1. Eagle Home Mortgage
Presents

2. What You Need to Know About Buying Your First Home
04/16
Committed to Seeing You Home.

3. Committed to Seeing You Home.
Presented by:
Eagle Home Mortgage – Ty Thompson, Loan Officer NMLS #226836, CA #CA-DOC226836, OR
| C: | O:
3550 Excel Drive, Suite 101 Medford, OR 97504
Universal American Mortgage Company, LLC dba Eagle Home Mortgage - Company NMLS #1058, Company Mortgage Lending License #ML , Branch NMLS #803193, CA #813J157, 3550 Excel Drive, Suite #101, Medford, OR Certain restrictions apply. This is not a commitment to lend. Applicants must qualify. Equal Housing Lender. Models/Lifestyles shown do not reflect any ethical/racial preference.
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4. Committed to Seeing You Home.
What is Real Estate?
Defined by Merriam Webster as “property in buildings and land”
Pertains to ownership of land and improvements thereon
Fee simple (ownership) or leasehold estate (lessee)
Condominium (individual ownership of a unit in a multi-unit structure)
Co-operative (ownership of an interest in the entity that owns the property)
Timeshare (ownership of unit for a defined time period per calendar year)
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5. Committed to Seeing You Home.
What is a Mortgage?
A temporary loan used to finance the purchase of real property, also known as a home loan
A mortgage is likely to be made up of several parts
The collateral used to secure the loan
Principal and interest payments
Taxes and insurance
Mortgage insurance, if applicable
Source:
Source:
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6. Committed to Seeing You Home.
Home Loan Programs
We offer a wide variety of programs
Conventional
FHA Insured Loans/VA Guaranteed
USDA (Rural)
Local, County and State Bond Programs
Adjustable Rate Mortgages
In-house Jumbo
Specialty Loans
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7. Conventional Mortgages
Conforming loans
Loan limit $417,000, or higher in some high cost areas*
Non-Conforming loans (or Jumbo Loans)
Non conforming loans may have a higher interest rate and/or higher permitted loan-to value (LTV) ratios
Conforming loans are eligible for purchase by Fannie Mae or Freddie Mac and must meet certain underwriting requirements.
Non-Conforming loans (or Jumbo Loans) are not eligible for purchase by Fannie Mae or Freddie Mac because they do not meet the standard requirements
*Some counties have higher loan limits. Go to FHFA.GOV to view all.
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8. Conventional 3% Down Payment Programs
Fannie Mae HomeReady 97% LTV (Loan to Value) financing
Principal residence
No minimum borrower contribution necessary from own funds
Borrower may not own any other properties at closing
Non-occupant borrowers permitted, with restrictions
Non-borrower household income allowed, with restrictions
Income limits apply
Homeowner education class required, through special provider
No income limits in low-income census tracts
100% of area median income (AMI) in high-minority census tracts or designated disaster areas
80% of AMI in all other census tracts
Non-occupant borrowers permitted to maximum 95% LTV in DU. Income considered as part of qualifying income and subject to income limits. No limitation on ownership of other property for non-occupant borrower.
Per UAMC guidelines: Manufactured housing not allowed.
Source:
AMI data source:
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9. Conventional 3% Down Payment Programs (Continued)
Freddie Mac Home Possible Advantage - 97% LTV
Primary residence
No minimum borrower contribution necessary from own funds
All borrowers must occupy residence
Borrowers may not own any other properties at closing
Income limits apply
Homebuyers class required
Per UAMC guidelines: Manufactured housing not allowed.
Source:
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10. Private Mortgage Insurance
Private Mortgage Insurance (PMI) is paid on Conventional loans with less than 20% down
Paid by the borrower to insure the lender against default/loss
PMI may be tax deductible*
May be cancelled when principal balance reaches 80% of the original value**
The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage.  
Automatic PMI termination Even if you don’t ask your lender to cancel PMI, your lender still must terminate PMI on the date when your principal balance is scheduled to reach 78 percent of the original value of your home. You also need to be current on your payments on the anticipated cancellation date. Otherwise, PMI will not be terminated until shortly after your payments are brought up to date.
*Certain restrictions apply. Limitations on property eligibility and income qualification. Consult a tax advisor for additional rules and regulations. Source:
**Certain requirements must be met. Source:
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11. Committed to Seeing You Home.
FHA Insured Mortgages
Relaxed qualification (standards/requirements)
Requires a minimum 3.5% down payment for qualified buyers
Maximum loan amount depends on county maximum*
May allow up to 100% in gifts from family members (certain restrictions apply)
Non-occupant family member co-borrowers allowed (must qualify)
Seller contributions allowed
Lender may credit some or all of the closing costs by selecting a slightly higher rate
Lower credit score and down payment requirements.
*Source:
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12. FHA Insured Mortgages (continued)
FHA requires borrowers to qualify according to set debt-to-income ratios*
The front-end ratio ~ the maximum ratio to qualify is 31%
The back-end ratio ~ the maximum ratio to qualify is 43%
Front end ratio -- considers the mortgage payment (PITI) as a percentage of the potential homebuyer’s monthly income
Back-end ratio -- compares all of the potential homebuyer’s debt to their pre-tax income
*Certain restrictions apply.
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13. FHA Insured Mortgages (continued)
FHA loans include Up-Front and Annual MIP (Mortgage Insurance Premium)*
Up-Front MIP is a set percentage of the base loan amount: can be added to the loan
Annual MIP is a set percentage of base loan amount paid monthly
MIP must be paid for the life of the loan until the loan is paid off or refinanced
Currently the up-front PME is 1.75%
Effective January 26, 2015, the Annual MIP rate was reduced by .50%*
*Applies to most Title II forward mortgages with amortization terms greater than 15 years.
Source: HUD.gov / Mortgagee Letter View the complete letter at:
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14. Committed to Seeing You Home.
VA Guaranteed Loans
VA Guaranteed loans are available to veterans, active duty personnel, and their surviving spouses
100% LTV financing*
Relaxed qualification standards
Requires payment of one-time VA Funding Fee
VA interest rates may be lower compared to other loan programs**
Funding fee can be financed (amount depends on specific circumstances
* Veteran applicants must have sufficient VA entitlement to qualify for the 100% financing.
**Rates are subject to change.
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15. Available Mortgage Products
Fixed Rate Mortgage
Adjustable Rate Mortgage (ARM)
Hybrid ARM Mortgage (3/1, 5/1, 7/1, 10/1)
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16. Committed to Seeing You Home.
Fixed Rate Mortgage
Fixed Rate Mortgage – the interest rate and the payment are fixed for the life of the loan
30 Year
Other Fixed Rate options include 20, 15 and 10 Year terms
Shorter terms may offer lower rates
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17. Adjustable Rate Mortgage (ARM)
Have monthly payments that can move up or down as interest rates fluctuate
Hybrid ARM Mortgage (3/1, 5/1, 7/1,10/1)
The interest rate is fixed for an initial period, then becomes adjustable
ARM rate = the index rate + the margin
The initial rate for an ARM may be lower than the current fixed rate programs*
Lower qualifying payment may make it possible to buy more house
Most ARM rates are tied to the performance of one of three major indexes.
*An increase in cost may occur depending on interest rates over the life of the loan and can adjust to cost more than equivalent fixed rate over time. Rules are subject to change.
Source:
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18. ARM Loan Limits on Interest Rate Changes
ARM loans have an interest rate called “floor” - the lowest the interest rate can go during the life of the loan
Interest rate “caps” limit the amount the rate changes, up or down, at any given change date
Periodic rate cap
Lifetime rate cap
Payment cap limits the amount the monthly payment can rise over the life of the loan
A periodic rate cap limits how much the interest rate can change from one year to the next.
A lifetime rate cap limits how much the interest rate can rise over the life of the loan.
A payment cap limits the amount the monthly payment can rise over the life of the loan in dollars, rather than how much the rate can change in percentage points
Source:
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19. Down Payment Assistance Programs
A down payment assistance (DPA) program is a non-profit or municipal-sponsored agency that provides homeownership funds for lower/middle income borrowers*. Some programs do not actually provide funds, but require silent second liens with deed/re-sale restrictions
Local, County and State Programs
Grants
*Programs and eligibility vary from states and jurisdictions
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20. Dos and Don’ts During the Mortgage Process
Do keep your payments current on all existing accounts
Don’t be late on your credit payments
Do explain any credit blemishes and credit inquiries
Don’t leave out any debts or liabilities on your loan application
Do continue to use your credit as normal
Don’t apply for new credit or increase your balance
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21. Dos and Don’ts (continued)
Do keep all of your paperwork, including paystubs and bank statements
Don’t move assets from one bank account to another
Do understand the process requires extensive documentation
Don’t change, quit your job, or change your pay structure without notifying your loan officer
Do know that gifted funds need a Gift Letter Affidavit and supporting documentation
Don’t make large deposits without documentation
Do keep your loan officer informed of any changes!
Committed to Seeing You Home.

22. The Approval Process… What the Lender Reviews
Ability to repay: debt-to-income ratio or DTI
Traditional guidelines use 28% for housing with a total of 36% for housing plus all other debt (DTI ratio of 28/36*)
Housing costs (PITI) include:
Principal and Interest (P&I)
Property tax (property tax bill divided by 12)
Hazard (Homeowners) Insurance premium
Housing costs may also include:
HOA/Condo fee, if applicable
Mortgage Insurance, if applicable
Total debt includes monthly payments for
Installment and revolving debt
Ability to repay – income history and savings relative to outstanding debt Installment debt such as automobile loans, student loans, personal loans, lines of credit
Amount of debt compared to gross monthly income (income before taxes)
Revolving debt such as credit card, department store, credit lines
*Ratios may be higher with compensating factors.
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23. Willingness Credit History
Willingness to repay – as indicated by credit history (credit score)
Lenders use “tri-merge” credit based on reports from three major repositories
Experian
Trans Union
Equifax
Each repository maintains history based on information reported by creditors
Not all creditors report to all repositories, so the score with each repository may differ
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24. Willingness Credit Scoring
Each repository analyzes the credit and uses various models to develop a score (FICO)
Range from 350 to 850
580+
720+
FHA may consider lending
Is excellent credit
Is good credit
Is fair credit
Source:
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25. Value Loan-to-Value (LTV) Ratio
Value of the asset* – is the property worth what is being borrowed against it (loan-to-value ratio or LTV)
Value is defined as the lesser of the appraised value or sales price
Banks consider loans greater than 80% LTV “higher risk”
Loans greater than 80% may be more acceptable by
Purchasing Private Mortgage Insurance (PMI)*
*Typically required for conventional loans.
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26. Committed to Seeing You Home.
Closing Costs
Lender Fees
Title Company Fees
Government Fees
Prepaid expenses
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27. Committed to Seeing You Home.
Lender Fees
Typical fees may include:
Application fee
Credit Report fee
Appraisal fee
Most lenders charge:
Underwriting fee
Tax Service provider fee
Flood Certification fee
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28. Additional Lender Fees
Origination Fee
What is a Mortgage Loan Point?
In dollar terms, each point is equal to1% of the new loan amount
Origination points are a one time fee that is customarily needed to acquire a loan
These can be paid by either the buyer or the seller and/or can be split between the two
Discount points may also be paid by the borrower to lower the interest rate of the mortgage
Other Fees*
*These fees may be negotiable.
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29. Committed to Seeing You Home.
Title Company Fees
Fees charged by the settlement company
Typical fees may include
Insurance Binder
Lender’s Title Policy
Owner’s Title Policy (optional)
Settlement Agent Fee
Title Search
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30. Committed to Seeing You Home.
Government Fees
Government fees are not negotiable, however…
May negotiate with the seller to pay the settlement transfer taxes in a purchase transaction*
*May be limited by the loan program guidelines regarding maximum seller contribution and/or state regulations.
Committed to Seeing You Home.

31. Committed to Seeing You Home.
The Loan Process
Prequalify
Find A Home
Purchase Agreement
Loan Application
Loan Estimate
Underwriting
Loan Approval
Closing Disclosures
Closing – Parties sign closing documents
Move In To Your New Home!
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32. Committed to Seeing You Home.
Thanks for Attending!
Committed to Seeing You Home.