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Introduction. Instructor and student introductions. Module overview. Student Introductions. Your name. Your expectations, questions, and concerns about buying a home. Purpose. Your Own Home: Gives you information on the home buying process.

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Presentation Transcript
Introduction
Introduction

  • Instructor and student introductions.

  • Module overview.

Your Own Home


Student introductions
Student Introductions

  • Your name.

  • Your expectations, questions, and concerns about buying a home.

Your Own Home


Purpose
Purpose

Your Own Home:

  • Gives you information on the home buying process.

  • Describes several mortgage options that you can use to buy a home.

Your Own Home


Objectives
Objectives

By the end of this course, you will be able to:

  • Describe the benefits and pitfalls of renting versus owning a home.

  • Identify the steps required to buy a home.

  • Identify questions to ask to determine your readiness to buy a home.

Your Own Home


Objectives continued
Objectives (Continued)

  • Identify basic terms used in a mortgage transaction.

  • Describe the advantages and disadvantages of different mortgage options.

Your Own Home


Agenda and ground rules
Agenda and Ground Rules

  • 90 minutes long

  • One 10-minute break

  • Training methods

  • Classroom participation

Your Own Home


Benefits of renting
Benefits of Renting

  • No property maintenance

  • One year (or less) rental contract

  • No property taxes or homeowner’s insurance

Your Own Home


Benefits of owning a home
Benefits of Owning a Home

  • You can build equity in your home and borrow against it.

  • A home generally increases in value.

  • The home is yours.

  • Your mortgage interest is tax deductible.

  • You can pass your home on to family members.

Your Own Home




Homebuyer assistance programs
Homebuyer Assistance Programs

  • Individual Development Account (IDA)

  • Programs offered by cities or local government offices.

  • Financial institutions

Your Own Home


Characteristics of government programs
Characteristics of Government Programs

  • Zero or low down payments

  • Flexible underwriting standards

  • Longer payment terms

  • Requirement for homeowner education

  • Some restrictions

Your Own Home


Components of a mortgage payment
Components of a Mortgage Payment

  • P = Principal

  • I = Interest

  • T = Taxes

  • I = Insurance

Your Own Home


How taxes and insurance are paid
How Taxes and Insurance are Paid

  • In an escrow account, along with the mortgage principal and interest.

  • Separately -

    • Quarterly or semi-annual property tax

    • Annual insurance premium

Your Own Home


Four cs of loan decision making
Four Cs of Loan Decision-Making

  • Capacity

  • Capital

  • Character

  • Collateral

Your Own Home


Pre qualification
Pre-qualification

The pre-qualification process:

  • Lets you know how much mortgage you can afford.

  • Is informal, involving no paperwork.

  • Gives you a “ballpark” estimate.

Your Own Home


Pre approval
Pre-approval

The pre-approval process:

  • Is a commitment from the lender to lend you money.

  • Lets you know how much money you can obtain.

  • Tells sellers you are prepared to buy a house.

Your Own Home


Mortgage options
Mortgage Options

  • Traditional mortgage

  • Interest-only mortgage

  • Biweekly payment mortgage

Your Own Home


Shop compare negotiate
Shop, Compare, Negotiate!

  • Check newspapers and the Internet for terms and rates.

  • Negotiate the best price you can get.

  • Let lenders compete for your business.

  • Get costs in writing.

Your Own Home


Good faith estimate
Good Faith Estimate

An estimate of the cost of settlement services that the lender should give you when you apply for the loan.

Your Own Home


When debt to income exceeds recommended ratios
When Debt-to-Income Exceeds Recommended Ratios

You must:

  • Have a demonstrated ability to pay more toward housing expenses.

  • Show evidence of acceptable credit history or limited credit use.

  • Make a larger down payment.

  • Have cash reserves.

Your Own Home


Settlement
Settlement

Settlement occurs when the borrower meets with the seller and other representatives to sign the documents that will finalize the sale of the house and any mortgage financing.

  • Also called “closing.”

  • HUD-1 or HUD-1a Settlement Statement.

Your Own Home


Tapping into your home s equity
Tapping Into Your Home’s Equity

  • Home equity loans

  • Home equity lines of credit

  • Cash-out refinancing

  • Reverse mortgage

Your Own Home


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