first-time home- buyer online seminar · 6/23/2020 · the first step to housing success 6/23/2020...
TRANSCRIPT
The first step to housing success 6/23/2020
First-Time Home-
Buyer Online Seminar
Presented by Housing & Community Initiatives,
Inc. and its Volunteer Instructors
640 E Diamond Ave Ste C
Gaithersburg, MD
20877 www.hcii.org
(301) 590-2765
First Time Home-Buyer Seminar The first step to housing success
T
First-Time Home-Buyer Seminar(Electronic Version)
Presented by
Housing & Community Initiatives, Inc.
and its Volunteer Instructors
640 E Diamond Ave Ste C
Gaithersburg, MD 20877
www.hcii.org
(301) 590-2765
© 2020, all rights reserved 6/17/2020 12:51 PM
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Welcome & Introductions
The Key ConceptsGetting Ready
Financing
The Home
The Settlement/Closing
Questions, Resources,
Evaluations & Certificates
1
Session Overview
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
REGISTRATION
INSTRUCTIONS
At the end of the class you will be given a
six (6) digit code.
Please contact Housing & Community
Initiatives (HCI) to receive your certificate.
301-590-2765
You will need to provide the nine (9)
digit code when you contact HCI.
2
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
3
Welcome & Introductions
About HCI
Housing & Community Initiatives, Inc.
(HCI) is an organization dedicated to
helping families achieve their home
ownership goals by providing education.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
4
Welcome & Introductions
About HCI
HCI instructors do not take the place of
the realtor, loan officer, inspector, or
settlement agent with whom you already
have working relationships.
HCI instructors cannot answer detailed
questions about specific loan
programs or your individual
circumstances.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Getting Ready
Financing
The Home
The Settlement/Closing
5
Key Concepts
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Budget & Credit Management
Things to Know Before you Shop…
Getting Ready
6
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Getting Ready
Reason to Buy …
Build Wealth through Home Appreciation
Forced Savings Through Mortgage Payments
Income Tax Advantage
Stability & Security
Personal Satisfaction
Pride of Ownership
7
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Getting Ready
Budgeting & Credit Management …
Understand how you are managing
debt/credit (money owed)
How much do you owe?
What is your record of payment?
Free Credit Reports
www.annualcreditreport.com
8
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Getting Ready
Budgeting & Credit Management …
Some Rules of Thumb
What’s an acceptable Credit Score?
Manageable Expense to Income Ratios.
Housing
Other Debt
Realistic Savings Goals.
9
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Getting Ready
Know your Responsibilities …
Educate yourself, ask questions, understand
before you sign!
Stay involved and on top of the process.
Be honest – do not misrepresent your
intentions or financial status.
Communicate, be responsive.
10
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Getting Ready
Know the available resources…
Affordable housing programs
Moderately-priced Dwelling Units (MPDU)
MPDU Orientation Seminar
Market Priced Properties
Mortgage programs for qualified buyers.
Closing Cost Assistance loans
and grants.
11See Resource Guide in back of hand-out.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Getting Ready
Things to Know Before You Shop…
Your Home Buying Team
Loan Officer (or Lender).
Real Estate Agent (or Realtor).
Settlement Agent (or Title Company).
Inspector(s).
Insurance Agent.
Others behind the scenes.
12
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
1. Education
2. Loan Pre-Approval
3. Research Available
Resources
4. Home Search
5. Contract Negotiation
6. Due Diligence
7. Get Loan Commitment
8. Settlement
Before You Shop…
Know the Process
13
Getting Ready
___________________________________
___________________________________
___________________________________
___________________________________
____________________________________
14
Pause for Questions
The first step to housing success
Please use the chat icon for
questions.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Sources of Financing
Choosing a Lender
Types of Loans
Understanding Loan Terms
What Lenders Consider
Mortgage Application Process
Financing
15
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Sources of Financing
Banks
Credit Unions
Mortgage Companies
Housing Opportunities Commission (HOC)
Maryland Mortgage Program (MMP)
Financing
16
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Choosing a Lender – some tips
Start with:Referrals from realtors, friends, family or
Established banking relationship or credit union or
Participating Lenders (HOC, CDA/MMP, REACH)
Then look for:Knowledge of special programs for
first-time buyers and
Willingness to listen, advise, help.
Financing
17
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Types of Loans
Conventional Fixed
Adjustable
Government-Insured
(FHA, VA, USDA)
Financing
18
See Signs of Predatory Lending in back of hand-out.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Loan Terms to Understand
Interest Rate – Fixed or Adjustable?
Origination Fee? Discount Point(s)?
What is Amortization?
Loan Term – 15, 30, years?
Prepayment Penalties?
What is Loan-to-Value?
Financing
19See Glossary in back of hand-out.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Loan Terms to Understand (continued)
What is PITI?
What are Escrow Accounts?
What is Mortgage Insurance?
Financing
20See Glossary in back of hand-out.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Loan Terms to Understand (continued)
What is Pre-Approval?
What is Underwriting?
What is Loan Commitment?
What’s Loan Estimate?
Financing
21See Glossary in back of hand-out.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
What Lenders Consider
Credit Report – affects terms of loan
Track record in paying obligations
Alternative Credit
Rent
Utility bills
Cell phone bills
Other regular monthly payments
Financing
22
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
What Lenders Consider (continued)
Debt – affects buying powerInstallment loans
Credit cards
Line of credit
Student loans
Alimony/Child Support
Financing
23
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
What Lenders Consider (continued)
Income – affects buying power
Salary/Hourly
Overtime/Bonus Pay
Two Years’ History of Commissions/Self-
employment
Two Years’ History Second Job
Alimony/Child support
Financing
24
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Financing
What Lenders Consider (continued)
Assets – savings for down payment
Savings and Checking
Investments
Gifts or Grants
Cash value of life insurance, 401K
Cash reserve
25
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
What Lenders Consider (continued)
The Property:
Appraisal – independent valuation
For Condominiums & HOAs:
Hazard/Master Insurance
Owner Occupancy Ratio
Delinquencies
Financing
26
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Mortgage Application Steps
1. Interview – phone or in person
2. Review Credit Report
3. Pre-approval, automated underwriting
4. Documents from Applicant:
Income: Pay Stubs, W-2s, Tax Returns
Assets: Bank Statements, Gift Letter
Alternative Credit Documentation
Financing
27
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Mortgage Application Steps (continued)
5. Appraisal
6. Submit package to underwriting
7. Loan Commitment or Denial
8. Coordinate with Settlement Agent
Financing
28
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
32
Pause for Questions
The first step to housing success
Please use the chat icon for
questions.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Choosing a Realtor
Find the Best Value for You
The Contract of Sale
Due Diligence
The Home
33
_
______________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Choosing a Realtor – some tips
Start with:
Referrals from lender, friends, family or
Ones you have met at Open Houses
Then look for:
Knowledge of special programs for
first-time buyers, areas of interest, and;
Willingness to listen, advise, help.
The Home
34
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Choosing a Realtor (continued)
Note: There are two types of agents:Buyer Agent - Buyer Agency Agreement
Agent works for YOU
Seller/Listing Agent
The Home
35
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Finding the Best Value for YouSet your criteria
Distinguish Needs vs. Wants
Prioritize the trade-offs:
Price
Location preferences
Size, features & style
The Home
36
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Finding the Best Value (continued)
Consider these factors:
Transportation
Schools
Community Amenities
Accommodations for disabilities (if needed)
Set your own pace
The Home
37
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Finding the Best Value (continued)
Finding Homes to Tour
From your Agent
For Sale Signs
Open Houses
Newspapers
Internet
Word of Mouth
The Home
38
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Finding the Best Value (continued)
Making the Choice
Keep records of homes seen to avoid
confusing one with another
Rate each against your own criteria
See “enough” homes
Develop your own sense of value
Re-visit the homes of interest
The Home
39
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
The Contract of Sale
Making an Offer – the Terms
Sales Price
Settlement Date
Earnest Money Deposit
Seller Concessions
Contingencies:
Financing & Appraisal
Inspections
Document Review
The Home
40
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
The Contract of Sale (continued)
Making an Offer – the Presentation
Written Offer on Standard Contract Forms
All Seller Disclosures Acknowledged
Accompanied by Financial Disclosure
and Pre-Approval Letter
Copy of Earnest Money Check or
Promissory Note
Delivered to Seller or Sellers’ Agent
The Home
41
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
The Contract of Sale (continued)
Basic Contract Concepts
Verbal offers not binding – get it in writing.
Written contracts are legally binding – know
what you’re signing.
All Contingencies have time limits – pay close
attention.
Get copies of everything you sign.
Ratified - “signed, sealed, delivered.”
The Home
42
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
The Contract of Sale (continued)
Negotiation Tactics
Let your agent (and your written offer)
speak for you.
Remain objective – don’t let it get “personal.”
Remember your priorities.
Be prepared to respond in a timely
manner.
The Home
43
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
The Contract of Sale (continued)
What Sellers Consider
Net Proceeds Is price right?
What about seller concessions?
Settlement Date
Risk Is financing solid?
Timeframe on contingencies reasonable?
The Home
44
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
The Contract of Sale (continued)
The Counter Offer
Serves to reject and nullify original offer
Made in Writing
Binding if signed by both parties
Can be withdrawn at any time before
“ratification”
The Home
45
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Due Diligence
Review all Disclosures:
Seller’s Property Condition Disclosure
Lead Paint Disclosure (pre 1979)
Master Plan
Regulations, Easements & Assessments
Estimated Taxes
Utilities
The Home
46
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Due Diligence (continued)
Get a Home Inspection!
General – electrical, plumbing, mechanical,
etc.
Structural (if indicated)
Termite
Hazardous Materials
Lead
Radon
Mold
The Home
47
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Due Diligence (continued)
HOA/Condo Doc Review- Statutory
Fees, Special Assessments
Unit-Owner’s Utility Statement
Rules & Regulations
Bylaws
Master Insurance Coverage
Repair/Replacement Reserve Funding
Investor Ratio & Delinquencies
The Home
48
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
About Common Ownership
CommunitiesTypes
Home Owner Associations (HOAs)
Condominium Associations
Are regulated by State & County Statutes through County Commision of Common Ownership(CCOC).
The Home
49
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
About Common Ownership
Communities (continued)
Have Governing Documents
Master Deed – Covenants & Restrictions
Bylaws – Rules for Governance
Rules & Regulations for residents & owners
Levy Fees for Common Expenses
Can place a lien on your property, enforce rules, assess fines
The Home
50
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
51
Pause for Questions
The first step to housing success
Please use the chat icon for
questions.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Preparing For Settlement
Role of the Settlement Agent
What is Title Insurance?
Forms of Ownership
The Closing Documents
The Settlement/Closing
52
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Preparing For Settlement
Earnest Money is Deposited!
Select Settlement Agent – ask realtor or lender for recommendation
Certified Funds/Cashier Check
Wire Transfer of Funds
The Settlement/Closing
53
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Preparing For Settlement (continued)
Maintain Credit/Financial Status
Give notice to your landlord
Contact utility companies, USPS
Arrange your move
Final Walk-thru
The Settlement/Closing
54
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
The Settlement Agent’s Role
Order Title Search & Survey
Obtain Title Insurance Binder
Provide Information to Lender to complete
approval
Prepare Deed of Conveyance
Prepare Closing Disclosure
– Cash to Close
The Settlement/Closing
55
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
The Settlement Agent’s Role (continued)
Conduct SettlementExplain all charges on the Closing Disclosure
Explain Note (promise to pay) and Deed of Trust
Collect Funds from Purchaser, Lender
Pay off Sellers’ liens, record release
Disburse funds (per contract)
Record new owner at courthouse
The Settlement/Closing
56
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
What is Title Insurance?
Protects an owner's or a lender's financial
interest against loss due to title defects.
Required by the Lender
Premium charges are regulated
May be eligible for “re-issue”
rate
One-time Payment (made by the buyer)
The Settlement/Closing
57
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Forms of Ownership
Tenants in Common
Joint Tenants, Right of Survivorship
Tenants by the Entirety
Unmarried Man
Unmarried Woman
The Settlement/Closing
58
____________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
The Settlement/Closing
The Closing Disclosure must be received by the
borrower no later than 3 business days prior to
settlement.
The consumer is considered to have
received the CD (3)days after it is mailed.
59
______________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
First Time Home-Buyer Seminar The first step to housing success
T
First Time Home-Buyer Seminar The first step to housing success
T
First Time Home-Buyer Seminar The first step to housing success
T
First Time Home-Buyer Seminar The first step to housing success
T
v
First Time Home-Buyer Seminar The first step to housing success
T
First Time Home-Buyer Seminar The first step to housing success
T
First Time Home-Buyer Seminar The first step to housing success
T
First Time Home-Buyer Seminar The first step to housing success
T
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
The Closing Disclosure
Settlement Charges
Lender fees
Attorney fees, Title Insurance
Transfer Taxes & Recording Fees
The Settlement/Closing
65
__________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
The Closing Disclosure (continued)
Prepaid Expenses, Adjustments
Real Estate Taxes
Hazard Insurance
Interest
Condo Fees & Assessments
Escrow Account Funding
Front Foot Benefit
The Settlement/Closing
66
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
The Closing Disclosure (continued)
Credits
Net Loan Amount
Earnest Money/Deposit
Seller Subsidy for Closing Costs (if any)
Grants & Assistance Programs (if any)
Other Adjustments/Gifts (if any)
The Settlement/Closing
67
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Other Important Closing Documents
The Note (Promise to Pay)
describes terms of the loan
The Deed of Trust
Authorizes trustee (lender) to foreclose on
default
Deed of Conveyance
Signed by Seller Only
Transfers Ownership
The Settlement/Closing
68
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
69
Pause for Questions
The first step to housing success
Please use the chat icon for
questions.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
After you Buy
Reference Materials
Questions
After You Buy
70
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Keep Good RecordsReceive Recorded Deed &
Title Insurance in the Mail.
Save all Settlement Documents in Safe Place.
Save all home improvement/maintenance records.
Income Tax Considerations
Consider Itemizing
Consider modifying withholding
After You Buy
71
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Budget Considerations
Pay Mortgage and Condo/HOA
Fees
Maintain Savings
Budget & Save for:
Future Repairs & Maintenance
Other non-monthly expenses
(e.g. auto insurance)
Desired Home Improvements
After You Buy
72
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Participate!Chances are, you will be part of a common
ownership community such as Condominium or a
Home Owners Association (HOA):
Know how your community is governed
Pay your Fees
Serve if you can
Vote!
After You Buy
73
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Resist !As a new owner, you will automatically get
MANY offers in the mail:
Many look official and related to your loan. Be careful, it
may be a scam!
Many offer you things you probably don’t need such as
mortgage protection. Other forms (such as life insurance)
may be better options for you.
And others may simply be tempting offers
from home goods stores. Take care not to
over-spend.
After You Buy
74
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
The first step to housing success
Get Help!If you have trouble making payments, get help early:
Contact your Mortgage Company
Use Community Resources such as bona fide credit
counseling agencies.
Don’t Delay!
After You Buy
75See Resource Guide in back of hand-out.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
The first step to housing success
Your handout includes the following
reference materials: Budget Worksheet
HOC, MPDU, CDA, REACH Program contact information
Signs of Predatory Lending
Glossary of Terms
Reference Material
76See Resource Guide in back of hand-out.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
77
Pause for Questions
The first step to housing success
Please use the chat icon for
questions.
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Session Review The Quiz !
The first step to housing success
First Time Home-Buyer Seminar The first step to housing success
T
FTHB Quiz One important thing to check when getting ready
to buy a home is your credit history by going to
Annual Credit Report.com (True or False)?
Earnest money is cash the seller of a property
pays the real estate agent for helping them sell
their home? (True or False)
Settlement and closing are the same thing and
are when the seller and buyer sign the papers
finalizing the transfer of ownership of the
property? (True or False)
The title search is when the settlement agent
drives by the property to verify it is still there?
(True or False)
The first step to housing success
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
FTHB Quiz Joint tenants is the type of real estate ownership
where if one of the joint owners dies, their share
of ownership goes to the remaining joint
owners. (True or False)
An escrow account is a savings account
maintained to pay future bills, such as property
taxes and hazard insurance. Often a mortgage
company will require such an account for the
homeowner (True or False)
A deed of trust is a legal document that shows
that County and State governments trust that
you will pay your taxes. (True or False)
.
The first step to housing success
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Thank you for attending!
Receive your Six (6) digit
code
Contact HCI for your FTHB
Certificate
programcoordinator@
hcii.org
301-590-2765
Present your nine (9) digit
code
Your FTHB certificate will
be emailThe first step to housing success
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
First Time Home-Buyer Seminar The first step to housing success
T
Budget Worksheet
Where does your money go? Consider all of these categories!
Housing
Rent or PITI $
HOA/Condo Dues $
Utilities (electric, gas, water/sewer) $
Trash Removal (if not in HOA/Condo Dues) $
Insurance (if not in PITI)* $
Home Maintenance/repairs * $
Telephone (1st
line) $
Transportation
Gas/Public Transit/Taxi, Parking $
Car/Truck Payment $
Insurance* $
Car registration * $
Car repairs and Maintenance * $
Insurance - Health, Life, Disability * $
Child Care
Day Care/Sitters $
Child Support/Alimony $
Diapers, etc. $
Food
Groceries $
Toiletries $
Lunch at Work/School $
Medical *
Doctor Visits/Co-Pay $
Dentist Visits $
Prescriptions $
Glasses $
Clothing
Clothes * $
Laundry/Dry Cleaning $
Note: For expenses that do not occur
monthly, estimate your annual expense
and divide by 12.
Budget Worksheet (continued)
Education *
Tuition$
Books/Supplies
First Time Home-Buyer Seminar The first step to housing success
T
$
Lessons (sports, music, dance) $
Gifts *
Birthdays $
Major Holidays $
Personal
Barber/Beauty Shop* $
Cigarettes, Beer, Wine Liquor $
Entertainment
Cable TV $
Internet Access $
Movies, Sporting Events, Concerts, CDs, etc. $
Restaurants $
Fitness/Social Clubs $
Vacations/Trips* $
Gambling/Lottery Tickets $
Hobbies & Crafts $
Pet Care/Supplies $
Additional Cell Phones $
Debts
Student Loans $
Credit Card Minimum Monthly $
Past Medical Bill/Judgments $
Personal Loans $
Note: For expenses that do not occur
monthly, estimate your annual expense
and divide by 12.
TOTAL $ How does this compare with your average
monthly take-home pay?
How will changes in your housing expense category
affect your other expenses?
First Time Home-Buyer Seminar The first step to housing success
T
Moderately Priced Housing Program (MPDU)
Montgomery County's Moderately Priced Dwelling Unit (MPDU) Program offers affordably priced
townhomes and condominiums – both new and resale – to first-time homebuyers who have a
moderate household income.
ALTERNATIVES:
In addition to the County MPDU Program, there are
also programs run by the cities of Rockville &
Gaithersburg. Use the following contact information
for these programs:
City of Rockville: (240) 314-8218
www.rockvillemd.gov/residents/MPDU
City of Gaithersburg (301) 258-6310
www.gaithersburgmd.gov
These are separate programs and may have entirely different rules and eligibility criteria.
For more information, contact:
Montgomery County Department of
Housing & Community Affairs (DHCA)
1401 Rockville Pike, 4th Floor
Rockville, MD 20852
Contact 311 with questions
First Time Home-Buyer Seminar The first step to housing success
T
HOC Mortgage Purchase Program
The Housing Opportunities Commission (HOC) First Trust Mortgage Purchase Program (MPP)
provides below-market rate mortgages to first-time homebuyers of moderate income.
You can work with a realtor, or work directly with the owner or builder, to find a home in Montgomery
County that falls within the amount you can afford (the results of getting pre-approved or pre-qualified
.
For more information, contact:
Housing Opportunities Commission (HOC)
10400 Detrick Avenue
Kensington, MD 20895
Phone: (240) 627-9400
First Time Home-Buyer Seminar
The first step to housing success
The first step to housing success
CDA Maryland Mortgage Program
The CDA Maryland Mortgage Program provides low-interest mortgage loans to eligible homebuyers
with low- to moderate-income households through private lending institutions throughout the State.
The Program is targeted primarily to first-time homebuyers, and can assist second time homebuyers
to buy in targeted areas.
For more information, contact:
Single Family Housing Community Development Administration
Dept of Housing and Community Development
100 Community Place
Crownsville, MD 21032-2023
Phone: 410-514-7530
Toll Free: 800-638-7781
First Time Home-Buyer Seminar
The first step to housing success
The first step to housing success
Rockville R.E.A.C.H. Program
R.E.A.C.H. is a joint venture between the City of Rockville and Housing & Community Initiatives, Inc.,
a nonprofit charitable organization. R.E.A.C.H. is structured to assist applicants with loans for down
payment and/or closing costs assistance that will enable them to become homeowners in Rockville.
Applicants must meet the program criteria, qualify for a home mortgage and be able to repay the
R.E.A.C.H. Loan. This creates a revolving fund that is perpetually replenished.
For more information, contact:
Housing & Community Initiatives, Inc.
640 E. Diamond Ave, Suite C
Gaithersburg, MD 20877
301-590-2765
First Time Home-Buyer Seminar
The first step to housing success
The first step to housing success
Recognizing “Predatory Lending” Practices
Predatory Lending encompasses lender practices and mortgage products that can endanger the
financial health and well-being of consumers. It can even result in someone loosing his home.
In particular, be alert and wary of these types of lender activities and tactics:
Lenders who call you at home on the telephone, or come to your door uninvited;
Lenders who keep calling you at home and won’t take no for an answer;
Lenders who are the sole suggestion of a home improvement contractor;
Lenders who solicit business via direct mail, fliers, the internet and television commercials;
Lenders who promise that bad credit is no problem;
Lenders who want to refinance your credit card debt into a first or second trust on your home;
Lenders who try to refinance your home mortgage often, but with no advantage to you;
Lenders who use pressure tactics and fast talking to get you to take their loan;
Lenders who say they can rescue you from financial trouble and can even prevent foreclosure;
Lenders who do not take the time to clearly explain the nature of a loan you are taking out;
Lenders who scare you into settling on a loan with threats that you must go through with it;
Lenders who discourage you from having a trusted third party review the mortgage documents with you or from accompanying you to the settlement.
And, be alert and wary of these types of mortgage products and features:
Loans with no review of your new house payment in relation to your income. These loans only look at the value of your home and not your ability to make the new payments.
Loans with a single-premium credit life or disability insurance policy. These add unnecessary principal to your loan amount. Only take out this type of insurance if it is separate from your mortgage and the payments are made on a monthly basis.
Loans with prepayment penalties. These can hinder you in refinancing to get lower rates and better terms in the future.
Loans with balloon payments (call features). These payments are a lump sum payment required of the homeowner at a specific date. They can often be large and unplanned for. Homeowners can be caught with a huge payment due when they cannot afford it or are unable to refinance their loan to accommodate this payment.
Loans with adjustable rates with frequent changes and with no caps or restrictions on the adjustments.
First Time Home-Buyer Seminar
The first step to housing success
The first step to housing success
Loans with negative amortization. These loans charge a certain interest rate each month, but require you to only pay a portion of this charge when you make your payment. The result is that the extra unpaid interest is added to the amount of your loan. With this you can owe the lender more than you initially borrowed from them.
Loans with mandatory arbitration clauses that require you to agree to resolve any and all disputes arising out of the loan through arbitration before you get the loan. This unfairly restricts your legal rights, if you are a victim of abusive lending practices.
Also, be alert and wary if you fall into one or more of these categories:
You are elderly and live alone;
You are unfamiliar with the mortgage process and find it confusing;
You do not understand the financial terminology used;
You have limited reading skills;
You are a low-income family;
You are a woman;
You are a minority;
You live in a minority community;
You are a new immigrant;
You have suffered a financial crisis recently, such as loss of a job, illness, death or divorce;
You are at home during the day;
You live on a limited fixed income;
You own your home outright with no mortgage;
Your English language skills are limited and someone offers to take care of everything for you, but does not clearly explain the details to you.
First Time Home-Buyer Seminar
The first step to housing success
The first step to housing success
Glossary of Terms Abstract (Of Title)
Report of Title Search by Abstractor for examination by Title Attorney
Acceleration Clause A clause in the Mortgage Note stating that loan balance is due in full following default
Agreement/Contract of Sale Contract between buyer and seller for sale of real estate. Must be in writing to be enforceable
Amortization Process by which a loan is paid in full over a specified number of periodic payments
Appraisal Determination of value of property by licensed Appraiser
Appreciation The value of the property increases
Assumption of Mortgage Buyer assumes existing indebtedness on property
Broker (See Real Estate Broker or Mortgage Broker)
Building Line or Setback
County requirement for distance from boundary to structure
Closing Costs Cost of transferring property- legal fees, county/state transfer fees, lender fees
Closing/Settlement Day Day that ownership transfers – seller signs Deed of Conveyance, buyer pays purchase price
Cloud (On Title) Unpaid tax liens, judgment liens
Commission Fee for sale of real property under listing agreement or exclusive buyer broker retainer agreement
Condemnation County declaration of unsafe property
Condominium A property that is part of a common ownership community in which the purchaser owns a unit and an undivided interest in the common areas such as lobby, recreation facilities, etc.
Contract of Sale
A signed agreement between purchaser and owner to transfer ownership at a specified future date for specified amount of money.
Contractor Licensed Construction Company, electrical, plumbing, roofing.
Conventional Mortgage Mortgage loans not insured by FHA or guaranteed by Veterans Affairs
Cooperative Housing Property owned by corporation and shares owned by residents who are tenants of the corporation
Deed of Conveyance A document signed by the seller that transfers title (ownership) to a property and is recorded at the Court House
Deed of Trust A document signed by the purchaser that gives the Mortgagee (lender) the right to foreclose in the event of Default.
Default Mortgagor (purchaser) Mortgage fails to re-pay the loan as agreed
Depreciation Value of property decreases
Documentary Stamps State tax on transfer of real property
Down Payment That portion of the sales price paid in cash by the purchaser at settlement
Earnest Money Deposit held in escrow until settlement - given by purchase in consideration of seller’s agreement not to sell the property to anyone else in the interim – and applied toward down payment at settlement.
Easement Rights Right-of-way for government, utilities or other access
Encroachment Part of building, fence or other structure that intrudes on property
First Time Home-Buyer Seminar
The first step to housing success
The first step to housing success
Encumbrance Property interest or lien on property
Equity Owner’s interest in property usually calculated as market value minus mortgage balance
Escrow Depository account for earnest money held in trust until settlement. Also money held by lender to pay taxes and insurance
Foreclosure Process by which mortgagee can take property on which the owner has defaulted on the payment
General Warranty Deed A deed which conveys the grantor's interests in and title and warrants good title free of defects
Grantee Buyer of property
Grantor Seller of property
Hazard Insurance Insurance for fire and other casualties
HUD U.S. Department of Housing and Development, enforces federal housing laws
HUD-1 A uniform Settlement Statement or account of all funds in a transaction
Interest Charge paid by borrower to lender of money usually expressed as a percent of value per annum
Lien Claim filed against deed on property for money owed
Loan Funds given in exchange for a promise to pay (see Mortgage Note and Mortgage)
Loan Officer The individual within a Financial Institution or Mortgage Broker that interfaces with borrower to originate a loan.
Marketable Title Title is free of liens and encumbrances
Mortgage A lien against property for which money is borrowed
Mortgage/Loan Commitment
Approval of loan after all information has been verified
Mortgage Note Agreement to repay a loan under specified terms
Mortgagee Lender of money secured by property
Mortgagor Borrower of money secured by property
Plat Map or drawing showing boundaries, easements, location of structures
Points A specified percentage of loan amount paid to lender as a fee at settlement
Mortgage Broker An individual or company that earns a fee for originating a loan with a financial institution on behalf of a borrower
Mortgage Insurance Premium Fee paid by borrower to HUD to pay for cost of FHA mortgage insurance
Prepayment Payment of mortgage principal before due date
Principal Mortgage loan balance owed
Purchase Agreement See Contract of Sale
Real Estate Broker Person licensed to engage in helping buyer or seller buy or sell
Refinancing Obtain new mortgage loan and pay off old one
Restrictive Covenants Private restrictions limiting use of property
Sales Agreement See Contract of Sale
Special Assessments Periodic or one time charge to owners to pay for improvements in common ownership communities
Special Lien A lien against a specific piece of property, not all property
First Time Home-Buyer Seminar
The first step to housing success
The first step to housing success
State Stamps Transfer taxes paid to state or county to transfer property
Survey Drawing of boundaries of lot, situate of improvements, if any, and easements
Tax (Real Estate) Fee levied by government against property owners, normally annually
Title Ownership of property
Title Insurance Insures property owner for claims against the title
Title Search or Examination Search land records for liens or encumbrances against title
Trustee A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another.
Zoning Ordinances The acts of an authorized local government establishing building codes, and setting forth regulations for property land usage.