Home Buying 101

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Welcome

• Home Buying 101

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Home Buying 101

• Presented by NASA Federal Credit Union
• Bert Aguilera
• Mortgage Consultant
• NMLS 551894
• [phone], x334

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What is a mortgage?

• A long-term loan in which the member uses the
  home as collateral to secure financing. It is
  typically referred to as a mortgage loan, a lien,
  or a security interest which is held by a
  financial institution. The lien is paid off and
  released after making timely payments for the
  term of the loan, the loan is refinanced to
  change the terms, or the home is sold. It is
  also known as a home loan.

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Overview of the Market

• Whats Different Now?

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The Mortgage Market Has Gone Back to Basics

• When applying for a mortgage 25 years ago, four
  things were critical
• Job Stability
• Cash
• Credit
• Income
• Today, these are still important!

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How Do You Qualify For A Home Loan in 2014?

• A Healthy Credit Score
• Cash to Close
• Full Documentation

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What To Avoid When Preparing To Get A Home Loan

• Lots of credit card debt
• Major purchases (buying a car or other large
  items)
• Changing jobs
• Applying for new credit

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Documentation Requirements

• The documentation requested on a mortgage loan is
  to determine the creditworthiness of the member
  and if they are able to repay the debt.
• Asset documentation to support funds for down
  payment, closing costs, and reserves.
• Income documentation such as recent pay stubs
  covering a one month period and W-2 statements
  for the last two years are normally required for
  salaried employees.

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Documentation Requirements Contd

• For self employed borrowers, additional
  documentation such as tax returns for the last
  two years and year to date profit and loss
  statements are required. For S corporations and
  businesses that are incorporated, business tax
  returns for the last two years are also required.

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Settlement Fees

• Cost associated with closing the loan
• Normally estimated at 4-6 on purchase
  transactions.
• Exact closing costs will depend on fees charges
  in your area, how much you are borrowing, how you
  finance your mortgage (points), and your closing
  date, i.e., where it falls within the month.
  Closing costs are in addition to the down payment
  amount required.

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What is a point?

• A point is a fee the member can choose to pay to
  reduce the rate.
• The secondary markets may apply other points for
  credit score, occupancy, subordinate financing
  (etc).
• Each point is equal to 1 of the loan amount and
  is added to the total closing costs.
• Members can elect to pay points or lenders can
  increase the offered interest rate to reduce the
  applicable points.

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What are other closing costs?

• Pre-paids (escrows for property taxes and
  homeowners insurance)
• State and local transfer and recordation taxes
• Origination Fees
• Appraisal Fees (paid outside closing)
• Credit Report, Flood Certification, Tax Service
  Fees
• Settlement Fees, such as title search and title
  insurance, inspection fees, survey, recording
  fees, and buyer attorney fees

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Do I need a down payment?

• Not always. The credit union offers a Zero Down,
  No MI portfolio special.
• Other mortgages can require a minimum down
  payment of 3.50, 5, 10, or even 20 of the
  sales price.
• Some mortgage programs require the money to be
  your own funds. The only borrowed funds must
  come from a secured asset such as a 401(k) plan.
  
• Other programs allow you to use a gift from a
  relative to cover your down payment.

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Basic Mortgage Terms

• LTV (loan-to-value) - The ratio between the
  amount of the mortgage and the total value of
  the property.
• CLTV (combined-loan-to-value) This means there
  is a second mortgage (80/15)(80/10) on the
  property.
• ARM adjustable rate mortgage
• EMD Earnest money deposit
• GFE Good faith estimate
• MI Mortgage insurance that is necessary if the
  LTV is greater than 80.
• P/I (PITI) Principal and interest (taxes
  insurance)
• DTI debt-to-income ratio
• HUD-1 settlement sheet detailing final cost of
  purchase

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Types of Mortgages

• Conforming up to 417,000
• Non-Conforming Jumbo Mortgages above 417,000
• FHA VA
• 80/15/5 or 80/10/10
• Zero Down No MI Special (purchase only)

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ARMs VS Fixed

• ARMs 3/1, 5/1, 7/1, 10/1
• Fixed Rates 10, 15, 20, 30 Year

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NEW PROGRAMS

• 100 Financing to 650,000
• - Zero Down Payment required- Purchase Loans
• - No mortgage insurance (MI) required
• - Need Good Credit, Income and Savings Pattern
• - Available on 30 and 15 year Fixed, 3/1, 5/1,
  7/1 and 10/1 ARM
• - 95 Financing to 850,000 with 5 down
  payment
• This offer is limited to well qualified
  applicants. Some restrictions may apply. Offer is
  valid for primary Residence Only.

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Record Low Interest Rates

• Rates havent been this low since 1971
• 4.00, 30 Year Fixed Conforming Rates effective
  08/15/2014 subject to change daily
• 3.75, 20 Year Fixed
• 3.125, 15 Year Fixed

What This Means For You
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Advantages of Lower Rates

• Lower Monthly Payments
• Reduced Terms
• May Qualify for More

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Monthly Payment Sample for a 400,000 Mortgage
Loan

• Term 30 Year Fixed
• Rate PI Payment Amount
• 4.00 1,910
• 5.00 2,147
• 6.00 2,398
• Total monthly payment (PITI) will include
  property taxes, homeowners insurance and
  possibly mortgage insurance

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Things to Consider When Shopping
For Your Home?

• Location and must have features
• Your maximum pre-approved loan limit
• Your Realtor
• Home Advantage (www.mycuhomeadvantage.com)
• Your Settlement Company
• CU Title

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Home Advantage Program

• Access program through Link on NASAs website
• Free program to members
• View current listings through the Multiple
  Listing Service (MLS)
• Obtain school and neighborhood data
• Find a qualified real estate professional and
  receive up to 20 of their commission towards
  your closing costs.

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Are You Ready To Buy A Home?

• Call NASA Federals 1st Mortgage Professionals
  First. We can help with a personal consultation.
• Get Pre-Approved
• Making an offer on a home with your agent
• What to expect from lender once your offer is
  accepted and ratified by the sellers (locking
  rate, disclosures, processing, underwriting)
• Loan Commitment Letter
• Settlement / Closing

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Recommendations

• Eliminate as much consumer debt as possible
• Save, Save, SAVE for a down payment closing
  costs
• Dont make any major purchases, change jobs, or
  get new credit while qualifying for a mortgage
• Thoroughly examine your credit report
• Free annual credit report (www.annualcreditreport.
  com)
• Use BALANCE for credit consultation

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Financing with NASA FCU

• One-Stop Shop!
• From finding a Realtor to Financing to Closing!
• Prompt, Courteous, Professional Service
• Lower Fees
• Online Tools
• Personal Consultations

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Free Personal Consultation

• Discover how much you can afford
• Explore different loan options
• Review the home buying process
• If you are not already a member of NASA FCU
  becoming one is easy!! Ask us how.

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Questions?

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Thank You For Attending!

• Home Buying 101