Top Banner
First Time Home Buyer First Time Home Buyer Seminar Seminar Presented By: Presented By: Mike Hall http://wwwmyohiohouse.com 614-937- 4162
27

First Time Home Buyer Seminar

Aug 23, 2014

Download

Real Estate

poo1shark8

Step by step process to buying a home. Everything you need to know from making the offer, to getting the proper inspections, the paperwork, and closing process.
Mike Hall
Http://www.myohiohouse.com
614-937-4162
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: First Time Home Buyer Seminar

First Time Home Buyer SeminarFirst Time Home Buyer SeminarPresented By:Presented By:

Mike Hall http://wwwmyohiohouse.com 614-937-4162

Page 2: First Time Home Buyer Seminar

First Time Home Buyer First Time Home Buyer SeminarSeminar

• Everything you need to know to make buying your first home easy and affordable.• Learn some of the financial reasons to buy a home. • Learn about your mortgage finance options and how to improve your credit. • Learn how to evaluate a home and make an offer.

Page 3: First Time Home Buyer Seminar

Why buy now?$7,500 interest free loan that may

turn into a grant that does not need to be repaid

Interest rates are near record lowsHuge selection to choose from means

prices are lowerNo money down options still availableThere is no fee to use a Realtor to

buy a home.

Page 4: First Time Home Buyer Seminar

Why Buy A Home?Why Buy A Home?Deduct the interest

payment and property taxes

Stable housing costs. No landlord to raise your rent.

Grow your equity and wealth through appreciation of the property.

Future equity build up lets you set up retirement investments.

Page 5: First Time Home Buyer Seminar

Renting Vs. Buying a Renting Vs. Buying a HomeHome$700 per month in rent5% annual rent increaseAfter 5 years you have spent

$46,415 in rent. Net equity gain: $ 0You have nothing to show after

spending all this money.

Page 6: First Time Home Buyer Seminar

Renting Vs. Buying a Renting Vs. Buying a HomeHome $700 rent buys you a $972 mortgage

payment (if you are in a 28% tax bracket). Subtract $ 150 per month for month for

taxes / insurance. Leaves 822 for an interest only payment

At 7% this buys you a 141,000 mortgage Assume the house price is $150,000. 5%

appreciation per year give you an extra $41,150 in equity.

$43,150 vs. $ 0? You do the math!

Page 7: First Time Home Buyer Seminar

How to Afford a Higher How to Afford a Higher PaymentsPayments Mortgage interest and

property taxes are tax deductible.

Change your withholding with your employer.

You can pay this extra money to the IRS, or pay it to yourself.

IRS.gov website has a withholding calculator.

You use the extra money to make the higher mortgage payment.

Page 8: First Time Home Buyer Seminar

Are You Ready To Buy?Are You Ready To Buy? Do you have a steady

income? Do you pay bills,

including your rent, on time?

Do you have low to medium debt?

Do you have cash for closing costs or down payment?

Do you have 2 month’s reserves of PITI in the bank?

Do you have the ability to make the mortgage payments?

Page 9: First Time Home Buyer Seminar

How Much Home Can You How Much Home Can You Afford?Afford?Housing costs should be less than 29% –

36% of gross monthly income. Housing costs include mortgage payment,

taxes, homeowners insurance, condo fees, other association fees.

Mortgage payment is based on the lender's "qualifying rate".

Housing costs plus long-term debt not to exceed 40% to 55% of gross monthly income.

Long term debt includes car payments, credit card payments, other loan payments.

Page 10: First Time Home Buyer Seminar

Why be Pre-Approved?Why be Pre-Approved? You know what you can

afford to pay before you look for a house.

You know if you are in a position to buy a home in your target neighborhood.

It tells sellers that you are a qualified buyer.

It lets you make an offer right away, before someone else does.

It makes it easier to get the service of a Realtor.

Page 11: First Time Home Buyer Seminar

Approval DocumentsApproval Documents Provide 2-3 months of

pay stubs. 2 years worth of tax

returns or W2 forms. Provide 6 to 12 months

bank statements. Proof of any additional

qualifying income such as alimony and child support.

Show a 2 year employment history.

580 credit score needed for 100% financing.

Page 12: First Time Home Buyer Seminar

Types of Loan ProgramsTypes of Loan Programs 30,40,50 year fixed rate. Interest-only mortgages.

Option ARM Mortgages. 2/1 Rate buy-downs give

you lower payments the first 2 years.

2/28 ARM stays fixed for the first two years, then adjusts annually.

80/20 Combo loan avoids the need for PMI (Private Mortgage Insurance).

A seller-held second mortgage lets buyers conserve cash.

Page 13: First Time Home Buyer Seminar

100% Financing & PMI100% Financing & PMI100% financing can be done as a single

loan or a combo loan (80/20) with NO PMI.

Some 100% financing loans also require PMI, while others don't.

PMI can be as much as 4% annually on the loan amount.

On a $100,000 loan, this can exceed $333 per month.

PMI can be removed when the LTV drops below 80%.

Property appreciation can eliminate PMI in a few years.

Page 14: First Time Home Buyer Seminar

Credit Scoring OverviewCredit Scoring Overview A credit report is an

accounting of your credit history.

It records payment histories, amount of time accounts are open, credit inquiries, and results of legal proceedings.

A credit score can be between 350 and 800.

It is an indication of the probability of going 90 days late on any account within the next 24 months.

It has the greatest effect on your interest rate.

Page 15: First Time Home Buyer Seminar

The Three Credit BureausThe Three Credit Bureaus Experian - FICO score

(888-397-3742). Equifax - Beacon score

(800-685-1111). TransUnion - Emperica

score(800-916-8800).

Each bureau has its own scoring model and not all accounts report to all three bureaus.

You are entitled to a free annual credit report.

Credit reports can have errors and help you spot identity theft.

Page 16: First Time Home Buyer Seminar

How Your Score is UsedHow Your Score is Used Your score is used to

determine the maximum loan-to-value.

Your score is used to determine your base interest rate.

Your score is used to determine which mortgage programs you qualify for.

A mid-score below 500 limits you to 70% LTV and very high rates.

A mid-score of 580 or higher is required to go 100% LTV.

A mid-score of 700 gets you access to prime lenders.

Page 17: First Time Home Buyer Seminar

How to Improve Your Credit How to Improve Your Credit ScoreScore Pay all bills on time. Keep balances below

50% of available limit, and below 30% if possible.

Don't close unused accounts. The zero balance can help your score.

Pay off recent collection accounts or charge-offs.

Let old items over 2 years remain unpaid.

Become an authorized user on someone's credit card with a good payment history.

Page 18: First Time Home Buyer Seminar

Working With Your RealtorWorking With Your Realtor Your Realtor is your

agent. He or she provides the expertise you need to buy a home safely.

Your Realtor abides by a Code of Ethics and takes continuing education courses every year.

Your Realtor knows the community.

Your Realtor can provide you with lists of homes that meet your criteria and price range.

Your Realtor will prepare your offer and assist with negotiations.

Your Realtor will guide you through the home buying process.

Page 19: First Time Home Buyer Seminar

Determining How Much to Determining How Much to OfferOffer

Know what the comps are for similar homes.

Know the home's condition and short-term repair expenses.

Know how long the home has been on the market and how fast homes are selling.

Know your financing options. Get pre-qualified by your mortgage consultant.

Know the seller's situation and motivation.

Be prepared to negotiate.

Page 20: First Time Home Buyer Seminar

Making an Offer to PurchaseMaking an Offer to PurchaseYour Realtor will fill out a purchase

agreement with you. The amount of earnest money will be

determined. Earnest money goes toward the down

payment or returned to you if the deal does not go through.

The down payment and amount financed will be determined.

Determine a settlement date. Understand what is included with the

purchase of the home as in fixtures, appliances and even plants.

Page 21: First Time Home Buyer Seminar

When the Offer is AcceptedWhen the Offer is Accepted Schedule a home

inspection. This can be done with your Realtor.

Schedule a home appraisal. This is done by your mortgage broker.

Get your mortgage application in process.

Select a title agency or escrow company. This is done by your Realtor.

Get a homeowner’s insurance policy.

Get your documentation together for your mortgage application.

Page 22: First Time Home Buyer Seminar

Inspections and Tests You Inspections and Tests You NeedNeed

Termite inspection will uncover potentially devastating wood damage.

Home inspection will uncover any problems with your home's structure and systems.

Radon and mold tests will make sure you have no environmental hazards.

Municipal inspection lets you know of any code violations and hazards.

A Certificate of Occupancy may be required by your municipality.

Page 23: First Time Home Buyer Seminar

Home Warranty ProgramsHome Warranty Programs A service contract which helps protect against

the expense of repairing or replacing covered home appliances and mechanical systems which breakdown due to normal wear and tear .

Basic coverage includes: heating system, plumbing system, electrical system, water heater, oven/range/cook-top, dishwasher, built-in microwave oven, garbage disposal, built-in whirlpool motor and pump, exhaust fan, garage door opener, sump pump and other items.

1-year contract is about $400.00. Golden Gate will negotiate so the sellers pay for this.

Page 24: First Time Home Buyer Seminar

Property AppraisalProperty Appraisal Appraisal determines the estimated market

value of the property.   Mortgage is based on the lower of the sales

prices or the appraised value. Value is determined by looking at recent

sale prices of properties in your area that are similar to yours.

Adjustments are made for differences in property features and amenities.

The appraiser also looks at the property value based on its replacement cost.

An appraisal does not warrant the condition of the property or that it meets local code.

Page 25: First Time Home Buyer Seminar

Understanding Closing CostsUnderstanding Closing Costs Property appraisal Home inspection Processing fee Underwriting fee Lender fee Loan discount fee Origination fee Recording fees

• Settlement Officer fee • Title insurance • Document preparation fees • Escrow of taxes and insurance • Prepaid interest • Credit report • Transfer taxes • Attorney / Notary fee• Survey Fee

Page 26: First Time Home Buyer Seminar

Settlement DaySettlement Day Closing agent will

prepare and present a HUD-1 form. This lists the money you owe and the credits you get.

The deed and mortgage will be recorded

Seller will provide proof of any warranties or inspections.

You will sign a stack of about 40 forms and documents.

You and/or the seller will pay the closing costs.

You get the keys to your new home!

Page 27: First Time Home Buyer Seminar

Take The Next StepTake The Next Step Work with your

mortgage consultant, so he or she can help you find the program that is right for you and get pre-qualified.

Work with your Realtor® to find suitable properties.

Don’t make any major purchases on credit or fill out any credit applications.

Michael HallGolden Gate Real Estate

Cell: 614.937.4162

Office: 614.888.3600

Fax: 614.231.4653

Email: [email protected]

Web: www.myohiohouse.com