homebuyer seminar - everything you need to know to purchase your home

FIRST TIME HOMEBUYERS SEMINAR

Everything you need to know to make buying your first home easy and affordable.

Presented by:

11811 North Frwy, Suite 500Houston, Tx 77060

(832)434-6299

Understanding your Home Purchase: Did you know?

“You are buying a home…it’s just a matter of who you are buying a home for…you or your landlord.”

WHY BUY? Tax deductions Stable housing

costs Appreciation on

your investment Gain equity You control your

property

ARE YOU READY TO BUY?

Steady income Pay bills on time Low to medium debt Down payment

available Ability to pay

mortgage

WHAT TYPE OF HOME?

Type of community New Home Resale Home Fixer-Upper Features

# of Bedrooms # of Bathrooms Garage, etc…

Understanding your Home Purchase: Tips to Get a Loan

Your home is your first and best investment.

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


How much home can you afford?Traditional method: 1/4th of Monthly Income for house

payment 1/3rd of Monthly Income for house

payment plus other debts


25%+3%=28% (max. House Payment)

33%+3%=36% (max. Payment + debts)


House Payment Monthly principle &

interest payment Plus 1/12th of taxes on

property Plus 1/12th of

insurance premiums Homeowner’s

insurance Flood insurance Mortgage

insurance


House Payment example: $150,000 loan @ 5% for 30 years = $961.48 Property taxes $3395 a year/12 = 282.91 Flood insurance $540 a year/12 = 45.00 Mortgage insurance $250 yr./12 = 20.83 Total house payment a month= $1310.22 (change price, interest rate, number of years,

insurance premiums, mortgage insurance)


Qualifying (Traditional Method) example:

Gross monthly income $40001. X 28% = $1120 max. payment2. X 36% = $1440 (payment + debts) (qualify for whichever is lower)


Major Types of Loans Conventional FHA VA


Qualifying: Credit Score Method “FICO” score

721-850 = A++ 700-720 = A+ 660-699 = A 620-659 = A- 580-619 = B 579 > = C/D


Past Payment Performance = 35%(on time/late/reasons)

Credit Utilization = 30%(balance/total credit)

Credit History = 15%(length/recent changes)

Types of Credit = 10%(finance co/bank or regular loan)

Inquires on account = 10%


1. Never pay late2. Keep balance low 3. Do not use consumer finance co.4. Do not make unnecessary inquires5. Do not take out unnecessary credit


1. Check for errors on reports2. Challenge wrong information3. Pay off balances as soon as

possible4. 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)


1. Always pay on time(set-up bank draft for minimum payment…

then make extra payment on payday)

2. Consider co-borrowers3. Consider Gifts4. Ask for Help & Advice


Alternative Financing Choices:Be on Guard!! internet offers contract for deeds owner “financing” “B” & “C” Lenders


“No credit? Bad credit? No problem!”

“If it sounds to good to be true…it is”


Free Credit Report:As of June 1, 2005 https://www.annualcreditreport.com

ExperianTransUnionEquifax

WHY BE PRE-APPROVED?

You know what you can afford before you begin to shop

Shows sellers you are serious about buying

Can make an offer as soon as you find the home you want

DOCUMENTS FOR PRE-APPROVED?

Pay stubs (2-3 months) W-2 forms (2 years) List of long term debt Recent bank statements Tax returns (2 years) Proof of any additional income

HOW YOUR REALTOR CAN HELP

Guides you through the process, buying or building

Knows the community

Can provide you with lists of homes that meet your requirements

HOW YOUR REALTOR CAN PROTECT YOU

Seller is represented by the listing Realtor

Listing Realtor is bound to protect and represent the seller

A buyer’s agent would be bound to protect and represent you (the buyer)

BEGIN LOOKING FOR HOMES

Compare to list of “must haves”

Imagine your furniture – will it fit?

What is the state of repair (or disrepair)?

Imagine it in all seasons

Ask your Realtor to point out the pros & cons

WHEN YOU’VE FOUND THE HOME YOU WANT

Determine amount you’re willing to offer

Decide how much earnest money you’ll put down

DETERMINING THE AMOUNT OF THE OFFER

What are comparable homes selling for

What is the home’s condition

How long has the home been on the market

What are the financing terms

What is the seller’s situation

Rely on your Realtor for guidance

Be prepared to negotiate

ABOUT THE EARNEST MONEY

Usually between 1-5% of the purchase price

If offer is accepted, earnest money becomes part of your down payment or closing cost

If offer is rejected, the money is returned to you

If you back out of the deal, you forfeit the money

MAKING THE OFFER

Your Realtor will assist you in making the offer, which will include: Legal description of

property Amount of earnest money Down payment and

financing details Proposed closing date Price you are offering Length of time offer is

valid Details of the deal

HOME INSPECTION

Contracts should be contingent upon it

Professional inspector evaluates safety and condition of the home

Includes structure, construction and mechanical systems

CLOSING COSTS INCLUDE

Escrow fees Property taxes Interest Loan origination fee Recording fees Survey fee Appraisal Homeowners insurance Mortgage insurance (if

applicable) Title insurance Loan discount points First payment to escrow account Documentation prep fees

ON CLOSING DAY

Closing agent will list money you owe seller and money seller owes you

Seller will provide proofs of any warranties or inspections

You’ll read documentation & sign on the dotted line

You’ll pay all closing costs and receive a settlement statement

The deed will then be recorded


Congratulations you are now a homeowner!

homebuyer seminar - everything you need to know to purchase your home

Real Estate