J U D I T H H A Y E S | B R O K E R / O W N E R | T H E H A Y E S T E A M . N E TbasicsM O R T G A G EA M OR TGAGE GU I D EREAL ESTATE BROKER/OWNERJudith Hayes
C O N T E N T SINTRODUCTIONNICE TO MEET YOUPOSSIBLE COSTSCOSTS ASSOCIATED WITH BUYING & SELLING A HOMETYPES OF MORTGAGESAVAILABLE HOME LOANS AND THEIR QUALIFICATIONS8 STEPS TO HOME OWNERSHIPTHE MORTGAGE PROCESSMORTGAGE TERMSIMPORTANT TERMINOLOGY YOU NEED TO KNOWMARKET UPDATECURRENT MARKET STATSDO'S AND DON'TSThings you should do and not do in the process of getting a home loan
[email protected] Directthehayesteam.netI’d love the opportunity to work with you! Whether buying, selling, leasing orinvesting, you need someone who understands the market, is committed to meetingand exceeding your expectations, and is a trusted source within the community!With 17 years of real estate experience as well as being a lifetime resident of thearea, my passion for real estate and unmatched knowledge of the greater Houstonarea it exceptional.Prior to working in real estate, I spent 20+ years in the legal field where a clientcentric focus was paramount. Negotiation and communication skills are strengths aswell. When not working, my husband and I travel – beaches or mountains. Downtime is spent poolside with our grand children and fur babys.REAL ESTATE BROKER/OWNERJudith HayesJudith Hayes
8 S T E P S T OO W N E R SHI Phome
EIGHT STEPSto home ownershipSET A BUDGET & START A HOME FUNDDetermine how much you can realisticallyafford to pay toward a mortgage each month.Other than what you spend on rent, writedown everything you spend money on eachmonth. These are your non-housing expenses.Next, subtract your non-housing expensesfrom your net take-home pay. Your goal wouldbe to stay well under this number. The furtheryour mortgage payment falls below thisnumber, the safer you'll be.02CHECK YOUR CREDIT REPORTS& SCORESYour credit score can make or break yourchances of getting a mortgage loan. Makesure there aren't any errors or inaccuracies.If there are, dispute them ASAP. Whenlooking at your FICO score, you'll probablyneed a score of at least 640 to qualify for amortgage loan.SELECT THE BEST TYPE OFMORTGAGE LOAN FOR YOUFHA. Conventional. ARM. Fixed-rate...thereare many choices with different rates, feesand time periods. Determine how long youmight be living in the home and select aterm that would best fit that need. A longerstay might warrant a fixed rate vs. anadjustable rate might suit a shorter staybetter.Do you want to make a larger downpayment of 10% on a conventional loan, andpay a smaller amount of mortgageinsurance each month? Or ... do you want tomake a smaller down payment of 3.5% foran FHA loan, and pay more in mortgageinsurance every month? Ultimately amortgage expert can help you decide whatwill be best for your situation.GET PRE-APPROVED &START SHOPPINGA lender will determine whether or notyou're qualified for a loan, and how muchthe lender is willing to give you. Once this isdetermined you will receive a letterinforming you what you have been preapproved for and this will help you decidewhat price range of homes you should belooking at.010304
EIGHT STEPSto home ownership05MAKE AN OFFERWhen you've found a house that meets allyour wants and needs, you're ready to makean offer! Your offer should be based oncomparable sales of similar homes that havesold in the same area recently. Negotiationswill begin and an agreement will be reached.06INSPECTIONSAfter an offer is accepted, you will hire ahome inspector. An inspection is a noninvasive examination of the house,including the visible portions of the roof,foundation, plumbing, electrical system, &heating/cooling system. This is doneentirely for your benefit and gives you abetter picture of a home's true condition.APPRAISALFA mortgage lender has a lot at stake in thisinvestment, therefore they want to makesure the home is worth the amount that youagreed to pay. The lender will have thehome appraised to determine its currentmarket value. If the lender determines thehome is worth less than the agreed price,the lender might withhold financing.CLOSINGWhen the property is transferred from theseller to the buyer, you are said to have\"closed escrow.\" Closing involves a lot ofpaperwork & the distribution of funds. Theseller gets paid, and if applicable, agentsreceive their commissions, and the lenderfees will be paid. Make sure you have savedup enough money to cover your closingcosts. Your lender will give you a writtenestimate of these costs in advance, alwayssaving over that estimated amount. Lastly,you will walk away with the keys to yournew house.0708
mortgagesTYPES OF
TYPES OFmortgageVeteransPersonnel withhonorable dischargeReservists &National GuardSurviving SpousesNONE NONE NONE 580Someone who isbuying a home in aUSDA -designatedrural area.NONE2% of the loanamount. Can berolled into loanamount.REQUIRED 640Anyone whomeets the minimumcredit and incomelevels.At least 3.5%of purchase price1.75% of loanamountREQUIRED 580-640REQUIRED 580-640REQUIREDREQUIRED6206201.75% of loanamountNONENONEAt least 3.5%of purchase priceVaries from 3%-20%of purchase priceVaries from 3%-20%,but typically rangesfrom 5-20%Anyone whoplans to purchasea fixer-upper or needsto renovate theirhome and meetscredit & incomerequirementsDepending on theprogram, available firsttime home buyers (abuyer who hasn'towned in the last threeyears) can put 3%down with aConventional 97program.Anyone whomeets lenders credit,income & debt levelrequirementsVADepartment ofVeteran AffairsUSDADepartment ofAgricultureFHAFederal HousingAdministration203KFederal HousingAdministrationCONVENTIONAL97SELECT SMARTPLUSWHO QUALIFIES DOWN PAYMENTUPFRONTMORTGAGEINSURANCEMONTHLYMORTGAGEINSURANCEMINIMUMCREDIT SCORE TYPES OF LOANS LOANS
costsPOSSIBLE
POSSIBLEassociated costsbuying a home selling a homeEXPENSE #1home renovationsIt is very rare to purchase a home and have itperfectly move-in ready. Be sure to have moneyset aside for some painting and appliances.EXPENSE #1owner’s title insuranceProtects the new owner from issues with yourhome’s title. This provides peace of mind to thefuture owner from the financial burden shouldthere be a dispute over the property or becauseof outstanding liens from contractors, creditors,or the government.EXPENSE #1property taxesProperty taxes will depend on the state andcounty where your home is. Real estate propertytaxes are paid annually and usually between 0%and 2.5% of your home price.EXPENSE #1closing costsClosing costs for sellers can reach 8% to 10% ofthe sale price of the home.EXPENSE #1closing costsBuyers closing costs typically add up to about2% to 5% of the home’s purchase price. Closingcosts depend on your unique transaction.Sometimes closing costs can be negotiated.However, as a buyer in today's market, you’lltypically be expected to cover the closing costs.EXPENSE #1closing feesClosing fees cover managing the closing. Thisincludes recording, signing and holding allfunds. Escrow providers charge either a flat feetypically $500-$2000 depending on where youlive, or 1% of the home sale priceEXPENSE #1home inspectionsAccording to the U.S. Department of Housingand Urban Development, a typical homeinspection costs $300 to $500, depending on thearea and size of the home. In almost all cases, it'swell worth it for a buyer to perform aninspection.EXPENSE #1title feesThese are the taxes you’ll pay when the title forthe home changes from you to your buyer atclosing.EXPENSE #2EXPENSE #3EXPENSE #4EXPENSE #1EXPENSE #2EXPENSE #3EXPENSE #4
buying a home selling a homeEXPENSE #1down paymentMany first time home buyers believe they haveto put 20 percent down on a home. But that’s farfrom true. There are loan programs that let youbuy with even less than 6 percent down.EXPENSE #1updates to prepare for saleMost homes need to do a fresh coat of paint andupdate some things to get their home in tip topshape for saleEXPENSE #1monthly mortgage paymentThis amount will vary widely, depending on thesale price of your home, the amount of yourdown payment, mortgage rates, and what feesare included in your payment.EXPENSE #1closing costsClosing costs for sellers can reach 8% to 10% ofthe sale price of the home.EXPENSE #1closing costsBuyers closing costs typically add up to about2% to 5% of the home’s purchase price. Closingcosts depend on your unique transaction.Sometimes closing costs can be negotiatedHowever, as a buyer in today's market, you’lltypically be expected to cover the closing costs.EXPENSE #1realtor commissionsTypically, the seller pays the real estate agentcommissions which usually total between 4 and6%.EXPENSE #1insuranceHOME OWNERS INSURANCE- Homeownersinsurance is designed to help cover costs if anysubstantial damage happens to your home.MORTGAGE INSURANCE- If you have put downless than 20% down payment, lenders willcharge you mortgage insurance as a way tominimizing the risk to them.EXPENSE #1prorated property taxesWhen selling a home, you are responsible forprorated property taxes due up to the date ofthe sale, at which point the buyer will take over.EXPENSE #2EXPENSE #3EXPENSE #4EXPENSE #1EXPENSE #2EXPENSE #3EXPENSE #4EXPENSE #1HOA feesIf you live in a neighborhood with HOA costs, youwill need to make sure you’ve paid up to theclose date.EXPENSE #4POSSIBLEassociated costs
termsMORTGAGE
AMORTIZATIONAmortization is an accounting technique used to periodically lower the book value of a loan or intangible asset over a set period of time.APPRAISALAn appraisal is a valuation of property, such as real estate, a business, collectible, or an antique, by the estimate of an authorized person.CERTIFICATE OF TITLEA certificate of title is a state or municipal-issued document that identifies the owner or owners of personal or real property.DEBT-TO-INCOME RATIO (DTI)The debt-to-income (DTI) ratio is a personal finance measure that compares an individual’s monthly debt payment to his or her monthly gross income.EQUITYEquity is the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company's debt waspaid off.ESCROWEscrow is a legal concept describing a financial instrument whereby an asset or escrow money is held by a third party on behalf of two other parties thatare in the process of completing a transaction.GOOD FAITH ESTIMATEA disclosure from your lender that outlines all of the costs associated in obtaining a mortgage.HAZARD INSURANCE (HOMEOWNER’S INSURANCE)Hazard insurance is coverage that protects a property owner against damage caused by fires, severe storms, earthquakes, or other natural events.MORTGAGE RATE LOCKA mortgage rate lock is an agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage for a specifiedtime period at the prevailing market interest rate.LIENA lien is a legal right granted by the owner of property, by a law or otherwise acquired by a creditor. A lien serves to guarantee an underlying obligation,such as the repayment of a loan.LOAN-TO-VALUE RATIO (LTV)The loan-to-value (LTV) ratio is an assessment of lending risk that financial institutions and other lenders examine before approving a mortgage.MORTGAGE INSURANCEMortgage Insurance is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan.TERMPeriod over which a loan agreement is forcible to be collected. Also, this includes the before or at the end of which the loan should either be repaid orrenegotiated for another term amount.TITLE INSURANCETitle insurance is a form of indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property.TRUTH-IN-LENDING ACT (TIL)The Truth in Lending Act (TILA) is a federal law enacted in 1968 to help protect consumers in their dealings with lenders and creditors.TermsMortgage
andDON ' T SDO' S
DODO get pre-approvedThe do's and don't swhen buying a homePre-approval helps to make sure you are shopping for homes in the right price range and helps to speed along theprocess when you find the home of your dreams and you want to place an offer.DODO check your credit reportYou may be surprised to find unknown credit inquiries. Which can negatively impact your credit score. It's best toget this cleaned up before applying for a home loan.DON'TDON’T change jobs.Most investors require 30 full days of paystubs or payment history, so changing jobs no matter how much betterthe salary may be will delay closing until the 30-day paperwork is obtained.DODO continue paying credit cards and any other debtPaying or not paying your credit card bills regularly and staying current while paying down debt effects your FICOscore. Your FICO score is key to getting the best interest rate and securing the best loan for your home.DON'TDON'T make any new major purchasesYou do not want to make any major purchases with any credit cards or loan until after you have closed on thehome purchase. These purchases can absolutely delay closing. If you have any questions contact your mortgagelender prior to making a purchase.