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Purchasing your 1 st Home…. What are your Expectations ?. ?. What we are Covering Today. Understanding Today’s Market & Trends Should I buy or wait? Is There a Loan For Me? Salesperson vs. Consultant The Process of Purchasing a Home Conclusion. Understanding Today’s

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Purchasing your 1 st home

Purchasing your 1st Home…


Purchasing your 1 st home

What are your

Expectations?

?


Purchasing your 1 st home

What we are Covering Today...

  • Understanding Today’s Market & Trends

  • Should I buy or wait?

  • Is There a Loan For Me?

  • Salesperson vs. Consultant

  • The Process of Purchasing a Home

  • Conclusion


Purchasing your 1 st home

Understanding Today’s

Market & Trends


Purchasing your 1 st home

Howis

the Market?


Purchasing your 1 st home

Santa Clara County

Current Inventory as of February 2011

2,404 - Single Family Homes

1,125 - Townhome/Condo’s

Bank Owned (REO)

192 - Single Family Homes (8%)

184 - Townhome/Condo Units (16%)

Short-Sales

667 - Single Family Homes (28%)

468 - Townhome/Condo Units (42%)


Purchasing your 1 st home

Santa Clara County

Current Inventory as of 2/14/2013

745 - Single Family Homes

204 - Townhome/Condo’s

Bank Owned (REO)

28 - Single Family Homes (4%)

17 - Townhome/Condo Units (8%)

Short-Sales

33 - Single Family Homes (4%)

13 - Townhome/Condo Units (6%)


Purchasing your 1 st home

Santa Clara County

Inventory – 10 Year Overview


Purchasing your 1 st home

Santa Clara County

  • Criteria:

  • All Price Ranges

  • Single Family Homes

  • Undefined Square Footage

0-3 Months – Sellers Market

3-6 Months – Balanced Market

6+ Months – Buyers Market


Purchasing your 1 st home

Blossom Valley

  • Criteria:

  • All Price Ranges

  • Single Family Homes

  • Undefined Square Footage

  • Median Sale Price in January 2013: $515,000

0-3 Months – Sellers Market

3-6 Months – Balanced Market

6+ Months – Buyers Market


Purchasing your 1 st home

Cambrian

  • Criteria:

  • All Price Ranges

  • Single Family Homes

  • Undefined Square Footage

  • Median Sale Price in January 2013: $700,000

0-3 Months – Sellers Market

3-6 Months – Balanced Market

6+ Months – Buyers Market


Purchasing your 1 st home

Willow Glen

  • Criteria:

  • All Price Ranges

  • Single Family Homes

  • Undefined Square Footage

  • Median Sale Price in January 2013: $828,000

0-3 Months – Sellers Market

3-6 Months – Balanced Market

6+ Months – Buyers Market


Purchasing your 1 st home

Almaden Valley

  • Criteria:

  • All Price Ranges

  • Single Family Homes

  • Undefined Square Footage

  • Median Sale Price in January 2013: $910,000

0-3 Months – Sellers Market

3-6 Months – Balanced Market

6+ Months – Buyers Market


Purchasing your 1 st home

Campbell

  • Criteria:

  • All Price Ranges

  • Single Family Homes

  • Undefined Square Footage

  • Median Sale Price in January 2013: $705,000

0-3 Months – Sellers Market

3-6 Months – Balanced Market

6+ Months – Buyers Market


Purchasing your 1 st home

Los Gatos/Monte Sereno

  • Criteria:

  • All Price Ranges

  • Single Family Homes

  • Undefined Square Footage

  • Median Sale Price in January 2013: $1,565,000

0-3 Months – Sellers Market

3-6 Months – Balanced Market

6+ Months – Buyers Market


Purchasing your 1 st home

Should I buy

or wait?


Purchasing your 1 st home

Rentals

Rising in Price


Purchasing your 1 st home

Interest Rate Comparison

You live in the payment, not the price


Purchasing your 1 st home

Warren Buffett

“It will be the best opportunity in your lifetime”


Purchasing your 1 st home

Interest Rates

Historic Data


Purchasing your 1 st home

Multiple Offers

in California


Purchasing your 1 st home

Five Points

of Loan Qualification

Credit

Ability to re-pay

Debt-ratio

Loan-to-value (LTV/CLTV)

Assets/Reserves


Purchasing your 1 st home

  • Credit

  • 2-Year History

  • 4-6 Trade Lines (At least 24 months)

  • Rental History (12-24 months)

  • No Unresolved Derogatory Credit

  • Mid-FICO Score of 640 or Better

    • (Ideal is 700-760)

  • Consider Credit Repair/Build Services


Purchasing your 1 st home

  • Ability to re-pay

  • 2-year history in the same type of work

  • Self-employed is acceptable with further documentation such as business license and business tax returns

  • Gross Income is what your qualification is based on


Purchasing your 1 st home

  • Debt-ratio

  • % of your income used to pay debt; including:

  • Proposed house payment

    • Taxes, Insurance

    • Homeowner Association Dues (If applicable)

    • Mortgage Insurance (If applicable)

  • Monthly installment payments (Auto, student loans, etc.)

  • Monthly revolving payments (Credit cards)

  • Does not include utilities, phone, food, living expenses


Purchasing your 1 st home

Debt-ratio

Monthly Debt Payments

Monthly GrossIncome

=

÷

Debt Ratio

Lender’s Ideal Debt Ratio33% - 45%or less

=

÷

$3,500

$9,800

36%

What’s YOUR Ideal Debt Ratio?


Purchasing your 1 st home

  • Loan-to-Value

  • (LTV)

  • % of the home value being loaned against

  • Down payment

  • 20% down (80% LTV) or more is ideal

  • Less than 20% requires Private Mortgage Insurance (PMI)

  • Must have a mid-FICO credit score of at least 740

  • Appraisal determines value and condition of property


Purchasing your 1 st home

  • Assets/Reserves

  • Down Payment and Closing costs

  • Reserve savings (equal to at least 3-6 mos. of proposed house payments; P.I.T.I.)

    • It must have at least 2-months of “seasoning”

  • 401-k/retirement accounts can be used for reserve

  • You must have the down payment and closing costs in a liquid account

  • Gift funds can be up to 3% of purchase price; which requires the giver to write a “gift letter” stating it is a gift; not a loan


  • Purchasing your 1 st home

    Salesperson

    vs.

    Consultant


    Purchasing your 1 st home

    • A ConsultantDoes Three Things:

      • Consult and Advise:

    • Asks profound, insightful questions, because the typical agent or lender might not ever take the risk of asking you those types of questions. A consultant will probe and inquire and discover what is really important to you!

    • Will appropriately define the problems and differentiate the essential objectives from less relevant concerns.

    • Anticipates likely obstacles to achieving your objectives and identify sensible means to circumvent them


    Purchasing your 1 st home

    • A Consultant Does Three Things:

      • Negotiate: A consultant:

    • Treats your money like it’s their own, because when it is time to save or make you money, they need to be like a "pit bull". Money is an emotional issue, representing yourself while purchasing a home can be compared to performing surgery on yourself– it’s not a great idea…

    • When dealing with your money, will critically examine the accuracy of the underlying assumptions. While negotiating for you, the consultant will skillfully articulate the strengths and weaknesses of each situation that may arise.

    • Recognizes the likely underlying agendas and motivations of individuals that are involved in the situations. Consultants also anticipate the likely emotional reactions of individuals and understand how to communicate and troubleshoot issues.

    • Will appropriately articulate the essential flaws in the arguments of others and reiterate the strengths of your position.

    • Recognizes when it's appropriate to resist the objection of others and remain committed to a sound course of action


    Purchasing your 1 st home

    • A Consultant Does Three Things:

      • Overseer:

    • Every transaction has 100 to 150 phone calls alone. Each one of them loaded with critical details. Every "i" must be dotted and every "t" must be crossed. There are 41 different people from 14 different industries that are involved during the each stage of your transaction.

    • Buying a home can be compared to flying an airplane across the country. The consultant is the pilot of your plane and you are the passenger – you can expect turbulence along the way. As your pilot, the consultant’s role is to oversee all of the small (but important) details. A good consultant will be able to see things from multiple perspectives and identify any likely unintended consequences of your decisions.


    Purchasing your 1 st home

    The Process of

    Purchasing a Home


    Purchasing your 1 st home

    • Where should I visit

    • online to view & research properties?

    • MLSListings.com

    • Apr.com

    • Realtor.com

    • QualityService.org


    Purchasing your 1 st home

    open.apr.com


    Purchasing your 1 st home

    APR Mobile


    Purchasing your 1 st home

    www.apr.com


    Purchasing your 1 st home

    The Process of

    Purchasing a Home

    • Banker & Realtor Selection

    • Pre-Approval with a lender

      • a. Establish a pre-approval price range based on your payment comfort level

  • Setup a meeting with your Realtor to establish your home purchase requirements

  • Start viewing homes

  • Upon selecting a home, you will make an offer

  • Upon acceptance of a purchase contract, the escrow period will begin and you will make a deposit to secure the home. The contract will have a timeline defined to conduct the necessary inspections, appraisal and finalize your loan and interest rate.


  • Purchasing your 1 st home

    The Process of

    Purchasing a Home

    • Upon the completion of your inspections, appraisal, full bank approval and your review of each report, you will decide if you are comfortable with the current contract terms. If something new was discovered, you can re-negotiate the contract until you feel completely comfortable with the agreement.

    • Once you are ready to proceed forward (with or without another negotiation), you will fully commit to the seller for the purchase of the property or elect to exit from the agreement.

    • Once you fully commit to the purchase, if you withdraw from the sale (for any reason) your deposit will be at risk and subject to negotiation between you and the seller based on your reason for contract termination.


    Purchasing your 1 st home

    The Process of

    Purchasing a Home

    • Next, you will sign the loan documents at the title company and provide your down-payment.

    • Next, your sale will complete after a total time period of approximately 30-60 days depending on the loan type.

    • You receive the keys to your new home!


    Purchasing your 1 st home

    The Mortgage

    Process

    • You will gather your required loan documentation

    • Setup a meeting with a mortgage consultant to review the various loan options

    • The mortgage consultant will run your credit report

    • A loan application is then completed and some disclosures are signed

    • Analysis will be run based on your financial profile

    • A Good Faith Estimate and Truth-in-lending statement will be provided to you outlining the estimated projected costs

    • We will conduct an appraisal to verify your purchase price against market conditions/comparable properties

    • Your loan is then submitted for final processing/review

    • The lender approval will arrive with their conditions to issue the loan; then your contingencies are removed

    • Final documents are signed at the title company

    • Your loan is wired/funded to the title/escrow office

    • This process takes approximately 30-60 days


    Purchasing your 1 st home

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    T he art is making it effortless...


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