Homebuyer Homebuyer Education Education SeminarSeminar

Homebuyer Education Homebuyer Education SeminarSeminar

Presented by:Presented by:

Cherise WalkerCherise Walker

Community Lending SpecialistCommunity Lending Specialist

About me…About me…

o Professional/CareerProfessional/Careero 8 years in the mortgage industry 8 years in the mortgage industry

serving the community and their needsserving the community and their needs

o EducationEducationo University of Michigan – Ann ArborUniversity of Michigan – Ann Arbor

o BA in Psychology with a minor in African & BA in Psychology with a minor in African & African American StudiesAfrican American Studies

Homebuyer Education Homebuyer Education SeminarSeminar

This is an opportunity to help This is an opportunity to help you understand what is you understand what is involved in the purchase of involved in the purchase of your first home. The more you your first home. The more you know, the easier it will be to know, the easier it will be to navigate through the process. navigate through the process. An educated consumer is able An educated consumer is able to make the best decisions!to make the best decisions!

OverviewOverviewo Is homeownership for me? Is homeownership for me? o How do I know what is affordable?How do I know what is affordable?o What is a lender looking for and what What is a lender looking for and what

documentation do I need to bring? documentation do I need to bring? o What is it going to cost me to get into What is it going to cost me to get into

a house?a house?o Is there down payment assistance Is there down payment assistance

available?available?o What types of loans should I consider?What types of loans should I consider?

Question #1Question #1

o Is homeownership for me? Is homeownership for me?

Welcome to A Buyer’s Welcome to A Buyer’s Market!Market!

o There are more homes for sale than there are consumers to There are more homes for sale than there are consumers to buy thembuy them

o Buyers, therefore, have more negotiating powerBuyers, therefore, have more negotiating powero Seller may accept a lower priceSeller may accept a lower priceo Seller may be willing to pay closing costsSeller may be willing to pay closing costso Appliances, furniture, and other items may come with the Appliances, furniture, and other items may come with the

househouseo Miscellaneous “seller’s concessions” and incentivesMiscellaneous “seller’s concessions” and incentives

o More time to look around and be sure the home you select is More time to look around and be sure the home you select is right for youright for youo Less chance of another buyer purchasing a home you may Less chance of another buyer purchasing a home you may

be interested inbe interested ino Less chance of someone “overbidding”Less chance of someone “overbidding”o You can take your timeYou can take your time

o Numerous foreclosed homes and short sales are on the Numerous foreclosed homes and short sales are on the marketmarket

o Low interest rates Low interest rates

Advantages of Home Advantages of Home OwnershipOwnership

o A place to call your own and where A place to call your own and where you want to liveyou want to live

o Pride of ownership and Pride of ownership and independenceindependence

o Being part of a communityBeing part of a communityo Good investment – build equity in Good investment – build equity in

your home (typically)your home (typically)o Income tax benefits, tax deductionsIncome tax benefits, tax deductions

o Mortgage InterestMortgage Interesto Property TaxesProperty Taxes

Disadvantages of Home Disadvantages of Home OwnershipOwnership

o Can be more expensive than rentingCan be more expensive than renting

o Homeownership can take money and time away Homeownership can take money and time away from other thingsfrom other things

o Your investment (equity) can build slowly. Your investment (equity) can build slowly. There’s no guarantee of appreciation, especially There’s no guarantee of appreciation, especially in today’s market.in today’s market.

o If you have to move, selling a home may be more If you have to move, selling a home may be more difficult than terminating a leasedifficult than terminating a lease

o There is more risk: Non-payment of mortgage There is more risk: Non-payment of mortgage payment = foreclosure = loss of investment and payment = foreclosure = loss of investment and results in poor creditresults in poor credit

Question #2Question #2

o What can I realistically What can I realistically afford?afford?

What can I realistically What can I realistically afford?afford?

How do you know what you can afford for a How do you know what you can afford for a mortgage?mortgage?

What is PITI?What is PITI?o P = PrincipalP = Principalo I = InterestI = Interesto T = TaxesT = Taxeso I = InsuranceI = Insuranceo Mortgage Insurance Mortgage Insurance o Homeowner’s Association Dues Homeowner’s Association Dues

(Condominiums)(Condominiums)

What can I afford?What can I afford?

o First Step - Why is it important to First Step - Why is it important to track expenses?track expenses?

o Know how you are spending your Know how you are spending your moneymoney

o Determine what expenses you can Determine what expenses you can control (e.g. dining out, control (e.g. dining out, entertainment, movies, cable, cell entertainment, movies, cable, cell phone, etc.)phone, etc.)

o This information should be used to This information should be used to prepare a budgetprepare a budget

AffordabilityAffordability

If you need to change how you spend If you need to change how you spend your money in order to afford a your money in order to afford a home, you need to start making home, you need to start making those changes those changes beforebefore you make the you make the purchase and move into your new purchase and move into your new home. home. Why is that?Why is that?

o What is tracking expenses?What is tracking expenses?o Why do you think it is important?Why do you think it is important?o Do you track your expenses Do you track your expenses

regularly now?regularly now?

Track Expenses - Track Expenses - CharacteristicsCharacteristics

People who do People who do notnot track track their expenses:their expenses:

o May not be as May not be as disciplineddisciplined

o Do not feel that it is Do not feel that it is important important

o May not have a budgetMay not have a budgeto May not know how to May not know how to

savesaveo Are often in debtAre often in debto May have poor creditMay have poor credito Often do not have Often do not have

financial goalsfinancial goalso Often look for instant Often look for instant

gratificationgratification

People who do track their People who do track their expenses:expenses:

o Are often more Are often more disciplineddisciplined

o Recognize that it is Recognize that it is important to know where important to know where their money is goingtheir money is going

o Often have a budgetOften have a budgeto Are able to save money Are able to save money o Usually have manageable Usually have manageable

debt or no debt at alldebt or no debt at allo Usually have better creditUsually have better credito Establish financial goalsEstablish financial goalso Are willing to sacrifice Are willing to sacrifice

some some wantswants in order to in order to reach their financial reach their financial goalsgoals

o Allows you to splurge and Allows you to splurge and treat yourself every now treat yourself every now and thenand then

Question #3Question #3

o What is a lender looking for What is a lender looking for when when

you apply for a home loan?you apply for a home loan?

Lender RequirementsLender Requirements

o Employment History Employment History o Source of IncomeSource of Incomeo Financial Liabilities (Debts on Credit Financial Liabilities (Debts on Credit

Report)Report)o AssetsAssetso Debt-To-Income Ratio (DTI)Debt-To-Income Ratio (DTI)o Credit HistoryCredit Historyo Source(s) of Down PaymentSource(s) of Down Payment

Question #4Question #4

o What is it going to cost me to What is it going to cost me to get a loan?get a loan?

Loan CostsLoan Costso Down PaymentDown Paymento Closing CostsClosing Costs

o Bank fees Bank fees o Title costsTitle costso County recording feesCounty recording feeso Appraisal, survey, pest inspectionAppraisal, survey, pest inspection

o Pre-paid CostsPre-paid Costso Property taxes to seller (reimbursed to seller)Property taxes to seller (reimbursed to seller)o Insurance (First year paid up front)Insurance (First year paid up front)o Property tax pro-rations (collected up front)Property tax pro-rations (collected up front)o First month’s interest on new loanFirst month’s interest on new loan

Question #5Question #5

o What assistance is available What assistance is available for the purchase of my home?for the purchase of my home?

Down Payment Assistance Down Payment Assistance ProgramsPrograms

o NSP (Neighborhood Stabilization NSP (Neighborhood Stabilization Program)Program)

o Varies from community to communityVaries from community to communityo Some are forgivableSome are forgivableo Some help with down payment costs as well Some help with down payment costs as well

as home improvementsas home improvementso You are not allowed to use MSHDA DPA You are not allowed to use MSHDA DPA

funds in addition to these fundsfunds in addition to these fundso Need to check with your particular Need to check with your particular

community for the detailscommunity for the detailso Income limitationsIncome limitations

PNC Community GrantPNC Community Grant

PNC Bank will provide a grant of up to PNC Bank will provide a grant of up to $1200 maximum toward eligible $1200 maximum toward eligible consumer’s closing costs and/or prepaids consumer’s closing costs and/or prepaids at the time of closing. The grant:at the time of closing. The grant:

o May not exceed actual closing costs and May not exceed actual closing costs and prepaidsprepaids

o May not be used for down payment or to May not be used for down payment or to buy the rate downbuy the rate down

o The customer must not receive any cash The customer must not receive any cash backback

Question #6Question #6

o What type of loan should I What type of loan should I consider?consider?

Available Mortgage Available Mortgage ProductsProducts

o FHA 203FHA 203bb loan loan (Traditional FHA (Traditional FHA loan)loan)

o FHA 203FHA 203kk loan loan (Rehabilitation FHA (Rehabilitation FHA loan)loan)

o HomePathHomePatho HomePath Renovation MortgageHomePath Renovation Mortgageo MSHDAMSHDAo ConventionalConventionalo VAVAo Rural DevelopmentRural Development

Home Buyer SeminarHome Buyer Seminar

Thank you for allowing me the Thank you for allowing me the opportunity to speak with you, if you opportunity to speak with you, if you would like to get pre-approved for a would like to get pre-approved for a mortgage I will be pleased to assist you.mortgage I will be pleased to assist you.

Cherise WalkerCherise Walker

Community Lending Specialist, PNC BankCommunity Lending Specialist, PNC Bank

(248) 729-8242(248) 729-8242