Home buying
This presentation is the property of its rightful owner.
Sponsored Links
1 / 32

Home Buying PowerPoint PPT Presentation


  • 115 Views
  • Uploaded on
  • Presentation posted in: General

Home Buying. Topics Include:. Are you ready to buy? What can you afford? Lenders and Loans Selecting a Real Estate Agent Negotiating the Deal Closing Costs and Closing Reducing Payback Time Homeowner’s Insurance. Are you ready to buy? Renting versus Buying. Rent. Buy.

Download Presentation

Home Buying

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Home buying

Home Buying


Topics include

Topics Include:

  • Are you ready to buy?

  • What can you afford?

  • Lenders and Loans

  • Selecting a Real Estate Agent

  • Negotiating the Deal

  • Closing Costs and Closing

  • Reducing Payback Time

  • Homeowner’s Insurance


Are you ready to buy renting versus buying

Are you ready to buy?Renting versus Buying

Rent

Buy

  • Ready for stability and sense of community

  • Have cash for a larger initial investment

  • Provides a tax advantage

  • Want your equity to grow

  • Don’t mind being a landlord

  • Don’t mind more variable expenses

  • Like fix your own home

  • Want to remodel and/or personalize

  • Move a lot

  • Unfamiliar with area

  • Low on cash

  • Can’t or won’t maintain

  • Prefer fixed expenses

  • Don’t want to risk losing equity

  • Okay with not personalizing

  • Don’t need tax advantage of home ownership

  • Don’t want to be a landlord


What type of house

What type of house?

  • Condo

  • Duplex

  • Single family

  • New construction

  • One story or two

  • Older home with character


Location location location

Location, location, location!

  • Distance to work

  • School system

  • Low crime area

  • City, suburb, country

  • Near mass transit

  • Near child care

  • Distance to schools, libraries, parks, shopping, highways, etc.


Needs versus wants

Needs versus Wants


What can you afford

What can you afford?

  • Prepare, or update, your financial plan or budget

  • Reduce debt

first page of the

Financial planning worksheet

Calculating your Debt-to-income Handout


Credit scores

Credit Scores

  • 35% - Your Payment History

  • 30% - Amounts You Owe

  • 15% - Length of Your Credit History

  • 10% - Types of Credit Used

  • 10% - New Credit

    www.annualcreditreport.com


U s credit scores in 2006

U.S. Credit Scores in 2006

Up to 499:1%500 - 549:5%550 - 599:7%600 - 649:11%650 - 699:16%700 - 749:20%750 - 799:29%Over 800:11%


Down payments

Down Payments

  • Conventional = up to 20%

  • FHA = 3 – 5%

  • VA = 0%


Choose a lender

Choose a Lender

  • Get referrals and recommendations

  • Compare lenders:

    • APR

    • Discount points

    • Loan origination fees

    • Lock-in Options


Choose a mortgage loan

Choose a Mortgage Loan

  • Fixed-rate loans

  • Adjustable-rate loans

  • FHA Loans

  • VA Loans

  • Assumptions

  • Buy Down

  • Step Loans

  • Balloon Loans

  • Seller Financing

  • State Veteran’s Programs


Borrower beware

Borrower Beware!

  • Interest-Only Mortgages

  • 80/20 Mortgages

  • Subprime Lenders

  • Excessive Fees

  • Abusive Pre-payment Penalties

  • Kickbacks to Brokers

  • Loan Flipping

  • Unnecessary Products

  • … and more

www.responsiblelending.org/issues/mortgage/sevensigns.html


The mortgage application process

The Mortgage Application Process

  • Pre-qualification

  • Pre-approval

  • Formal application

  • Processing time

    • Conventional loans - 4 to 6 weeks

    • VA loans - 6 weeks to 2 months


Select a real estate agent

Select a Real Estate Agent

Real estate professionals help you to:

  • Target suitable neighborhoods

  • Identify available homes

  • Identify prices and features

  • Compare cost per square foot of recent sales

  • Assess your financial situation

  • Manage the details


Select a real estate agent1

Select a Real Estate Agent

  • Principal broker

  • Realtor

  • Listing agent

  • Selling agent

  • Buyer’s agent


Interview agents

Interview Agents

  • Arrange a meeting to discuss your “needs” and “wants”

  • Review positive features of previous homes

  • Discuss areas you have visited

  • Ask for other recommended neighborhoods

  • Have agent recheck your loan qualifications or approval

  • Arrange appointments for you to see homes in your price range


Do it yourself

Do it yourself?

  • FSBO: For Sale by Owner

  • Rent to Own

  • Foreclosures

  • MLS: Multiple Listing Service


Begin the search

Begin the Search

Checklist for

Your House

Hunt Handout


Negotiate the deal

Negotiate the Deal

  • Property Values (Use “Comps”)

  • Offer to purchase

    • Set the price

    • List personal property

    • List repairs to be included

    • Include contingencies – home inspection, selling your house, etc.

  • Earnest Money

  • Get a Home Inspection


Closing costs

Closing Costs

  • Between 2% and 4% of loan amount

  • Can be paid by buyer or seller

  • Negotiable


Examples of closing costs

Examples of Closing Costs

  • Appraisal ($350)

  • Attorney’s fees ($450)

  • Credit report ($60)

  • Escrow/title company costs ($300)

  • Home inspection ($100 - $300)

  • Home warranty programs (varies with realtor)

  • Loan origination fee (0-2%)

  • Pest inspection fee ($100 - $200)

  • Recording fee ($50 - $100)

  • Survey ($150 - $200)

  • Title search and insurance (based on loan amount)


Pre paid costs

Pre-Paid Costs

  • Private Mortgage Insurance (PMI)

  • Mortgage Insurance Premium (MIP)

  • VA Funding Fee

  • Homeowner’s insurance - 14 mos.

  • Property taxes - 3 mos.

  • Interest - Date of closing to end of month


Closing

Closing

  • Take possession

    • Collect all keys/change locks

    • Request seller provide:

      • Operating instructions for appliances, heating/cooling system

      • Names of contractors

      • Paint colors

      • Locations of utility turn-offs

      • Security system combinations, if applicable


Reducing payback time shorter loan term

Reducing Payback Time:Shorter Loan Term

Principal & Interest$817$600 Payment (per mo.)

Total paid $147,075$178,967 over term in P & I

15 Year

30 Year

Total Savings 15 year vs. 30 year = $31,892


Reducing payback time prepaying principal

Reducing Payback Time:Prepaying Principal

  • Prepay the principal - 30 to 20 yrs.

    • Extra lump sum payment per year

    • Increase monthly payment by 1/12th

    • Bi-weekly payments (pay one-half of mortgage payment every other week)

  • Prepay the principal - 30 to 15 yrs.

    • Pay the next month’s principal amount with each payment


Early mortgage payment

Early Mortgage Payment

  • Advantages

    • Emotional Security

    • Future Investing

    • Retirement Needs

    • Reduces Stress

  • Disadvantages

    • Missing other investment opportunities

    • Lost tax savings

    • Larger monthly payments

    • More frequent payments


Homeowner s insurance

Homeowner’s Insurance

Minimal Coverage:

  • Dwelling, cost to rebuild not what you paid

  • Other structures

  • Personal property

  • Living expenses

  • Personal liability, up to $100,000

  • Medical payment, set at $1,000 per person


Additional coverage

Additional Coverage

  • Replacement Cost

  • Umbrella

  • Riders

  • Flood Insurance

  • Earthquake Insurance


Reduce premium costs

Reduce Premium Costs

  • Shop around

  • Raise deductibles

  • Ask for non-smoker’s discount

  • Install fire alarm/extinguisher

  • Same company as life and auto insurance


Summary

Summary

  • Identify “wants” and “needs”

  • Know what you can afford

  • Research homes, agents, lenders and loans

  • Get a home inspection

  • Adequately insure the home

  • Enjoy your new home!


Print your certificate

Print your Certificate

Click on the following link to add your name to the certificate and print it:

Home Buying


  • Login