Understanding a Home Purchase and Mortgage Information

Understanding your Home Purchase

Information Provided by:

North Texas Top Team RealtorsColdwell Banker Jane Henry Realtors

www.NorthTexasTopTeam.com

Melissa HaileyBroker-Associate, Realtor, CRS, SFR, TAHS [email protected]

Understanding your Home Purchase

“No matter where you live, you are buying a home…it’s just a matter of who you are buying a home for…

……you or your landlord.”

Understanding your Home Purchase

♦ Your home is your first and best investment.

♦ You can deduct some of the costs associated with this investment.

♦ It is the only investment you buy with money you are already spending.

Understanding your Home Purchase

How much home can you afford?

Traditional method:♦ One-fourth of monthly income for house payment ♦ One-third of monthly income for house payment plus

other debts

Understanding your Home Purchase

♦ House payment• Monthly principle and interest payment• Plus 1/12th of taxes on property• Plus 1/12th of insurance premiums

• Homeowner’s insurance• Flood insurance (if required)• Mortgage insurance (if required)

Plus you will want to budget for any Home Owner Association dues to be paid outside of the house payment.

Understanding your Home Purchase

♦House payment example:– $150,000 loan @ 5% for 30 years = $805.23– Property taxes $2250 a year, divide by12 = $187.50– Home Owner insurance $1200 year, divide by 12 = $100.00

– Total monthly house payment = $1,092.73

You may want to change the sales price, interest rate, number of years, insurance premiums, mortgage insurance, etc. to apply to your particular situation. This is a general example only.

A full mortgage calculator can be found at www.NorthTexasTopTeam.com

Understanding your Home Purchase

♦ Major types of loans

– Conventional– FHA– VA– Texas Vet

– USDA Rural Development (when available)

Understanding your Home Purchase

How does your credit report get scored?

♦ Past payment performance = 35% (on time/late/reasons)♦ Credit utilization = 30% (balance/total credit)♦ Credit history = 15% (length/recent changes)♦ Types of credit = 10% (credit card, bank, or regular loan)♦ Inquiries on account = 10%

Information provided by Fair Isaac and is not a guarantee of performance. This is an example only and subject to change.

Understanding your Home Purchase

TIPS to maximize your credit score:

Never pay late Keep balance low Do not use consumer finance co. Do not make unnecessary inquiries Do not take out unnecessary credit

Understanding your Home Purchase

TIPS to maximize your credit score:

Check for errors on reports Challenge wrong information Pay off balances as soon as possible Do not use one credit card to pay off another

within 30-45 days of applying for a loan (both balances may show up on report)

Understanding your Home Purchase

TIPS to maximize your credit score:

1. Always pay on time(You may even want to set up a bank draft for the minimum payment, then make an extra payment on payday if you can)

1. Consider co-borrowers

2. Consider gifts

3. Ask for help and advice

Understanding your Home Purchase

When your credit score isn’t as high as it could be, a lender may consider compensating factors such as:

♦ Larger down payment♦ Energy efficient property♦ Rent payments equal or higher than new payments♦ Consistent pattern of saving♦ Potential for increased earnings due to job training or education♦ Short term income such as child support, part-time work, or social

security income, which is usually not counted if it lasts less than three years

♦ Liquid assets to carry mortgage at least two months or more

Understanding your Home Purchase

Housing assistance programs may include:♦ Gift programs♦ Section 8 housing programs♦ First time buyer programs

Texas State Affordable Housing Corporation (TSAHC)- Down-payment and closing cost assistance- Targets firefighters, police, teachers

Texas Department of Housing & Community Affairs (TDHCA)- Mortgage Credit Certificate (MCC)

Various city grant programs as available

Understanding your Home Purchase

Buyer Beware of alternative financing choices like:

♦ Internet offers♦ contract for deeds♦ owner “financing”

Beware of: “No credit? Bad credit? No problem!”“If it sounds to good to be true, it is.”

Understanding your Home Purchase

Want to see you FREE credit report:

https://www.annualcreditreport.com

Experian

TransUnion

Equifax

Understanding your Home Purchase

Other helpful websites:http://www.tdhca.state.tx.us

http://www.glo.state.tx.us

http://texascaresprogram.org

http://www.fanniemae.com

http://texasrealestate.com

http://texasrealtors.com

http://www.NorthTexasTopTeam.com