new homebuyer presentation

It’s Great to be Home™Homebuyer Workshop

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It’s Great to be Home™ Homebuyer Workshop

Introduction• Bank of America Home Loans promise:We will always be a responsible lender.We will help create successful homeowners.

• The purpose of this seminar is to empower you with the knowledge to make wise financial decisions throughout the home buying process.

• From this session you will learn:– The steps you can take to be a responsible homeowner

and preserve your biggest lifetime investment.– Information about affordable mortgage programs and

services designed to help borrowers become successful homeowners.

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Before You Start Looking for a Home

• Owning a home is not for everyone:– Some people do not want the responsibility.– Others do not want to change their spending habits

in order to keep up with monthly payments and maintenance on a home.

• By the end of this session, you will have a better idea if homeownership is in your best interest.

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Homeownership Advantages and Disadvantages

Advantages Disadvantages

Tax benefits* Maintenance and repairs

Equity in property ownership over the long-term

No guarantees that the property will appreciate in value

Pride of owning a home Decreased mobility

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*Consult your tax advisor


Should I Buy a Home or Not?

• Knowing how homeownership fits into your larger financial plan is important.

• Ask yourself if owning a home is an achievable goal given your current situation, and prioritize it among any other financial goals you may have.

• Also ask yourself:– Would buying a home mean stretching to my

financial limits?– If so, where can I make changes in my budget

to keep it more balanced?– Will I still be able to save enough for other

opportunities or unexpected emergencies?

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DO NOT DUPLICATE WITHOUT PERMISSION6

Managing Your Money

• Now that you have decided you want to become a homeowner, you need to create a savings and spending plan that is realistic to your lifestyle. Visit www.bankofamerica.com/homebuyereducation to download the following helpful tools:

– Monthly spending and saving plan– Daily spending worksheet

• Bankofamerica.com/homebuyereducation also provides helpful tips on managing your money.


How Much Should I Borrow?

Now that you have established a budget and savings plan• Ask yourself, “How much should I borrow?” instead of, “How

much could I borrow?” This is an important distinction. – Having a full understanding of your current and future

financial goals is an important factor to help understand how homeownership will fit into this scenario.

• When you think of buying a home, ensure that your expectations are realistic.

– Keep in mind how much you can comfortably afford to spend on a home without putting the rest of your financial plans on hold, so you can enjoy the benefits of homeownership more fully. • A rough estimation for how much home you can possibly qualify for is to

multiply your gross annual income by 2.5 to 3. • You also need to consider other monthly obligations like, homeowners

insurance, homeowners association fees and home maintenance.

– Also consider whether you have sufficient cash available for a down payment and closing costs.


How Much Should I Borrow?

• Once you determine a monthly housing payment you can comfortably afford, including other costs of home ownership, such as insurance, homeowner association fees, etc., the next step is to get an estimate of how much you can comfortably borrow.

– One of the easiest ways to do this is to prequalify for a loan.

– Prequalification is a good first step to seeing what your lender could offer you in terms of loan amount and the type

of loans available to you. (Please note that prequalification is not a loan approval or commitment to lend.)


Getting Prequalified Before Applying for a Mortgage Loan

• Prequalification– Prequalification is a process that provides an estimate

of your borrowing power. • The process estimates how much money a prospective home

buyer might be eligible to borrow before they apply for a loan.• You will need to provide information about your credit,

assets and debts.

• Preapproval1

– Preapproval is a formal commitment by the lender to lend you the money to buy a house based on the verification of your income, assets, employment and debt. It is subject to an appraisal and title review of the property after you sign the contract to purchase, and no change in your financial condition before final loan approval.

1 If the interest rate is not locked or the rate protection expires, any rate increase may lower the amount for which you have been preapproved.

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What Is Credit and Why Is It Important?

• Credit is the act of borrowing money with the promise to pay it back in the future.

• When you apply for credit, the lender reviews your credit history to help them make a decision to approve or deny your credit request.

– This history comes from a credit report.

• A strong credit history can open up opportunities, making it easier for you to get:

– A mortgage loan– Lower interest rates and/or closing costs

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What Is a Credit Report and a Credit Score?

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• Lenders report your credit history to a credit reporting agency (also known as credit bureau) who creates a credit report that contains your payment history, personal information, collection accounts, lender credit inquiries and public records information.

– It also shows whether you have paid your debts on time, if you have ever been late in making payments, or if you have ever failed to make payments.

• A credit score is a single number that summarizes your traditional credit history on your report.

– FICO score is a proprietary (privately owned) model used extensively in the mortgage industry.• Score range: 350 – 850

– Vantage Score is developed jointly by the three major national credit reporting companies. It is a consistent, generic way for the agencies to provide a credit score.• Score range: 501 – 990


Ordering a Credit Report and a Credit Score

• You should obtain your own credit report to verify that all information is accurate, and to get a sense of how others view your credit.

• You can request a free credit report once a year from each credit bureau:

– Experian• 1.888.397.3742• www.experian.com

– TransUnion• 1.800.888.4213• www.transunion.com

– Equifax• 1.800.685.1111• www.equifax.com

• You can also obtain your free credit report online at www.annualcreditreport.com.

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Loan Application

• The application provides information about a prospective borrower's employment, income, assets, debts, the purpose of the home loan and about the property itself.

• Items usually required for submission with the loan application include:

– W-2s and federal income tax returns for the last two years– Paycheck stubs covering the past 30 days showing

current and year-to-date income (if self-employed, different documents are required)

– Three most recent monthly statements for any checking, savings or other financial accounts to show the source for down payment and closing costs funds

– Documents verifying other income sources or assets (such as Social Security, alimony, child support, pension, stocks, IRAs, 401k, etc.)

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Affordable Mortgage Products and Programs• Our products and programs offer a wide variety of solutions that can

increase homeownership opportunities for people who might have difficulty qualifying for a traditional mortgage.

• We have a wide range of loan products and programs that fit different financial situations.

• By learning more about the different types of home loans and their advantages, you’ll have the knowledge and confidence to choose the home loan that’s right for you.

• Our new interactive Bank of America Home Loan Guide located at bankofamerica.com/homeloans can walk you through the homeownership process.


Affordable Mortgage Products and Programs

•Our affordable loan programs offer a number of ways to open doors to homeownership for low-to-moderate income (LMI) borrowers and first-time homebuyers.

– An LMI borrower is a borrower whose income is less than 80% of the median income for the area they live in.

– LMI borrowers may apply for the following:• FHA-insured loans• VA fixed and adjustable-rate loans for veterans• Affordable Loan Programs• Rural Housing Service Loans• Mortgage Revenue Bonds• Down Payment Assistance Programs

•The American Recovery and Reinvestment Act of 2009 offers aFederal Government tax credit of up to $8,000 for first-time homebuyers until December 1, 2009. Ask your tax advisor for details.

• Certain states are also offering state tax credits for first- time homebuyers through December 2009.


Bank of America’s Clarity Commitment™

• It’s a one-page loan summary of key loan terms given to you in conjunction with the official documents received in your loan package.

• It is intended to be a clear and simple description of your loan terms.

• It’s very important that you read and understand all your loan documents

– Don’t hesitate to ask questions if you don’t understand something before signing any document .

The summary is provided as a convenience, does not serve as a substitute for a borrower's actual loandocuments, and is not a commitment to lend. Borrowers should become fully informed by reviewing all ofthe loan and disclosure documentation provided.

Note: Clarity Commitment™ not available on all products.

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Finding a Home

• Home features checklist– Before you start looking for a home, write down the desired

characteristics and evaluate how the homes you look at meet your desires.

• Who is on your “home buying team”?

• When looking for a home, consider:– Different types of homes

• Single-family• Duplex• Condominium• Other

– Location– Neighborhood– Space needs

• It’s time to make an offer!

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It’s Great to be Home

• Making your monthly payment:– The preferred payment method is an automatic draft from

your bank account.– If mailing, send your payment so that it arrives on or before

the due date to avoid late fees.– Write down your account number on your check.– If necessary, include any appropriate escrow expenses (taxes

and/or insurance) in your monthly payment.

• Avoiding foreclosure:– Call your lender if you are having problems making your monthly

payment. It is very important that you contact your lender early! – In addition to speaking to your lender, there are many

nonprofit housing counseling organizations that have expert staff to assist you free of charge.• Check the www.HUD.gov website for a list of HUD approved

counseling agencies

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It’s Great to be Home

• Home damage:– If the damage to your home is covered by your

homeowner’s insurance policy, contact your insurance agent and fill out a claim.

• Preserve your home:– Your loan requires you to maintain your property

in good condition.– Always use licensed contactors for repairs you

are unable to do yourself.

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How We Could Help You Achieve Your Homeownership Goals• Our dedicated mortgage loan officers are committed to helping you

become a successful homeowner.

• That’s why we’ll begin helping you gather the information you need to decide if the time is right for you to purchase a home.

• We also promise you:– Personal service provided by a reliable mortgage loan officer who will

work with you to explain your loan options in clear terms so that you can make the choices that are right for you.

– Free homebuyer consultation and estimates, so you’ll know how much home you can comfortably afford before you begin looking.

– Affordable mortgage loan products and programs for qualified borrowers.

– Convenient ways for you to manage your monthly payments.– Homebuyer education to help you decide if the time is right for you to

buy a home.• Visit www.bankofamerica.com/homebuyereducation for more

information.

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Home Buying Online Resources

• For Online Homebuyer Education Certification, visit:

www.bankofamerica.com/homebuyereducation

• For Online Homebuyer Education Certification in Spanish, visit:

www.bankofamerica.com/mihogar

• Download a free electronic copy of Bank of America’s It’s Great to be Home™ Workbook* referenced throughout this presentation ( ) at:

www.bankofamerica.com/neighborhoodlending

*Workbook is located under the “Counseling, Education, & Grants” section of the Web site.

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Appendix: Common Mortgage Terms

Annual Percentage Rate (APR) — the method used to calculate the total cost of your loan. The calculation includes the mortgage interest cost over the life of the loan and certain out-of-pocket costs you may pay to close your loan.

Down Payment — the sum of money needed up front to pay for a home; a mortgage loan covers the rest of the cost.

Equity — the difference between the value of your home and the amount you still owe on the mortgage.

Gross Monthly Income — the total amount a person earns per month before any taxes or expenses are deducted.

Insurance — there are two types of insurance fees typically collected each month as part of your mortgage payment: homeowner’s insurance which protects your property in case of damage, and private mortgage insurance which protects your lender in the event you can’t pay your mortgage.

Interest — the cost of borrowing the money.

Interest Rate — the actual rate of interest you’ll pay over the life of the loan for the use of the funds. Your monthly mortgage payment (principal and interest) is calculated using the mortgage interest rate — not the APR.

Lien — legal claim against a property that must be paid when the property is sold.

Mortgage — term to describe the loan used to buy a home. The home is the collateral for the loan, and it acts as a guarantee that the loan will be repaid. A monthly mortgage payment pays off both the principal of your loan and interest as well as insurance and tax.

Points — optional one-time fees paid up front by the borrower to the lender to obtain a lower interest rate on the loan. Each point is equivalent to 1% of the loan amount.

Principal — the amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.

Taxes —property taxes assessed by your local government and collected by your lender as part of your monthly payment.

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Bank of America, N.A., Member FDIC Equal Housing Lender © 2009 Bank of America Corporation. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. 00-62-1471NSB