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Realizing the American Dream. Are You Ready to Buy a Home?. Agenda. Is owning a home right for you How you buy a home Your homeownership team Mortgage payment and other costs How much you can afford Qualifying ratios. Advantages of Homeownership. Stable housing costs Tax benefits

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realizing the american dream
Realizing the American Dream

Are You Ready

to Buy a Home?

agenda
Agenda
  • Is owning a home right for you
  • How you buy a home
  • Your homeownership team
  • Mortgage payment and other costs
  • How much you can afford
  • Qualifying ratios
advantages of homeownership
Advantages of Homeownership
  • Stable housing costs
  • Tax benefits
  • Equity
  • Control over your environment
  • Stability
disadvantages of homeownership
Disadvantages of Homeownership
  • Monthly costs
  • No guarantees
  • Maintenance and repairs
  • Decreased mobility
  • Fewer features included
steps in the homebuying process
Steps in the HomebuyingProcess
  • Attend homeownership education class
  • Determine how much you can afford
  • Meet with lender for pre-approval
  • Determine wants and needs in a home
  • Shop for a home
steps cont d
Steps (Cont’d)
  • Make an offer
  • Have professional home inspection
  • Apply for mortgage loan
  • Obtain homeowners insurance
  • Close the loan
your homebuying team
Your Homebuying Team
  • Homeownership Counselor
  • Real Estate Agent
  • Lender
  • Attorney or Escrow Agent
  • Title Insurance Agent
  • Home Inspector
  • Appraiser
  • Surveyor
  • Homeowners Insurance Agent
the mortgage payment
The Mortgage Payment
  • Principal
  • Interest
  • Taxes
  • Insurance
costs of buying a home
Costs of Buying a Home
  • Upfront Costs
  • Down payment
  • Closing costs
  • Escrows
  • Reserves
  • Moving costs
  • Ongoing Costs
  • Mortgage payment
  • Utilities
  • Maintenance and repairs
the 4 cs of credit
The 4 Cs of Credit
  • Capital
  • Capacity
  • Credit History
  • Collateral
ordering a credit report
Ordering a Credit Report

Experian www.experian.com

(800) 831-5614

TransUnion www.transunion.com

(800) 888-4213

Equifax www.equifax.com

(800) 685-1111

how much can you afford
How Much Can You Afford?

5%–10% of monthly income

$36,000

($3,000/mo.)

$90,000 – $108,000

Income

Debts

2.5– 3 times

Home Price

qualifying ratios
Qualifying Ratios

Housing

33%

Debts

5%

Other Expenses

62%Expenses

62%

38% for housing plus all other long-term debt

62%

33%

5%

prequalification
Prequalification
  • Financial Calculations
    • How much money the lender will lend you
    • What price home you can afford
    • How much down payment you need
    • How much your monthly payments will be

This is not a guarantee

summary
Summary
  • Pros and cons of ownership
  • Key steps and professionals involved in the homebuying process
  • Mortgage payment and other costs
  • How lenders determine creditworthiness and affordability
next steps
Next Steps
  • Sign up for education or counseling
  • Order copies of your credit report