Presented by: Cherise Walker Community Lending Specialist
About me… o Professional/Career o 8 years in the mortgage industry serving the community and their needs o Education o University of Michigan – Ann Arbor o BA in Psychology with a minor in African & African American Studies
Homebuyer Education Seminar This is an opportunity to help you understand what is involved in the purchase of your first home. The more you know, the easier it will be to navigate through the process. An educated consumer is able to make the best decisions!
Overview o Is homeownership for me? o How do I know what is affordable? o What is a lender looking for and what documentation do I need to bring? o What is it going to cost me to get into a house? o Is there down payment assistance available? o What types of loans should I consider?
Welcome to A Buyer’s Market! o There are more homes for sale than there are consumers to buy them o Buyers, therefore, have more negotiating power o Seller may accept a lower price o Seller may be willing to pay closing costs o Appliances, furniture, and other items may come with the house o Miscellaneous “seller’s concessions” and incentives o More time to look around and be sure the home you select is right for you o Less chance of another buyer purchasing a home you may be interested in o Less chance of someone “overbidding” o You can take your time o Numerous foreclosed homes and short sales are on the market o Low interest rates
Advantages of Home Ownership o A place to call your own and where you want to live o Pride of ownership and independence o Being part of a community o Good investment – build equity in your home (typically) o Income tax benefits, tax deductions o Mortgage Interest o Property Taxes
Disadvantages of Home Ownership o Can be more expensive than renting o Homeownership can take money and time away from other things o Your investment (equity) can build slowly. There’s no guarantee of appreciation, especially in today’s market. o If you have to move, selling a home may be more difficult than terminating a lease o There is more risk: Non-payment of mortgage payment = foreclosure = loss of investment and results in poor credit
What can I realistically afford? How do you know what you can afford for a mortgage? What is PITI? o P = Principal o I = Interest o T = Taxes o I = Insurance o Mortgage Insurance o Homeowner’s Association Dues (Condominiums)
What can I afford? o First Step - Why is it important to track expenses? o Know how you are spending your money o Determine what expenses you can control (e.g. dining out, entertainment, movies, cable, cell phone, etc.) o This information should be used to prepare a budget
Affordability If you need to change how you spend your money in order to afford a home, you need to start making those changes before you make the purchase and move into your new home. Why is that? o What is tracking expenses? o Why do you think it is important? o Do you track your expenses regularly now?
Track Expenses - Characteristics People who do not track their expenses: o May not be as disciplined o Do not feel that it is important o May not have a budget o May not know how to save o Are often in debt o May have poor credit o Often do not have financial goals o Often look for instant gratification People who do track their expenses: o Are often more disciplined o Recognize that it is important to know where their money is going o Often have a budget o Are able to save money o Usually have manageable debt or no debt at all o Usually have better credit o Establish financial goals o Are willing to sacrifice some wants in order to reach their financial goals o Allows you to splurge and treat yourself every now and then
Question #3 o What is a lender looking for when you apply for a home loan?
Lender Requirements o Employment History o Source of Income o Financial Liabilities (Debts on Credit Report) o Assets o Debt-To-Income Ratio (DTI) o Credit History o Source(s) of Down Payment
Question #4 o What is it going to cost me to get a loan?
Loan Costs o Down Payment o Closing Costs o Bank fees o Title costs o County recording fees o Appraisal, survey, pest inspection o Pre-paid Costs o Property taxes to seller (reimbursed to seller) o Insurance (First year paid up front) o Property tax pro-rations (collected up front) o First month’s interest on new loan
Question #5 o What assistance is available for the purchase of my home?
Down Payment Assistance Programs o NSP (Neighborhood Stabilization Program) o Varies from community to community o Some are forgivable o Some help with down payment costs as well as home improvements o You are not allowed to use MSHDA DPA funds in addition to these funds o Need to check with your particular community for the details o Income limitations
PNC Community Grant PNC Bank will provide a grant of up to $1200 maximum toward eligible consumer’s closing costs and/or prepaids at the time of closing. The grant: o May not exceed actual closing costs and prepaids o May not be used for down payment or to buy the rate down o The customer must not receive any cash back
Question #6 o What type of loan should I consider?
Available Mortgage Products o FHA 203b loan (Traditional FHA loan) o FHA 203k loan (Rehabilitation FHA loan) o HomePath o HomePath Renovation Mortgage o MSHDA o Conventional o VA o Rural Development
Home Buyer Seminar Thank you for allowing me the opportunity to speak with you, if you would like to get pre- approved for a mortgage I will be pleased to assist you. Cherise Walker Community Lending Specialist, PNC Bank (248) 729-8242