steps to homeownership english

Harris Homebuyers Guide

The Steps to HomeownershipA Guide for First-time Homebuyers


• 9 Easy Steps to Your Home Loan• Homeowner Advantages and Responsibilities• Pre-qualification Example• Rent vs. Own Comparison• Affordable Mortgage Products and Programs• Fixed Rate vs. ARM Comparison• The Application Interview

GETTING STARTED

The Steps to Homeownership


• Good Faith Estimate• Appraisal and Insurance• Loan Approval and Closing• Consumer Advice• Harris Advantages• Pre-qualification and Pre-approval

GETTING STARTED



1. Pre-qualification

2. Choose Your Loan

3. The Application

4. Income and Employment Verification

5. Credit Check

6. Asset Review

7. Appraisal and Hazard Insurance

8. Loan Approval

9. Loan Closing


9 Easy Steps to Your Home Loan


Advantages of homeownership• Tax Savings• Financial Investment

Responsibilities of homeownership• Utility Costs• Maintenance• Appliance repair/replacement• Possible structural repairs• Home improvements• Recordkeeping for federal income taxes


Homeowner Advantages and Responsibilities


Pre-qualification is the process of estimating the amount of mortgage you can afford.

• How much do I earn?

• How much do I owe?

• How much do I have available for the downpayment, closing costs and reserves?

• How much can I borrow to purchase a home?


Pre-qualification


How much do I earn?

Monthly IncomeCombined Gross Wages of AllBorrowers (before tax deductions) $5,625.00

Alimony/Child Support -0-

Pre-qualification


How much do I owe?

Monthly Payments

Auto Loans $550

Student Loans - 0 -

Credit Card Payments $100

Alimony/Child Support - 0 -

Pre-qualification


How much money do I have available for the downpayment, closing costs and reserves?

Bank Accounts $5,000

Gift from Relative $5,000

Grant - 0 -

Affordable Second Mortgage - 0 -

Pre-qualification


Pre-Qualification Example:

How much can I borrow to purchase a home?Loan Terms

Product Harris Homebuyer AdvantageSM

Loan Type Fixed RateInterest Rate 6.625%Term 30 yearsDownpayment 5%

Qualification GuidelinesMonthly Housing Expense Ratio No LimitMonthly Recurring Debt Ratio 42%

Maximum Purchase Price $195,000.00Downpayment $9,750.00Maximum Loan Amount $185,250.00Monthly Mortgage Payment

Principal and Interest $1,186.18Real Estate Taxes $325.00Hazard Insurance $40.00

Private Mortgage Insurance $120.00

Total Payment $1,671.18

Pre-qualification


Savings and Advantages

Rent vs. Own Comparison—Savings/Advantages

Mortgage Rent

Fixed Rate6.625%

30 years$185,250.00

Monthly PaymentPrincipal and Interest

$1,186.18Rent

$1,200.00

Tax Bracket 28% 28%

After the first year…Tax SavingsNet Payment

283.51$902.67

-0-$1,200.00


• Fixed rate and adjustable rate mortgage options

• 1- to 4-unit owner-occupied properties

• Annual household income limits

• No downpayment or low downpayments

• Gifts from relatives for downpayment or closing costs

• Grants and second mortgages for downpayment and/or closing costs


Affordable Mortgage Products and Programs


• Housing expense payment reserves

• Minimum credit scores

• Alternative credit sources

• Expanded guidelines for qualification

• Private Mortgage Insurance (PMI)

• Borrower pre-purchase education

• Closing cost discounts


Affordable Mortgage Products and Programs


Harris offers a variety of affordable mortgage products and programs for first-time homebuyers.

• Harris Homebuyer AdvantageSM

• Home PossibleSM

• Harris Community CommitmentSM

• Harris New Home RewardsSM

• Alternative Identification MortgageSM


Harris Affordable Mortgage Products and Programs


Fixed Rate Mortgages

• Interest rate and payment remain the same for the life of the loan.

• Even if market conditions change, your interest rate and your payment will not be affected.


Fixed Rate vs. ARM Comparison


Adjustable Rate Mortgages

• Because the initial interest rate is lower than a fixed rate mortgage, your initial payment will be lower and you may qualify for a larger mortgage amount.

• Your interest rate and your payment may increase or decrease during the life of the loan, depending on market conditions.

• An ARM with a lower initial rate of interest and an adjustment period after five or seven years can save you money.


Fixed Rate vs. ARM Comparison


Income

Assets: Downpayment, Closing Costs and Reserves

Debts and Obligations

Property


What to Bring for an Application


Income: How much money do I earn?

Borrower Co-Borrower

Wages $ _______________ $ _______________ Overtime _______________ _______________ Bonus _______________ _______________ Commission _______________ _______________ Social Security _______________ _______________ Pension _______________ _______________ Disability _______________ _______________ Alimony _______________

Child Support _______________

Dividends/Interest _______________ _______________ Other _______________ _______________

Total $ _______________ $ _______________

The Application

My Income


How much money do I owe?


Revolving Credit Card $ _______________ $ _______________ Revolving Credit Card _______________ _______________ Revolving Credit Card _______________ _______________ Revolving Credit Card _______________ _______________ Car Loan _______________ _______________ Student Loan _______________ _______________ Line of Credit _______________ _______________ Alimony _______________ _______________ Child Support _______________ _______________Other _______________ _______________ Other _______________ _______________

Total $ _______________ $ _______________

The Application

My Debts and Obligations


How have I paid my bills over time?

What is my credit score?

How can I improve my credit score?

What if I don’t have any established credit?


Credit Check


How much money do I have available for the downpayment, closing costs and reserves?


Checking $ _______________ $ _______________ Savings _______________ _______________ Money Market _______________ _______________ Certificates of Deposit _______________ _______________ Stocks/Bonds _______________ _______________ Gift Funds _______________ _______________ Grant Funds _______________ _______________ Affordable Second Mortgage _______________ _______________ IRAs _______________ _______________401(k) _______________ _______________ Other _______________ _______________

Total $ _______________ $ _______________

The Application

My Assets


Savings and Advantages

Good Faith Estimate Example

Loan TypeLoan Term

Loan Amount Interest Rate

Discount Points

Fixed Rate

30 years

$185,250.00

6.625%

- 0 -

Appraisal

Credit Report

Discount Points

Flood Certification

Tax Service Fee

Underwriting Fee

Hazard Insurance Premium

Settlement/Closing Fee

Title Charges

Recording Fee

$250.00$ 15.00

-0 –$ 9.00$ 55.00$350.00$400.00$475.00$905.00$100.00

Total $2,559.00


What is the value and condition of the property that I want to purchase?

• An appraisal is a written report that describes the property and estimates its value and marketability.

• Most homebuyers purchase homeowner’s insurance which is a combination of coverage (hazard insurance and personal liability)


Appraisal and Insurance


After your mortgage loan has been approved, the final step to homeownership is the loan closing.

• All mortgage and legal documents are signed, all financial sums are paid, and ownership of the property is formally transferred.


Loan Approval and Closing


What is predatory lending?

Typical predatory loan features include:

• High interest rates

• Broker fees

• Unnecessary closing costs such as pre-paid life insurance

• Unaffordable repayment terms


Consumer Advice


How can I protect myself from a predatory lender?

• Comparison shop

• Choose a reputable lender

• Don’t borrow more money than necessary

• Choose a mortgage that meets your needs

• Don’t buy services that you don’t need

• Get the best terms that you qualify for

• If you don’t understand something, ask questions until you are satisfied

• Get financial counseling if you need it


Consumer Advice


Friendly and knowledgeable Mortgage Specialists A variety of products and programs for first-time homebuyers Free pre-qualifications Free pre-approvals Pre-approvals with 120-day Mortgage Interest Rate Price Protection Option Local processing, underwriting, closing and servicing Low closing costs The Harris No Surprises Mortgage® guarantee Over 225 convenient locations in Chicagoland and Indiana

The Harris Advantage

Harris Advantages


Pre-qualification

• Your Mortgage Specialist estimates how much money you can borrow to purchase a home and what your monthly mortgage payment will be.

Pre-approval

• A pre-approval is a formal application for a home loan.

• Realtors and builders prefer to work with buyers who have been pre-approved for a mortgage before they begin shopping for home


Pre-qualification and Pre-approval


Over the past century, Harris has helped thousands of

families and individuals finance their first home.

We can make homeownership possible for you, too!

Thank you.

The Harris Advantage

Homeownership….We Make It Possible!

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