CalSTRS 80/17 Presentation Updated 12-19-08

A Complete Guide to the CalSTRS 80/17 Purchase Loan

Thank You for AttendingClass will begin at 7:00pm

Presented By:Broadview Mortgage Corporation

Presenter:

Scott Schang

Contact Information:

Phone: [email protected]


The Purpose and Goals of this Class

• To Create and Empower Home Owners

• Educate you about the current California Real Estate market and Financing Options

• Empower you with the ability to make educated decisions in the home buying process

• Introduce you to Broadview Mortgage Corporation as your CalSTRS 80/17 expert


Topics We Will Cover In This Class

• Overview of California Real Estate Market

• A Complete Guide to CalSTRS 80/17

• Things you should know about getting started

• Wrap Up and Take Aways


Topics We Will Cover In This Class

• Ask Questions throughout presentation– You may type questions in at any time during the

presentation – Questions box on your screen

– CalSTRS 80/17 specialists are standing by to answer your questions during the presentation

– The only dumb question is the one you don’t ask

Write number down now in case you get disconnected

1-866-667-6724

Overview of the California Real Estate Market

Being At The Right Place / Right Time

• What it means to be in a Buyer’s Market• Supply and demand• Many homes for sale• Few home buyers in market• Credit market offers few options

• Why CA Market is a “Perfect Storm”– Affordability Factor up– Median Home Prices Down– Specialty Programs for Home Buyers


Most California home prices have dropped more than 20% since July of 2007

County/City/Area 8-Jul 7-Jul Y-T-Y % Change

Sonoma County $360,000.00 $521,000.00 -30.90%

Santa Cruz County $510,000.00 $720,000.00 -29.20%

Napa County $439,500.00 $615,000.00 -28.50%

Orange County $460,000.00 $643,750.00 -28.50%

Yolo County $290,300.00 $405,000.00 -28.30%

Ventura County $420,000.00 $585,000.00 -28.20%

Alameda County $440,000.00 $611,750.00 -28.10%

Los Angeles County $400,000.00 $550,000.00 -27.30%

Kern County $190,750.00 $260,000.00 -26.60%

San Diego County $365,000.00 $490,000.00 -25.50%

Fresno County $217,250.00 $281,500.00 -22.80%


Many California home prices have dropped more than 30% since July of 2007

County/City/Area 8-Jul 7-Jul Y-T-Y % Change

Merced County $155,000.00 $315,000.00 -50.80%

Monterey County $300,000.00 $560,000.00 -46.40%

Santa Barbara County $344,000.00 $615,000.00 -44.10%

San Joaquin County $220,000.00 $378,750.00 -41.90%

Stanislaus County $190,000.00 $325,000.00 -41.50%

Contra Costa County $349,000.00 $590,000.00 -40.80%

Riverside County $260,000.00 $404,500.00 -35.70%

San Benito County $323,000.00 $500,500.00 -35.50%

Sacramento County $210,000.00 $325,000.00 -35.40%

San Bernardino County $229,750.00 $355,000.00 -35.30%

Solano County $270,000.00 $415,000.00 -34.90%

Madera County $195,500.00 $289,500.00 -32.50%

California Real Estate Market in the News

• HEADLINE: Southern California home sales jump 65 percent in September– Mercury News, Silicon Valley – Oct. 20th, 2008

– LOS ANGELES — Southern California home sales jumped 65 percent in September from a year ago, as plummeting prices fueled by foreclosures lured more buyers.

– Last month's median home price in the six-county region fell 33.2 percent to $308,500, compared with $462,000 in September 2007.

California Real Estate Market in the News

• HEADLINE: Bargains Boost SoCal Home Sales a record 67% in October! • OC Register, Nov. 18th

– Bargain-basement sales helped pull down home prices in the SoCal region last month and boosted the number of transactions by a record 67%

– The median price of a Southern California home fell to $300,000 in October — the lowest since April 2003 and down 41% below the peak price hit in the spring and summer of 2007.

A Complete Guide to CalSTRS 80/17

• Who’s Eligible for a CalSTRS 80/17?– Any employee of a California public school or

community college• Can work in any capacity• Can work in school district• Pay check stub from public school system

– If you are eligible for CalSTRS pension benefits• Provide certificate of eligibility• Do not have to be currently employed

– Any eligible borrower makes family eligible


• How CalSTRS benefits from the 80/17– CalSTRS pension fund invests in mortgage notes

as mortgage backed securities• CalSTRS is not a lender and does not do loans

– Payments go back into CalSTRS pension fund

– Contributes to the growth and stability of your retirement system as a member of CalSTRS

– Broadview Mortgage is an approved Lender on CalSTRS website - See link on site


• CalSTRS 80/17 Compared to FHA

• Lower Down Payment than FHA– 3.5% Down as of January 1st, 2009

• Interest Rates as compared to FHA• No UPFRONT Mortgage Insurance Premium

– FHA increased to 1.75%

• No MONTHLY Mortgage Insurance– FHA increased to .55%

• FHA vs CalSTRS Closing Costs– FHA lower up front / CalSTRS lower total cost

• CalSTRS - No cost to lock or rate


• CalSTRS 80/17 Compared to FHA

• FHA is a GREAT program as a Plan B– Low down payment requirements– Low up front closing costs– Aggressive interest rates– 6% seller concessions from seller– Flexible qualifying guidelines– No penalty for lower credit scores

• If you are eligible and qualify for the CalSTRS 80/17 there is simply no comparison. Period


• CalSTRS 80/17 – Max Loan Amounts

• Conforming Loan Amount – Up to $417,000

• First mortgage loan amount– $521,250 Max Purchase Price

• Jumbo Loan Amount – Up to $536,082

• First mortgage loan amount• Max total loan amounts $650,000

– Up to $670,103 Max Purchase Price

• Jumbo interest rate is typically 1% higher


• CalSTRS 80/17 – Property Qualifications

• Eligible Properties – Single Family Residence - Detached– Condominiums / Townhomes - Attached– Planned Urban Development (PUD)

• Must be owner Occupied• Must be located in State of California• Cannot own any other properties

– Mobile home not on a permanent foundation and on leased lot/park is not considered real property


• CalSTRS 80/17 – Loan Structure

• Max 1st Loan Amount - 80%– Qualify on 80% Only– Increases your purchasing power

• Max 2nd Loan Amount - 17% – No payments for first 5 years

• 30 Year fixed rate loan only• Same interest rate for both loans• One time free float down – both loans

– Anytime in first 40 days


• CalSTRS 80/17 – Second Mortgage

• Second Mortgage Loan– Deferred payments for 5 Years– Simple interest accrues for deferred period – Accrued interest added to principle balance – Fully amortized over remaining 300 months

• No surprises guarantee - You will know exactly what your payments will be– Although you qualify on first mortgage only, we will

always send you a good faith estimate with total payment


• CalSTRS 80/17 – Down Payment

• Down payment requirements– 3% down payment– 1% from buyer’s own funds

• Sources of Down Payment and Closing Costs– Down Payment - Borrower's own funds

• CalPERS can borrow for DP or Closing Costs– Down Payment - Gift from relative – Down Payment – Grant from government agency– Closing Costs - Seller contributions up to 3% – Closing Costs - Borrower's own funds – Closing Costs - Gift from relative


• Down Payment and Closing Cost options for Members of CalPERS

– Maximum purchase price $350,000– Can borrow up to 5% of value of home– Up to 50% of Member’s current contribution

• Minimum $1,000• Maximum $18,421

– Personal loan secured by PERS• Not borrowed from PERS account

– Minimum loan term is 1 year / Max is 15 years– Must be primary residence– Cannot have any other CalPERS personal loans


• Other CalSTRS 80/17 Highlights

• No Income limits• You do not have to be a first time homebuyer• You cannot own any other properties• Minimum FICO Scores

– 620 for Loan Amounts up to $400,000 – 680 for Loan Amounts up to $650,000

• Combined 1st & 2nd Loans

• Interest Rate lock requires Property Address– Typically rate is locked when offer is accepted

• If offer falls out – Rate lock is lost as well


• CalSTRS 80/17 - What Makes it Different

• Cannot buy interest rate down– Below market / Set by CalSTRS

• Cannot “roll in” closing costs into rate• Fannie Mae – Pricing Adjustments

– Declining Market - .25%– High LTV Flex 97 - .5%– Risk based credit score pricing

• None at 740 FICO

• Much lower cost than FHA but may require more money brought to the closing table


• CalSTRS 80/17 – Review

– Only 3% down payment required– No upfront mortgage insurance premium– No monthly mortgage insurance premium– Qualify for 80% first mortgage only– 17% second mortgage deferred for 5 years– No income or first time home buyer limits– Up to 3% seller concessions for closing costs– Rates set by CalSTRS– One time Free float down– Interest rate can be locked once offer accepted– CalPERS members can use personal loan for

closing costs or down payment


• Bait and Switch “Red Flags”– Community programs designed to benefit specific

members of the education community– CalSTRS loans have fixed rates and fees

• Buyer Benefit - Lenders can’t charge more– What to watch out for……

• Agent recommends lender but not program• Lender isn’t CalSTRS 80/17 Expert• FHA is presented as an option/solution

– Underwriting guidelines changed– Approval can not be changed if locked

• CalSTRS loans can close in weeks – Call us!– Escrow can often be delayed without penalty

Things you should know about getting started

– Very First Step – Get pre-approved for financing

– Get pre-approved for the maximum you can qualify for – Be prepared for competition

– Work with a buyer’s agent – Fiduciary duties require that your best interests are represented

– Work with a Real Estate Agent that is familiar with these special home purchase programs

– Work with a Lender that is already familiar with this program

Wrap up and Take Aways

– Home prices have dropped 20-50% and homes are twice as affordable as they were 2 or 3 years ago

– Teachers and Employees in California Public Schools and Community Colleges have more purchasing power than many other buyers in the market

– Opportunities like this happen once in a lifetime

– Educate yourself on the process. Do not take anyone’s “word for it”.

Wrap up and Take Aways

– We are the Lender for all CalSTRS, CalPERS, CalHFA, FHA & VA, Conventional and Jumbo Loans

– We can Refer you to a qualified Real Estate Agent in your area

– We are more than happy to be your “second opinion” if you are already working with someone

– We are committed to educating and empowering homeowners - Join us for future classes

Upcoming Home Buyer Classes

• A Complete Guide to Buying Foreclosures and Short Sales

• Real Estate Agent Round Table • Open Q&A with Experienced Buyer’s Agents

talk about buying home in this market

• A First Time Home Buyer’s Complete Guide to Credit and Qualifying

• A First Time Home buyer’s Complete Guide to Closing Costs and the Good Faith Estimate

• Check back often for upcoming classes

Thank you for Attending

Please Join us for one of our other educational

home buyer classes

Presented By:Broadview Mortgage Corp.

Presenter:

Scott Schang

Contact Information:

Phone: [email protected]

CalSTRS 80/17 Presentation Updated 12-19-08

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