2010 seminar in a box
TRANSCRIPT
First Time Home Buyers Seminar
Presented by Tessa Rider
Who is Primary Residential Mortgage, Inc?Founded in 1998Headquarters in Salt Lake City, Utah250 offices nationwide in 47 statesMore than 1,900 employeesA variety of loan products from the nation’s top lenders:
Bank of AmericaWells FargoGMAC, and more!
“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.
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.”
—U.S. Department of Housing and Urban Development
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
Money: What are Mortgages really made of?
CreditCapacityCollateral
The Keys to Becoming a Home OwnerThe Keys to Becoming a Home OwnerOrganizeWatch Spending and SavingsNegotiateElevate your Credit ScoreRead (and Understand) the Fine Print
Down Payments30-Year Mortgage
House Price
Interest rate Monthlypayment
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
http://loan.yahoo.com/m/basics7.html
How much can you afford?Debt-to-Income Ratio—the lower the better:
It shouldn’t exceed 36%How to calculate your debt-to-income ratio:
Calculate your total monthly income: Include wages, overtime, guaranteed commissions/bonuses, alimonyIf income varies, calculate average based on last two years
Add up your monthly debt payments: Include credit cards, car loans, student loans, mortgage payments
Divide monthly debt payments by total monthly income—This is your debt-to-income ratio
$2,000.00 (total monthly debt)
÷ $6,000.00 (total monthly income)
------------0.33 or 33%
Mortgage Shopping“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,
or a home equity loan—is a product, just like a car, so the price and terms
may be negotiable. You’ll want to compare all the costs involved in
obtaining a mortgage. Shopping, comparing, and
negotiating may save you thousands of dollars.”
—The Federal Reserve Board
Basic Loan Types and Products
ConventionalFederal Housing Administration (FHA)Veteran’s Affairs (VA)United States Department of Agriculture (USDA)
30 Year Fixed15 Year FixedARM
5/13/3
Balloon
Cost InformationRatesPointsFeesDown Payments Mortgage Insurance
“Shop, Compare, Negotiate: Get the best deal that you can!”
—Federal Reserve Board
Pre-ApprovalOnce you’ve found a mortgage company you’re comfortable with, get pre-approved
This essentially gives you a budget for your house
“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.”
—http://money.cnn.com/magazines/moneymag/money101/lesson8/index.htm
Good Faith Estimate (GFE)
Required by the Real Estate Settlement Procedures Act (RESPA)Provided by mortgage lenderGives an estimate of fees due at closing, including:
Loan feesFees to be paid in advanceReservesTitle chargesGovernment chargesAdditional charges
Actual closing costs can differ from GFE
Realtor ShoppingDemand Experience
Look for a real estate agent with a minimum of two years experience
Look for CommitmentFull-time Realtors are best
Consider EducationOn-going training
Conduct InterviewsInterview at least three agents
http://ired.com/buymyself/canale/art3.html
Home ShoppingIs it THE house? Consider the…
CommuteAmenitiesSchools
Can you really afford it?Remember, starter homes are just that—a start
The OfferWhat are the steps to making an offer?
Negotiating a sales priceAsking Price Initial Purchase OfferAcceptance of Offer and Counter-Offer
Make an offer in writingProposed Purchase PriceConcessionsConveyancesHome inspection contingencesEarnest MoneyAcceptanceMediation and Arbitration
Home InspectionA 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:Evaluate the physical condition: the structure, construction and mechanical systems. Identify items that should be repaired or replaced. Estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.
Insurance Title insuranceHomeowners insuranceFlood insurance
Closing
What to expectWhat you need to doHUD-1 Settlement Statement
Questions and Answers