CalSTRS Webinar - Nov 10th 2008

A Complete Guide to the CalSTRS 80/17 Purchase Loan

Presented on:

Monday, November 10th 2008

Presented By:Broadview Mortgage Corporation

Presenter:Scott Schang, CalSTRS Specialist

Contact Information:Phone: 866-667-6724

[email protected]


Topics We Will Cover In This Class

• Overview of California Real Estate Market

• A Complete Guide to CalSTRS 80/17

• Everything you need to know about the $7,500 Federal Tax Credit - Update

• Things you should know about getting started

• Wrap Up and Take Aways


The Purpose and Goals of this Class

• To Create and Empower Home Owners

• Educate you about the current California Real Estate market

• Empower you with the ability to make educated decisions in the home buying process


Topics We Will Cover In This Class

• Questions and Answers– You may type questions in at any time during the

presentation – Questions and Answers Box– Loan specialists are standing by to answer your

questions during the presentation– I will answer questions live at end of webinar– The only dumb question the one you don’t ask

Overview of the California Real Estate Market

Being At The Right Place / Right Time

• What it means to be in a Buyer’s Market• Supply and demand• Many homes for sale• Few home buyers in market• Credit market offers few options

• Why CA Market is a “Perfect Storm”– Affordability Factor up– Median Home Prices Down– Specialty Programs for Home Buyers


• California Housing Affordability Index– Index used to determine the percentage of

families that could afford a home

• Method Used to Determine Affordability– Median Home Prices– Interest Rates– Down Payment – 10% used for index– Statistical Data for area incomes

• Value as a Comparative Analysis– Affordability approaching 2003 numbers– 2003 home sales and affordability 30 year highs


Area/Region Q2 2008 Q2 2007 Q2 2006 Q2 2005 Q2 2004 Q2 2003United States 67 62 41 63 69 72Central Valley n.a. 42 26 40 49 58San Diego n.a. 23 36 23 26 41Sacramento 68 44 63 41 50 62High Desert 68 45 38 50 66 78Riverside/SBernardino 60 37 21 40 46 59California - Condos 51 36 19 40 48 58Northern California 49 37 32 35 41 50Ventura 48 25 22 26 33 48California 48 24 23 30 36 46Palm Sprgs/Lwr Desert 48 31 30 31 25 40Southern California 47 23 35 29 35 n.a.Santa Barbara Area 46 11 40 18 22 33Northern Wine Country 43 23 22 23 30 37Orange County 41 23 25 25 27 42Monterey Region 40 17 18 20 26 35Los Angeles 39 20 13 27 36 48San Luis Obispo 34 19 29 23 36 37Santa Clara 33 21 26 33 43 49San Francisco Bay 32 18 25 29 31 38












Most California home prices have dropped more than 20% since July of 2007

County/City/Area 8-Jul 7-Jul Y-T-Y % Change

Sonoma County $360,000.00 $521,000.00 -30.90%

Santa Cruz County $510,000.00 $720,000.00 -29.20%

Napa County $439,500.00 $615,000.00 -28.50%

Orange County $460,000.00 $643,750.00 -28.50%

Yolo County $290,300.00 $405,000.00 -28.30%

Ventura County $420,000.00 $585,000.00 -28.20%

Alameda County $440,000.00 $611,750.00 -28.10%

Los Angeles County $400,000.00 $550,000.00 -27.30%

Kern County $190,750.00 $260,000.00 -26.60%

San Diego County $365,000.00 $490,000.00 -25.50%

Fresno County $217,250.00 $281,500.00 -22.80%


Many California home prices have dropped more than 30% since July of 2007

County/City/Area 8-Jul 7-Jul Y-T-Y % Change

Merced County $155,000.00 $315,000.00 -50.80%

Monterey County $300,000.00 $560,000.00 -46.40%

Santa Barbara County $344,000.00 $615,000.00 -44.10%

San Joaquin County $220,000.00 $378,750.00 -41.90%

Stanislaus County $190,000.00 $325,000.00 -41.50%

Contra Costa County $349,000.00 $590,000.00 -40.80%

Riverside County $260,000.00 $404,500.00 -35.70%

San Benito County $323,000.00 $500,500.00 -35.50%

Sacramento County $210,000.00 $325,000.00 -35.40%

San Bernardino County $229,750.00 $355,000.00 -35.30%

Solano County $270,000.00 $415,000.00 -34.90%

Madera County $195,500.00 $289,500.00 -32.50%

California Real Estate Market in the News

• HEADLINE: Southern California home sales jump 65 percent in September– Mercury News, Silicon Valley – Oct. 20th, 2008

– LOS ANGELES — Southern California home sales jumped 65 percent in September from a year ago, as plummeting prices fueled by foreclosures lured more buyers, a real estate tracking firm said Monday.

– Last month's median home price in the six-county region fell 33.2 percent to $308,500, compared with $462,000 in September 2007, according to San Diego-based MDA DataQuick.

A Complete Guide to CalSTRS 80/17

• CalSTRS 80/17 Compared to FHA

• Lower Down Payment than FHA– 3.5% Down as of January 1st, 2009

• Lower Interest Rates than FHA• No UPFRONT Mortgage Insurance Premium

– FHA increased to 1.75%

• No MONTHLY Mortgage Insurance– FHA increased to .55%

• FHA vs CalSTRS Closing Costs– FHA lower up front / CalSTRS lower total cost

• CalSTRS - No cost lock & free float down


• CalSTRS 80/17 – Max Loan Amounts

• Conforming Loan Amount – Up to $417,000– $521,250 Max Purchase Price

• Jumbo Loan Amount – Up to $520,000 – Up to $650,000 Max Purchase Price


• CalSTRS 80/17 – Property Qualifications

• Eligible Properties – Single Family Residence– Condominiums– Planned Urban Development (PUD)

• Must be owner Occupied• Must be located in State of California• Can not own any other properties


• CalSTRS 80/17 – Loan Structure

• Max 1st Loan Amount - 80%– Qualify on 80% Only– Increases your purchasing power

• Max 2nd Loan Amount - 17% – No payments for first 5 years

• 30 Year fixed rate loan only• Same interest rate for both loans• One time free float down

– Anytime in first 30 days


• CalSTRS 80/17 – Second Mortgage

• Second Mortgage Loan– Deferred payments for 5 Years– Simple interest accrues for deferred period – Accrued interest added to principle balance – Fully amortized over remaining 300 months

• Tips for Reducing Payments on Second– $7,500 Tax Credit– Pay Interest at a minimum– Make extra principle payments


• CalSTRS 80/17 – Down Payment

• Down payment requirements– 3% down payment– 1% from buyer’s own funds

• Sources of Down Payment and Closing Costs– Down Payment - Borrower's own funds – Down Payment - Gift from relative – Down Payment – Grant from government agency– Closing Costs - Seller contributions up to 3% – Closing Costs - Borrower's own funds – Closing Costs - Gift from relative


• Other CalSTRS 80/17 Highlights

• No Income limits• You do not have to be a first time homebuyer• You can not own any other properties• Minimum FICO Scores

– 620 for Loan Amounts up to $400,000 – 680 for Loan Amounts up to $650,000

• Combined 1st & 2nd Loans


• CalSTRS 80/17 - What Makes it Different

• Can not buy interest rate down– Below market / Set by CalSTRS

• Can not “roll in” closing costs into rate• Fannie Mae – Pricing Adjustments

– Declining Market - .25%– High LTV Flex 97 - .5%– Risk based credit score pricing

• None at 740 FICO

• Much lower cost than FHA but may require more money brought to the closing table


• CalSTRS 80/17 – Review

– Only 3% down payment required– No upfront mortgage insurance premium– No monthly mortgage insurance premium– Qualify for 80% first mortgage only– 17% second mortgage deferred for 5 years– No income or first time home buyer limits– Up to 3% seller concessions for closing costs– Work or Teach in California Public school or

Community College– Rates set by CalSTRS


• Bait and Switch “Red Flags”

– Community programs designed to benefit specific members of the community

– CalSTRS, CalPERS, CalHFA loans have fixed fixed rates and fees

– What to watch out for……• Originally submitted as “Cal” loan• Well into the process – Problem occurs• FHA is presented as solution

– Loan Approval is automated and instant• Conditions include contract and inspections

• CalSTRS loans can close in 2-3 weeks– Call Me!, Call Me!, Call Me!, Call Me!, Call Me!

Everything you need to know about the $7,500 Federal Tax Credit

• Purchase home between April 1st 2008 and July 31st 2009

• Must be first time home buyer– Can not have owned in past 3 years

• $7,500 tax credit Regardless of Filing Status*

• Income can not exceed $150,000 for married couple

• Income can not exceed $75,000 for single• Credit paid back over 15 years• May be able to claim credit before purchase

Things you should know about getting started

– Very First Step – Get pre-approved for financing

– Get pre-approved for the maximum you can qualify for – Be prepared for competition

– Work with a buyer’s agent – Fiduciary duties require that your best interests are represented

– Work with a Real Estate Agent that is familiar with these special home purchase programs

– Work with a Lender that is already familiar with this program

Wrap up and Take Aways

– Home prices have dropped 20-50% and homes are twice as affordable as they were 2 or 3 years ago

– California Teachers, Public Employees and First Time Home Buyers have more purchasing power than many other buyers in the market

– Opportunities like this happen once in a lifetime

– Educate yourself on the process. Do not take anyone’s “word for it”.


– We are the Lender for all CalSTRS, CalPERS, CalHFA, FHA & VA, Conventional and Jumbo Loans.

– We can Refer you to a qualified Real Estate Agent in your area

– We are more than happy to be your “second opinion” if you are already working with someone

– We are committed to educating and empowering homeowners


– You will receive a “Thank You” email that will include all of our contact information for questions

– Access to Applications and Resources:• Getting Approved for a CalSTRS loan• Find a Qualified Real Estate Agent• Contact a loan specialist to answer questions• Dream home finder• Informative and educational YouTube library

Upcoming Home Buyer ClassesSaturday, Nov. 15th 10am - Noon


• Road Map to Home Ownership


• Road Map to Home Ownership• Step by step process


• Road Map to Home Ownership• Step by step process• Common Terminology



• How to find and hire a Real Estate agent



• How to find and hire a Real Estate agent• What a Real Estate Agent does



• How to find and hire a Real Estate agent• What a Real Estate Agent does• How to find and interview an Agent to work for you

• What you need to know about Short Sales• What is a short sale• What do you offer on a short sale?

• What you need to know about Foreclosures• What to expect when making an offer on REO• How much do you offer on an REO?

• Check back often for upcoming classes







• What you need to know about Short Sales




• What you need to know about Short Sales• What is a short sale









• What you need to know about Foreclosures





• What you need to know about Foreclosures• What to expect when making an offer on REO





• What you need to know about Foreclosures• What to expect when making an offer on REO• How much do you offer on an REO?

• Check back often for upcoming classes

Schedule a Live or Private Home Buyer Workshop

• Live or private on-line classes available

• Call me to schedule time / place

• No minimum for on-line classes

• Open and Extensive Q & A

• Expanded topics – create your own– Choose loan programs– Choose topics

Thank you for Attending

Please make suggestions and recommendations for future on-line class topics

Presented By:Broadview Mortgage Corp.

Presenter:Scott Schang, CalSTRS Specialist

Contact Information:Phone: 866-667-6724

[email protected]