul><li>Bank of America </li></ul></ul><ul><ul><li>Wells Fargo </li></ul></ul><ul><ul><li>GMAC, and </li></ul></ul><ul><ul><li>more! </li></ul></ul>
  3. 3. <ul><li>“ A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. </li></ul><ul><li>This will save you a lot each year, because the interest you pay will make up most of your monthly payment for most of the years of your mortgage. In addition, the value of your home may go up over the years. Finally, you’ll enjoy having something that's all yours—a home where your own personal style will tell the world who you are.” </li></ul><ul><li>— U.S. Department of Housing and Urban Development </li></ul>
  4. 4. Renting vs. Buying RENTING OWNING No Ownership Pride of Ownership No Privacy Complete Privacy No Foundation Family Foundation No Tax Benefit Tax Deductible Interest Payment You’re paying the owner’s mortgage Build home equity over time
  5. 5. Money: What are Mortgages really made of? <ul><li>Credit </li></ul><ul><li>Capacity </li></ul><ul><li>Collateral </li></ul>
  6. 6. The Keys to Becoming a Home Owner <ul><li>O rganize </li></ul><ul><li>W atch Spending and Savings </li></ul><ul><li>N egotiate </li></ul><ul><li>E levate your Credit Score </li></ul><ul><li>R ead (and Understand) </li></ul><ul><li>the Fine Print </li></ul>
  7. 7. Down Payments 30-Year Mortgage House Price Interest rate Monthly payment Price with 5% down Price with 10% down Price with 15% down Price with 20% down 7.00 $1,060 $167,712 $177,029 $187,442 $199,158 7.50 $1,060 $159,578 $168,443 $178,352 $180,499 8.00 $1,060 $152,064 $160,512 $169,954 $180,576 8.50 $1,060 $145,113 $153,174 $162,185 $172,321 15-Year Mortgage House Price Interest rate Monthly payment Price with 5% down Price with 10% down Price with 15% down Price with 20% down 6.50 $1,060 $128,088 $135,204 $143,158 $152,105 7.00 $1,060 $124,138 $131,034 $138,742 $147,414 7.50 $1,060 $120,364 $127,051 $134,525 $142,933 8.00 $1,060 $116,757 $123,243 $130,493 $138,649
  8. 8. How much can you afford? <ul><li>Debt-to-Income Ratio—the lower the better: </li></ul><ul><ul><li>It shouldn’t exceed 36% </li></ul></ul><ul><li>How to calculate your debt-to-income ratio: </li></ul><ul><ul><li>Calculate your total monthly income: </li></ul></ul><ul><ul><ul><li>Include wages, overtime, guaranteed commissions/bonuses, alimony </li></ul></ul></ul><ul><ul><ul><li>If income varies, calculate average based on last two years </li></ul></ul></ul><ul><ul><li>Add up your monthly debt payments: </li></ul></ul><ul><ul><ul><li>Include credit cards, car loans, student loans, </li></ul></ul></ul><ul><ul><ul><li>mortgage payments </li></ul></ul></ul><ul><ul><li>Divide monthly debt payments by total monthly income </li></ul></ul><ul><ul><li>— This is your debt-to-income ratio </li></ul></ul><ul><li>$2,000.00 (total monthly debt) </li></ul><ul><li>÷ $6,000.00 (total monthly income) </li></ul><ul><li>------------ </li></ul><ul><li>0.33 or 33% </li></ul>
  9. 9. Mortgage Shopping <ul><li>“ Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage—whether it’s a home purchase, a refinance, </li></ul><ul><li>or a home equity loan—is a product, </li></ul><ul><li>just like a car, so the price and terms </li></ul><ul><li>may be negotiable. You’ll want to </li></ul><ul><li>compare all the costs involved in </li></ul><ul><li>obtaining a mortgage. </li></ul><ul><li>Shopping, comparing, and negotiating may save you thousands of dollars.” </li></ul><ul><li>— The Federal Reserve Board </li></ul>
  10. 10. Basic Loan Types and Products <ul><li>Conventional </li></ul><ul><li>Federal Housing Administration (FHA) </li></ul><ul><li>Veteran’s Affairs (VA) </li></ul><ul><li>United States Department of Agriculture (USDA) </li></ul><ul><li>30 Year Fixed </li></ul><ul><li>15 Year Fixed </li></ul><ul><li>ARM </li></ul><ul><ul><li>5/1 </li></ul></ul><ul><ul><li>3/3 </li></ul></ul><ul><li>Balloon </li></ul>
  11. 11. Cost Information <ul><li>Rates </li></ul><ul><li>Points </li></ul><ul><li>Fees </li></ul><ul><li>Down Payments </li></ul><ul><li>Mortgage Insurance </li></ul><ul><li>“ Shop, Compare, Negotiate: </li></ul><ul><li>Get the best deal that you can!” </li></ul><ul><li>— Federal Reserve Board </li></ul>
  12. 12. Pre-Approval <ul><li>Once you’ve found a mortgage company you’re comfortable with, get pre-approved </li></ul><ul><ul><li>This essentially gives you a budget for your house </li></ul></ul><ul><li>“ Getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt, and credit history.” </li></ul><ul><li>— </li></ul>
  13. 13. Good Faith Estimate (GFE) <ul><li>Required by the Real Estate Settlement Procedures Act </li></ul><ul><li>(RESPA) </li></ul><ul><li>Provided by mortgage lender </li></ul><ul><li>Gives an estimate of fees due at closing, including: </li></ul><ul><ul><li>Loan fees </li></ul></ul><ul><ul><li>Fees to be paid in advance </li></ul></ul><ul><ul><li>Reserves </li></ul></ul><ul><ul><li>Title charges </li></ul></ul><ul><ul><li>Government charges </li></ul></ul><ul><ul><li>Additional charges </li></ul></ul><ul><li>Actual closing costs can differ </li></ul><ul><li>from GFE </li></ul>
  14. 14. Realtor Shopping <ul><li>Demand Experience </li></ul><ul><ul><li>Look for a real estate agent with a minimum of two years experience </li></ul></ul><ul><li>Look for Commitment </li></ul><ul><ul><li>Full-time Realtors are best </li></ul></ul><ul><li>Consider Education </li></ul><ul><ul><li>On-going training </li></ul></ul><ul><li>Conduct Interviews </li></ul><ul><ul><li>Interview at least three agents </li></ul></ul><ul><li> </li></ul>
  15. 15. Home Shopping <ul><li>Is it THE house? </li></ul><ul><li>Consider the… </li></ul><ul><ul><li>Commute </li></ul></ul><ul><ul><li>Amenities </li></ul></ul><ul><ul><li>Schools </li></ul></ul><ul><li>Can you really afford it? </li></ul><ul><li>Remember, starter homes are just that </li></ul><ul><li>— a start </li></ul>
  16. 16. The Offer <ul><li>What are the steps to making an offer? </li></ul><ul><ul><li>Negotiating a sales price </li></ul></ul><ul><ul><ul><li>Asking Price </li></ul></ul></ul><ul><ul><ul><li>Initial Purchase Offer </li></ul></ul></ul><ul><ul><ul><li>Acceptance of Offer and Counter-Offer </li></ul></ul></ul><ul><ul><li>Make an offer in writing </li></ul></ul><ul><ul><ul><li>Proposed Purchase Price </li></ul></ul></ul><ul><ul><ul><li>Concessions </li></ul></ul></ul><ul><ul><ul><li>Conveyances </li></ul></ul></ul><ul><ul><ul><li>Home inspection contingences </li></ul></ul></ul><ul><ul><ul><li>Earnest Money </li></ul></ul></ul><ul><ul><ul><li>Acceptance </li></ul></ul></ul><ul><ul><ul><li>Mediation and Arbitration </li></ul></ul></ul>
  17. 17. Home Inspection <ul><li>A home inspection is an evaluation of a home’s condition by a trained expert. During a home inspection, a qualified inspector takes an in-depth and impartial look at the property you plan to buy. The inspector will: </li></ul><ul><li>Evaluate the physical condition: the structure, construction and mechanical systems. </li></ul><ul><li>Identify items that should be repaired or replaced. </li></ul><ul><li>Estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes. </li></ul>
  18. 18. Insurance <ul><ul><li>Title insurance </li></ul></ul><ul><ul><li>Homeowners insurance </li></ul></ul><ul><ul><li>Flood insurance </li></ul></ul>
  19. 19. Closing <ul><li>What to expect </li></ul><ul><li>What you need to do </li></ul><ul><li>HUD-1 Settlement Statement </li></ul>
  20. 20. Questions and Answers