Thank You For Attending!Thank You For Attending!Presented by Christian CookPresented by Christian CookResidential Home Mortgage LenderResidential Home Mortgage LenderTown Square Mortgage & Town Square Mortgage &

InvestmentsInvestments

A LITTLE ABOUT MEA LITTLE ABOUT ME Chris is an experienced mortgage lender

He puts his 8 years experience as a mortgagelender, to use when negotiating and working withLenders, insurance companies, realtors, and title

companies on behalf of his clients.

While not working Chris enjoys DIY projects, spending time with his 3 kids, and oh yeah………

ELVIS TRIBUTE ARTISTELVIS TRIBUTE ARTIST Thankya…..Thankyaverymuch!Thankya…..Thankyaverymuch!

Topics to be Discussed1. Are you Financially Ready

*Determines how “much” house can you buy *Knowing all the costs *Why your credit rating is important *Mortgage basics

2. Building Your Team of Experts *Your Home-Buying Team

Are you Financially Ready? Credit *How your score is determined; *Hints & Tips to repairing & maintain Savings *Down Payment – 3.5% to 5% What Can you Afford *Household Income *Debt Ratios Closing Costs *About 5-6% of Purchase Price

Are you Financially Ready? Your Credit Score

With the credit crunch lenders have increased their focus on credit scores when determining lending approval and interest rates charged.

Understand how your credit score is determined. *Payment History 35 *Amounts Owed? 30% *How long is your credit history? 15% *Have you applied for new credit recently? 10% *Type of credit accounts do you have? 10%

Tips on Boosting and Maintaining Your Credit Score *Maintain active accounts; no trades = no score.

*Allow increases to credit limits. *Always make your minimum monthly payments on time *Keep your credit inquiries to a minimum *Check your credit once a year to prevent identity theft and/or other inaccuracies

What is a good credit score?

720 and higher: Excellent Qualify for best rates 650-719: Good Eligible for good rates on most loans 600-649: Ok Represents higher risk & borrowing options are limited 500-599: Not great High risk for lenders = below 600 is “sub-prime” If given a loan, will be higher interest rates & higher

mortgage payment 499 and below: Poor Purchasing on credit not an option at this point

Are you Financially Ready? Down payment Minimum of 3.5% of the purchase

price

1. Savings/Checking2. Retirement Plan3. Gift4. Borrowed from eligible sources5. Government/City Grant programs

Are you Financially Ready? There are industry standards as to what is considered

“affordable” by mortgage lenders. Housing ratio = “Top Ratio or Front End Ratio” * PITI / Gross monthly income *Usually 28%-31% DTI(Debt To Income) = “Back End Ratio or Total DTI” *PITI + monthly debt / Gross monthly Income *(Debts include car payment, credit cards, other

loans) *Usually 31%-43% Have a mortgage professional calculate this for you.

Are you Financially Ready? Closing Costs Appraisal Fee Attorney Fees Title Insurance Title/Closing Fees Credit Reports Prepaid Taxes & Homeowner’s Insurance Lender Fees

Closing costs can be estimated at 5-6% of the purchase price

Arranging Your MortgageArranging Your MortgageRequired Documents

Your approval will be based on the information given and the supporting documentation

provided by you.Your information will be held in the strictest confidence and will only be used for yourfinancing application.

1. Written Verification of Employment (Lender to obtain)2. Most Recent 30 days of Pay stubs3. If Self Employed, Past 2 years of Tax Returns ***all pages and schedules***4. Verification of Down payment • Two Months Bank Statements • Gift Letter • Retirement/401K/IRA Statements5. Identification – Copy of Drivers License and Social Security Card

MORTGAGE BASICS

WHAT IS A MORTGAGEWHAT IS A MORTGAGE A large secured loan used to purchase a

home. Mortgage or Promissory Note – Promise to repay the loan – Terms & conditions of loan – Details about monthly payment Deed of Trust – Pledges your home as security for the

loan

Where can I go to get a mortgage?

Commercial Banks State and Federal Savings Banks Savings & Loan Associations Mortgage Companies Credit Unions

Remember:These institutions may or may not own your loan

They may sell your loan to another company

Mortgage Terms Principal – Amount of original loan Interest – Fee you pay to borrow money Term – Length of loan (period of time) Escrow – Account opened by lender – Holds money for taxes & insurance Equity – Amount of principal you’ve paid = portion of

home you own

Mortgage Terms (2) Loan-to-Value Ratio (LTV) – Ratio that determines your down payment – 80% LTV means you put 20% down – Some first-time home buyer loans allow 95%, 97% or

even 100% LTV Points – Loan Origination Fee – Discount Points: 1% of loan, used to lower interest rate Annual Percentage Rate – Total cost of loan – Interest + loan fees + mortgage insurance + points – Good way to compare options (includes all fees)

Mortgage Terms (3) Amortization Schedule – Timetable that shows each payment – Indicates how much paid towards principal &

how much to interest Insurance – Hazard Insurance – Private Mortgage Insurance (PMI) Qualifying Ratios – Used by lenders to determine how much you

can afford

Your Monthly PaymentP = PrincipalI = InterestT = TaxesI = Insurance

Types of Mortgage Types of Mortgage FHA (This is most common loan now, FHA (This is most common loan now,

and most likely what you will be using and most likely what you will be using to buy your home)to buy your home)

2) Conventional 2) Conventional (Traditional Mortgage)(Traditional Mortgage)3) VA 3) VA (Veteran’s Administration)(Veteran’s Administration)4) USDA 4) USDA (United States Dept. of (United States Dept. of

Agriculture)Agriculture)5) Sub-prime……..5) Sub-prime……..obsolete, see ya, kicked to the obsolete, see ya, kicked to the

curb, scram, beat it, get lost.curb, scram, beat it, get lost.

FFederal ederal HHousing ousing AAdministration dministration LoanLoan

FHA mortgage loan types are insured FHA mortgage loan types are insured by the government through mortgage by the government through mortgage insurance that is funded into the loan. insurance that is funded into the loan. First-time home buyers are ideal First-time home buyers are ideal candidates for an FHA loan because candidates for an FHA loan because the down payment requirements are the down payment requirements are minimal and no FICO minimal and no FICO requirements****requirements****

Requires only a minimum 3.50% down Requires only a minimum 3.50% down paymentpayment

VVeteran’s eteran’s AAdministration dministration LoanLoan

A A VAVA loan is a government loan is available to loan is a government loan is available to veterans who have served in the U.S. Armed veterans who have served in the U.S. Armed Services and, in certain cases, to spouses of Services and, in certain cases, to spouses of deceased veterans. The requirements vary deceased veterans. The requirements vary depending on the year of service and depending on the year of service and whether the discharge was honorable or whether the discharge was honorable or dishonorable. The main benefit to a VA loan dishonorable. The main benefit to a VA loan is the borrower does not need a down is the borrower does not need a down payment. The loan is guaranteed by the payment. The loan is guaranteed by the Department of Veteran Affairs, but funded by Department of Veteran Affairs, but funded by a conventional lender. a conventional lender.

USDAUSDARural HousingRural Housing

Primarily used to help low-income Primarily used to help low-income individuals or households purchase individuals or households purchase homes in rural areas. homes in rural areas.

100% Financing100% Financing

USDA available in rural-outlying USDA available in rural-outlying areasareas

No down-payment neededNo down-payment needed Eligible North Texas CitiesEligible North Texas Cities As of July 20, 2008As of July 20, 2008 This list is not all inclusive of the eligible areas in North Texas. It only covers the major towns serviced by Area 3. For specific eligible This list is not all inclusive of the eligible areas in North Texas. It only covers the major towns serviced by Area 3. For specific eligible

areas, check our eligibility website: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do or contact the local Rural areas, check our eligibility website: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do or contact the local Rural Development Office. You can find all Texas USDA Rural Development offices at www.rurdev.usda.gov. Development Office. You can find all Texas USDA Rural Development offices at www.rurdev.usda.gov.

CountyCounty Serviced ByServiced By CitiesCities ArcherArcher DecaturDecatur Cities include Archer City, Windthorst, Holiday and Lakeside CityCities include Archer City, Windthorst, Holiday and Lakeside City BaylorBaylor DecaturDecatur No ineligible areas in the County. Cities include SeymourNo ineligible areas in the County. Cities include Seymour ClayClay DecaturDecatur No ineligible areas in the county. Cities Henrietta, Byers, Petrolia and Bellevue.No ineligible areas in the county. Cities Henrietta, Byers, Petrolia and Bellevue. CollinCollin McKinneyMcKinney Cities include Princeton, Farmersville, Nevada, Lavon, Prosper, Celina, Anna, Melissa, Westminster, Blue Cities include Princeton, Farmersville, Nevada, Lavon, Prosper, Celina, Anna, Melissa, Westminster, Blue

Ridge, WylieRidge, Wylie CookeCooke McKinneyMcKinney No ineligible areas in the county. Cities include Muenster, Callisburg, Valley View, Lindsay, Gainesville.No ineligible areas in the county. Cities include Muenster, Callisburg, Valley View, Lindsay, Gainesville. CottleCottle DecaturDecatur No ineligible areas in the county. Cities include Narcisso and Paducah.No ineligible areas in the county. Cities include Narcisso and Paducah. DallasDallas McKinneyMcKinney Eligible cities include Seagoville and CombineEligible cities include Seagoville and Combine DentonDenton McKinneyMcKinney Cities include Aubrey, Corinth, Little Elm, Justin, Roanoke, Krum, Highland Village, Lake Dallas, Ponder, Cities include Aubrey, Corinth, Little Elm, Justin, Roanoke, Krum, Highland Village, Lake Dallas, Ponder,

Sanger, Pilot PointSanger, Pilot Point FoardFoard DecaturDecatur No ineligible areas in the county. Cities include Crowell and ThaliaNo ineligible areas in the county. Cities include Crowell and Thalia FanninFannin McKinneyMcKinney No ineligible areas in the countyNo ineligible areas in the county GraysonGrayson McKinneyMcKinney The entire county except the city limits of Sherman and Denison is eligible to include Van Alystine, Gunter, The entire county except the city limits of Sherman and Denison is eligible to include Van Alystine, Gunter,

Whitewright, Tioga, Whitesboro, PottsboroWhitewright, Tioga, Whitesboro, Pottsboro HardemanHardeman DecaturDecatur No ineligible areas in the county. Cities include Chillicothe and Quanah.No ineligible areas in the county. Cities include Chillicothe and Quanah. HuntHunt McKinneyMcKinney Cities include Quinlan, West Tawakoni, Celeste, Commerce, Campbell, Lone Oak, Caddo MillsCities include Quinlan, West Tawakoni, Celeste, Commerce, Campbell, Lone Oak, Caddo Mills JackJack DecaturDecatur No ineligible areas in the county. Cities include Bryson, Jacksboro, Antelope, Postoak.No ineligible areas in the county. Cities include Bryson, Jacksboro, Antelope, Postoak. KaufmanKaufman McKinneyMcKinney Combine, Cottonwood, Crandall, Forney, Kaufman, Oak Grove, Oak Ridge, Talty, Mabank, Kemp, Grays Combine, Cottonwood, Crandall, Forney, Kaufman, Oak Grove, Oak Ridge, Talty, Mabank, Kemp, Grays

Prarie, Rosser, outside the city limits of TerrellPrarie, Rosser, outside the city limits of Terrell MontagueMontague DecaturDecatur No ineligible areas in the county. Cities include Montague, Nocona, Bowie, St Jo, Forestburg.No ineligible areas in the county. Cities include Montague, Nocona, Bowie, St Jo, Forestburg. Palo PintoPalo Pinto McKinneyMcKinney No ineligible areas in the county. Cities include Mineral Wells, Graford, Strawn, Santo, New Salem, Palo No ineligible areas in the county. Cities include Mineral Wells, Graford, Strawn, Santo, New Salem, Palo

Pinto, Gordon, MingusPinto, Gordon, Mingus ParkerParker McKinneyMcKinney Cities includes, Aledo, Springtown, Willow Park, SanctuaryCities includes, Aledo, Springtown, Willow Park, Sanctuary RockwallRockwall McKinneyMcKinney The entire county east of Lake Ray Hubbard is eligible, Rockwall, Royse City, Fate, HeathThe entire county east of Lake Ray Hubbard is eligible, Rockwall, Royse City, Fate, Heath Tarrant Tarrant McKinneyMcKinney Cities include Avondale, Azle, Blue Mound, Briar, Center Point, Crowley, Haslet, Lakeview, Oak Grove, Pelican Cities include Avondale, Azle, Blue Mound, Briar, Center Point, Crowley, Haslet, Lakeview, Oak Grove, Pelican

Bay, Saginaw, WheatlandBay, Saginaw, Wheatland WichitaWichita DecaturDecatur Cities of Wichita Falls and Burkburnett are not eligible. Cities include Electra, Iowa Park, Lakeside City, Cities of Wichita Falls and Burkburnett are not eligible. Cities include Electra, Iowa Park, Lakeside City,

KamayKamay WilbargerWilbarger DecaturDecatur No ineligible areas in the county. Cities include Vernon.No ineligible areas in the county. Cities include Vernon. WiseWise DecaturDecatur Cities include Bridgeport, Decatur, Alvord, Aurora, Chico, Rhome, BoydCities include Bridgeport, Decatur, Alvord, Aurora, Chico, Rhome, Boyd YoungYoung DecaturDecatur Cities include Graham, Olney, Newcastle, Jean, LovingCities include Graham, Olney, Newcastle, Jean, Loving

Traditional MortgagesTraditional MortgagesFixed Rate Mortgages– Same interest rate throughout life

of loan– Monthly payments never change– Key choice: term of loan(15 years & 30 years are most

common)

Traditional Mortgages (2) Adjustable Rate Mortgages (ARM) – Interest rate is fixed for certain number of years (3, 5, & 7 years most common) – After fixed time, interest moves up or down to meet

national interest rates – May have a cap of how high interest rates can go – Make sure to ask: o How long does initial interest rate apply? o How high can the interest rate go? o Does the loan set a minimum interest rate? o What is the maximum monthly payment you could pay?

Specialty Mortgages Interest Only Mortgages – You pay only interest first 5-10 years of loan – After interest-only period, monthly payment increases to

include both interest & principal Negative Amortization Mortgages **TOAST** – Monthly payment is less than interest owed & unpaid interest

is added to principal of loan – Total amount you owe increases each month Option Payment ARM Mortgages **TOAST** – You have the option of different types of monthly payments – Options include: interest-only, fixed rate, or minimum

payment 40-Year Mortgages (not available on FHA) – Reduces monthly payment but increases interest paid

SUB PRIME LOANSSUB PRIME LOANSGoner!Goner!

Assemble your Team of Experts

Your home buying team includes……………….

MORTGAGE PROFESSIONAL/EXPERT

• Should guide you through entire process • Should help negotiate on your behalf • Should have choices, which means more competitive

rates • Will ensure that you’re getting the best rates and terms • Should have access to available grant assistance

programs • We guide you through the entire process • We will provide you with expert advice • No cost to you • Ongoing support and consultation after the deal closes

Assemble your Team of Experts

Your Home Buying Team Includes………………

Real Estate Agent Knows DFW and neighborhood, and understands market Will listen to your needs and advise Is an expert at type of property you are buying Will add you to email lists to send you recent property listings……… MLS – Multiple Listing Service Book viewing appointments Show you properties that match your criteria Prepare Purchase Agreement Negotiate best possible price for your home Knows the ins-and-outs of all the available City Grant and Bond

Programs!!

Thanks Everyone!

We will all be available following the presentation if you have specific details you wish to discuss, or any questions.

HAVE A GREAT WEEKEND!