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Residential Mortgage Corporation
What to Expect
• Intent: To clear up the confusion of buying a home
• Purpose: To strengthen our financial IQ
• Goal: To be a successful homeowner
Residential Mortgage Corporation
Home Buying Objectives
• The Financial Benefits of Buying A Home
• The Process of Buying a Home
• The Cost of Buying a Home
• Programs that will help you Buy a Home
• The proper Mindset to Buy a Home
Residential Mortgage Corporation
Biggest Mistakes When Buying• Not having a relationship with a Certified Mortgage Planning Specialist
• Not knowing how to shop for a mortgage
• Not staying consistent with the initial plan of action
• Not factoring in long term goals
• Not fully understanding the terms of the Loan
• Listening to too many people outside the transaction
Residential Mortgage Corporation
Biggest Mistakes When BuyingContinued
• Getting tied into looking for homes before getting a solid preapproval
• Allowing the loan officer to tell us what to pay on a monthly basis
• Shopping for a home based on a “Program”
• We allow the process to become emotional
Residential Mortgage Corporation
Example of 2nd tax benefit
• Single Person $250,00.00
• Married Couple $500,000.00
TAX FREE
Residential Mortgage Corporation
The Financial Benefits of Homeownership
Leverage
Equity Benefit
Automatic Savings
Investment opportunities
Residential Mortgage Corporation
The Immediate Benefits of Homeownership
• Interest rates and property prices are at historical lows
• Sellers are paying closing cost
• Community programs available for help 1st time home buyers
Residential Mortgage Corporation
Preparing for the Loan Application
• Last two pay stubs ( 30 day period)• Last two W-2 forms (2013, 2014)• Last two bank statements/asset statements• 12 months of canceled rental checks• Credit explanation letter, if necessary• Landlord and employment contact information
Residential Mortgage Corporation
The Process
• Step One: Education• Step Two: Pre-qualification• Step Three: Pre-approval• Step Four: Search for property (ratified contract)• Step Five: Formal loan application• Step Six: Processing• Step Seven: Underwriting• Step Eight: Celebration
Residential Mortgage Corporation
4 C’s of Approval
• Credit- Your character
• Capital- Your money
• Capacity- Your ability to make payments
• Collateral-Your property selection
Financial Stewardship
How is your score determined?
• Payment History 35%• Amounts Owed 30%• Length of history 15%• New Credit 10%• Types of Credit 10%
•
Residential Mortgage Corporation
Finding Capital
• First-Time Homebuyer IRA Withdrawal
• Have a yard sale
• Cash in Vacation
• Tax Refund
• Income Tax Withholdings ( increase exemptions)
• Equity Sharing
• Seller Financing
• Gift Funds
• Local Community Programs
• Borrow from 401k or Retirement Plan
Residential Mortgage Corporation
CapacityHow Much Can you
afford??
For which of you, intending to build a tower, sitteth not down
first and counteth the cost, whether he have sufficient to
finish it? Luke 14:28
Residential Mortgage Corporation
Debt to Income Ratio• This calculation is based on your monthly debt and
proposed mortgage payment divided by your gross monthly income
• A maximum monthly back end debt to income Ratio (DTI) of 45% is required (above 620)
Example
Gross Income: $60,200 / 12 = $5016.66
Monthly Debt: $500 + $1200 = $1700
$1700 / $5016.66 = 34%
Financial Stewardship
Get prepared for Upfront Cost
• Credit Report - $25• Earnest Money Deposit $1000 - $2000• Inspection $300 - $600• Appraisal $425 - $450• Homeowners Insurance $300 - $600
Residential Mortgage Corporation
Two cost of buying a Home
• Down Payment – 3.5%
• Closing Costs – 6.0%
• Total needed will be 9.5% between the Program, The Seller, and YOU!
Residential Mortgage Corporation
Example:
Purchase Price = $100,000.00
Down payment (3.5%) = $3,500.00Closing (6.0%) = $6,000.00 Total needed = $9,500.00
Seller can pay (0-6%)Program/credit
You!!
Residential Mortgage Corporation
“I Can’t Afford to buy a home”
• Escalation clauses
• Effective interest rate
• Inflation over time
• Home appreciation
• Interest rate environment
Residential Mortgage Corporation
Mortgage Programs
FHA- 3.5% down payment
VA- 0% down payment
Conventional- 3% down payment
USDA- 0% Down payment
$100 FHA- $100 down
FHA 203k Financing (full/streamline)-3.5% down
Officers/Teachers Next Door Program
Residential Mortgage Corporation
Mortgage Programs HPAP- For DC Residence
EPAP- For DC Residence
MAP- Ann Arundel County
My HOME- Prince Georges County
New Neighbor Program- College Park Program
CDA- Maryland State Program (You’ve earned it Program)
HOC – Montgomery County
Residential Mortgage Corporation
In Conclusion5 Keys to a successful Home buying
experience
• Separate emotion from the buying process. • Have Realistic Expectations• Don’t Give Up!• Protect your confidence• Know that buying a home is tactical/tool
Residential Mortgage Corporation
MODULE III
Your Money Blueprint
•The Proper Mind Set to Build a Home
Financial Stewardship Ministry
Example of an Effective System• Collect all checks in envelope and deposit at end of
month
• Make all bill payments at one time (change due dates)
• Deposit enough to pay bills only (put rest in savings)
• Become a member of NSL Credit Union (and deposit money monthly)
• Have a specific allowance
• 1 credit card with max limit (purchases above $20.00…payoff EVERY month.
Financial Stewardship Ministry
Example of a Effective System
• Implement the “2 week rule” (wants)• 10% Tithe• Save 20% of net, or 10% of gross• Identify one spouse as the CFO (meet
once a month for min 1 hour)• Have a relationship with a Mortgage Prof.• Have written plan for 5, 10, 15 years• Know your monthly survival Number
Residential Mortgage Corporation
Totally different thinking!• Wealthy People have a lot of money and spend little• Poor people have little money and spend a lot• Wealthy people work to earn money for their investments• Poor people work to earn money to live today• Wealthy people buy assets• Poor people buy expenses• Wealthy people collect land• Poor people collect bills• Wealthy people constantly learn and grow• Poor people think they already know
Residential Mortgage Corporation
Thank you for your Time!
Derick W. Hungerford
301-773-9811 ext [email protected]
Amindtobuild.com
Get your book today!