1. For First Time Home Buyers A Presentation of Delaware Bankruptcy Inn of Court Pro Bono Project Homeownership Pointers

2. Purpose - Gives you information on the home buying process - Describes first time homebuyer programs - Helps you become a savvy buyer

3. Objectives - Describe the benefits and pitfalls of renting versus owning a home - Identify the steps required to buy a home - Determine your readiness to buy a home

4. Benefits of Renting - No property maintenance - Lease for one year (or less) - No property taxes or homeowner’s insurance

5. Benefits of Owning a Home - Payments build equity - Mortgage interest is tax deductible - Home increases in value over time - Home may be passed on to family - The home is yours

6. Components of a Mortgage Payment - Principal - Interest - Taxes - Insurance

7. Steps to Buying a Home Step One: Determine if you are ready to buy a home –Regular source of income –Credit history –Money for down payment –Closing costs

8. Steps to Buying a Home Step Two: Determine how much mortgage you can afford - Identify all monthly expenses - Build in a cushion for savings and home repairs

9. Steps to Buying a Home Step Three: Determine what mortgage option works best for you -Type: 1 st, 2 nd, 3 rd -Term: 15 yrs, 20 yrs, 30 yrs -Interest rate: fixed, variable

10. Interest rate comparison 30 yr Mortgage 5% interest7% interest 10% interest $50,000 Loan $268.41 /mo $332.65 /mo $438.79 /mo $75,000 Loan $402.62 /mo $498.98 /mo $658.18 /mo $100,000 Loan $536.82 /mo $665.30 /mo $877.57 /mo

11. Steps to Buying a Home Step Four: Qualify for a loan -Meet with a mortgage lender -Obtain pre-approval

12. Pre-approval for a Mortgage The pre-approval process: - Is a commitment from a bank to lend you money - Lets you know how much money you can obtain - Is provided to Seller along with an offer to show you can buy the home

13. Good Faith Estimate An estimate of the cost of settlement services that the lender should give you when you apply for the loan - Closing costs - Taxes and insurance - Total monthly payment

14. Steps to Buying a Home Step Five: Find the right home - Research neighborhoods and schools - Offer and acceptance - Home inspection - Closing

15. Delaware State Housing Authority First Time Homebuyers Program Purpose - Provides first mortgage financing at below- market interest rates Loan Terms - 30 year fixed rate loans currently at 4.25%

16. Delaware State Housing Authority First Time Homebuyers Program Borrower Qualifications CountyArea1 or 2 Person Households 3 or More Person Households New Castle Non-targeted$77,800$89,470 Targeted$93,360$108,920 Kent & Sussex Non-targeted$70,800$81,420 Targeted$84,960$99,120

17. Delaware State Housing Authority First Time Homebuyers Program Property Qualifications CountyTargeted vs Non- targeted 1 Unit Home New CastleNon-targeted$378,000 Targeted$462,000 KentNon-targeted$338,625 Targeted$413,875 SussexNon-targeted$337,500 TargetedN/A