Residential Mortgage Corporation A Mind to Build Proper Planning for the First-time Homebuyer.

Residential Mortgage Corporation

A Mind to BuildProper Planning for the First-

time Homebuyer


What to Expect

• Intent: To clear up the confusion of buying a home

• Purpose: To strengthen our financial IQ

• Goal: To be a successful homeowner


Home Buying Objectives

• The Financial Benefits of Buying A Home

• The Process of Buying a Home

• The Cost of Buying a Home

• Programs that will help you Buy a Home

• The proper Mindset to Buy a Home


Biggest Mistakes When Buying• Not having a relationship with a Certified Mortgage Planning Specialist

• Not knowing how to shop for a mortgage

• Not staying consistent with the initial plan of action

• Not factoring in long term goals

• Not fully understanding the terms of the Loan

• Listening to too many people outside the transaction


Biggest Mistakes When BuyingContinued

• Getting tied into looking for homes before getting a solid preapproval

• Allowing the loan officer to tell us what to pay on a monthly basis

• Shopping for a home based on a “Program”

• We allow the process to become emotional


MODULE I

The Awesome Benefits of

Homeownership


The Financial Benefit of Homeownership

Tax Write-off


Example of 2nd tax benefit

• Single Person $250,00.00

• Married Couple $500,000.00

TAX FREE


The Financial Benefits of Homeownership

Leverage

Equity Benefit

Automatic Savings

Investment opportunities


The Immediate Benefits of Homeownership

• Interest rates and property prices are at historical lows

• Sellers are paying closing cost

• Community programs available for help 1st time home buyers


MODULE II

The Process, Programs, & Pecos


Preparing for the Loan Application

• Last two pay stubs ( 30 day period)• Last two W-2 forms (2013, 2014)• Last two bank statements/asset statements• 12 months of canceled rental checks• Credit explanation letter, if necessary• Landlord and employment contact information


The Process

• Step One: Education• Step Two: Pre-qualification• Step Three: Pre-approval• Step Four: Search for property (ratified contract)• Step Five: Formal loan application• Step Six: Processing• Step Seven: Underwriting• Step Eight: Celebration


4 C’s of Approval

• Credit- Your character

• Capital- Your money

• Capacity- Your ability to make payments

• Collateral-Your property selection

Financial Stewardship

How is your score determined?

• Payment History 35%• Amounts Owed 30%• Length of history 15%• New Credit 10%• Types of Credit 10%

•


Finding Capital

• First-Time Homebuyer IRA Withdrawal

• Have a yard sale

• Cash in Vacation

• Tax Refund

• Income Tax Withholdings ( increase exemptions)

• Equity Sharing

• Seller Financing

• Gift Funds

• Local Community Programs

• Borrow from 401k or Retirement Plan


CapacityHow Much Can you

afford??

For which of you, intending to build a tower, sitteth not down

first and counteth the cost, whether he have sufficient to

finish it? Luke 14:28


Debt to Income Ratio• This calculation is based on your monthly debt and

proposed mortgage payment divided by your gross monthly income

• A maximum monthly back end debt to income Ratio (DTI) of 45% is required (above 620)

Example

Gross Income: $60,200 / 12 = $5016.66

Monthly Debt: $500 + $1200 = $1700

$1700 / $5016.66 = 34%


Get prepared for Upfront Cost

• Credit Report - $25• Earnest Money Deposit $1000 - $2000• Inspection $300 - $600• Appraisal $425 - $450• Homeowners Insurance $300 - $600


Two cost of buying a Home

• Down Payment – 3.5%

• Closing Costs – 6.0%

• Total needed will be 9.5% between the Program, The Seller, and YOU!


Example:

Purchase Price = $100,000.00

Down payment (3.5%) = $3,500.00Closing (6.0%) = $6,000.00 Total needed = $9,500.00

Seller can pay (0-6%)Program/credit

You!!


“I Can’t Afford to buy a home”

• Escalation clauses

• Effective interest rate

• Inflation over time

• Home appreciation

• Interest rate environment


Mortgage Programs

FHA- 3.5% down payment

VA- 0% down payment

Conventional- 3% down payment

USDA- 0% Down payment

$100 FHA- $100 down

FHA 203k Financing (full/streamline)-3.5% down

Officers/Teachers Next Door Program


Mortgage Programs HPAP- For DC Residence

EPAP- For DC Residence

MAP- Ann Arundel County

My HOME- Prince Georges County

New Neighbor Program- College Park Program

CDA- Maryland State Program (You’ve earned it Program)

HOC – Montgomery County


In Conclusion5 Keys to a successful Home buying

experience

• Separate emotion from the buying process. • Have Realistic Expectations• Don’t Give Up!• Protect your confidence• Know that buying a home is tactical/tool


MODULE III

Your Money Blueprint

•The Proper Mind Set to Build a Home

Financial Stewardship Ministry

Example of an Effective System• Collect all checks in envelope and deposit at end of

month

• Make all bill payments at one time (change due dates)

• Deposit enough to pay bills only (put rest in savings)

• Become a member of NSL Credit Union (and deposit money monthly)

• Have a specific allowance

• 1 credit card with max limit (purchases above $20.00…payoff EVERY month.

Financial Stewardship Ministry

Example of a Effective System

• Implement the “2 week rule” (wants)• 10% Tithe• Save 20% of net, or 10% of gross• Identify one spouse as the CFO (meet

once a month for min 1 hour)• Have a relationship with a Mortgage Prof.• Have written plan for 5, 10, 15 years• Know your monthly survival Number


The 3 Financial Miracles


Totally different thinking!• Wealthy People have a lot of money and spend little• Poor people have little money and spend a lot• Wealthy people work to earn money for their investments• Poor people work to earn money to live today• Wealthy people buy assets• Poor people buy expenses• Wealthy people collect land• Poor people collect bills• Wealthy people constantly learn and grow• Poor people think they already know


Thank you for your Time!

Derick W. Hungerford

301-773-9811 ext [email protected]

Amindtobuild.com

Get your book today!

mailto:[email protected]

Residential Mortgage Corporation A Mind to Build Proper Planning for the First-time Homebuyer.

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