7. BASIC MORTGAGE MATH
The maximum amount a lender will
loan based on constraints including
income, debt and available cash.
Home Sales Price
x Loan to Value
(LTV)%
______________________
Maximum Loan
Amount
9. MORTGAGE DEFINITIONS YOU
SHOULD KNOW….
PRINCIPAL-is the amount of money that
you actually borrow or the amount of the
loan that is still unpaid
INTEREST- is the charge for using the
lenders money.
FIXED-RATE MORTGAGE LOAN- means
you will always pay the same rate on
interest
10. MORTGAGE TERMS YOU
SHOULD KNOW
ADJUSTABLE RATE MORTGAGE -
means your rate will increase or
decrease once or twice a year.
TERM- is the amount of time you have
to repay the loan.
POINTS - refer to the type of fee the
lender may charge.
11. MORTGAGE TERMS YOU
SHOULD KNOW
DOWNPAYMENT REQUIREMENT- is the
lenders lowest allowable down payment
and is part of the purchase price that
the buyer pays in cash.
CLOSING COST-are the expenses buyers
and sellers pay to transfer ownership of
a home.
13. How do you choose the right
Mortgage?
How many years do you expect to
live in your home?
How important it it to be free of
mortgage debt before facing long
term financial commitments?
How comfortable are you with the
certainty of a fixed mortgage
payment versus a payment that
can change over time.?
14. How do you choose the right
Mortgage?
How many years do you expect to
live in your home?
How important it it to be free of
mortgage debt before facing long
term financial commitments?
How comfortable are you with the
certainty of a fixed mortgage
payment versus a payment that
can change over time.?
15. FEATURES OF A FIXED-RATE
MORTGAGE
Most poplar
Best chance to keep
monthly mortgage
payments low
16. Advantages of Fixed-Rate
Mortgages
Interest Rate will remain the same for the life
of the loan.
Monthly mortgage payments will be stable
Predictable monthly mortgage payments
18. Loan Terms You Should Know:
Annual Percentage Rate – shows costs of
loan expressed as a yearly interest rate.
Commitment Letter – stating your loan has
been approved.
Contingency – events that must happen
prior to closing.
19. LOAN TERMS YOU SHOULD
KNOW:
Conventional Mortgage – any mortgage that
is not insured by the Federal Government
Debt-to-Income Ratio- Percentage of total
debt payments to income.
Deed- legal document conveying property
Discount Point – equivalent to 1% of the
purchase price.
20. LOAN TERMS YOU SHOULD
KNOW:
Down payment – part of the purchase price
that the borrower pays in cash.
Earnest Money – Money put down by a
potential buyer to show that he or she is
serious
Equity – owner’s financial interest in a
property.
22. 22
Writing down your goals
Easily visible
Keep it simple
30 Day Challenge
Review and adjust
Fail to plan – Plan to fail
Keys to Successful Money
Management
23. 23
What Kind of Spender Are You?
The Miser - hoarding, stingy person
The Conservative - moderate, cautious
The Carefree - spends without care
The Big Spender – very generous
The Over spender - spending beyond limits
24. 24
30 Days to Success
Live Normal for 30 days
Track each expense – keep every receipt
Evaluate after 30 days
Create 30 day financial spending plan
Can‟t Fail – simply adjust!
25. 25
Why Manage Your Money?
Prepares you for large expenses
Identifies wasteful spending
Keeps control of financial future
Encourages savings
Strengthens loan application
Helps to accomplish goals
26. 26
Three Steps to Planning a Budget
1. Write down your income
2. Write down your monthly expenses
3. Decide what to do with leftover
money
27. 27
What are Some Money
Management Tips?
Plan according to current income
Plan ahead for six months
Include spending money for all
Keep record-keeping simple
Set money aside for emergencies
Get consensus from entire family
Pay yourself first at least 10% of
take-home pay
28. 28
Tips for Savers
Pay yourself first
Open a savings account
Save change at end of day
29. 29
Review the Plan
Is your budget working?
Are all family members able to follow it?
Which costs always seem to be over
budget?
Are we getting closer to reaching our
goals?
30. 30
What Are Ways to Make Money
Management Easier?
Carry written reminders of goals with you
Carry as little cash as possible
Use direct deposit
Put items on layaway
Buy only what you need
31. 31
Spending Pie Chart (1)
Desired
Living
Entertainment
Savings/Investmen
t
Retirement
60%
15%
10%
15%
34. 34
Why is Good Credit
Important?
To rent, buy or purchase things you
want or need
To save money by borrowing at a
lower interest rate
To obtain a job
To lease rental property
45. 45
How Long Does Information Stay?
Bankruptcy 10 years
Judgments 7 years
Tax Lien 7 years
Collection, Charge-Off 7 years
Most Adverse Info 7 years
Inquiries 2 years
46. 46
What Are the Main Credit
Bureaus?
Experian
www.experian.com
(888) EXPERIAN (397-3742)
Trans Union
www.tuc.com
(800) 916-8800
Equifax
www.equifax.com
(800) 685-1111
47. 47
Equal Credit Opportunity Act
Prevents lender‟s discrimination
on the basis of age, sex, race,
marital status, religion or
national origin
Requires written disclosure of
reason for denial within 30
days
48. 48
Fair Credit Billing Act
Provides right to question if you
think your credit card bill is
wrong within 60 days
Requires creditor to begin
research within 30 days
Requires creditors to supply an
answer within 90 days
49. 49
Fair Credit Reporting Act
Protects your rights to know
what is in your credit report
and to fix mistakes
50. 50
Credit Summary
Credit is a useful tool
Order your report
Correct mistakes and fix
problems
Protect your credit rating
Manage your debts, so they
don‟t manage you
52. 52
Foreclosure Process
California Process
Judicial
Non-judicial
Foreclosure Process Flowchart
Alternatives
Loss Mitigation
Modification
Deed in Lieu of Foreclosure
Repayment Plan
Pre-foreclosure Sale
53. 53
BUYING FORECLOSURES
When to buy foreclosures
Before the auction (Pre-foreclosure)
At the auction
After the auction (REO)
54. 54
What Are My Alternatives?
Special forbearance
Mortgage modification
Partial claim
Pre-foreclosure sale
Deed-in-lieu of foreclosure
55. 55
Precautions
Don‟t sign papers you don‟t fully understand
Make sure you get all promises in writing
Beware of any loans you are not formally
released from liability of your mortgage debt
and contracts of sale
Check with an attorney or your mortgage
company before entering into any deals involving
your home
56. 56
Main Points to Remember
Make your monthly payments on time.
Contact your mortgage lender immediately and be
honest about your financial situation.
Have a plan to cure delinquency
Arrange an appointment with a HUD-approved
housing counseling agency www.hud.gov
58. 58
Protecting Your Investment
Types of Insurance
Homeownership Tips
Your Community
1. Police
2. Fire
3. Others in your community
59. 59
Types of Insurance
Hazard Insurance
Flood Insurance
Special Hazard Insurance
Mortgage Insurance
60. 60
Referred to as “Fire”
Insurance
Required by the Lender
Protects against hazards such
as fires or storms
HAZARD INSURANCE
61. 61
Liability Protection
Legal responsibility for any injuries or
property damage the owner or a family
member causes to other people
Protection of the other structures and the
homes contents
Living expenses, if displaced
HOMEOWNER’S INSURANCE
62. 62
Homeowner’s Insurance Features
Dwelling coverage
Other structures
Personal property
Loss of use
Personal liability
Medical payments coverage
Deductible
63. 63
FLOOD INSURANCE
Required by lender if the property is
located in a flood zone
Generally not covered under hazard or
homeowners insurance policy
Protects during heavy rain, failed
dams and inadequate drainage
systems
64. 64
MORTGAGE INSURANCE
Protects the lender in case the
borrower defaults and the lender
must foreclose
Generally required if the
downpayment is less than 20% of
the purchase price.
66. 66
MORTGAGE LIFE INSURANCE
Life insurance policy that pays off the
borrowers mortgage in the event of
death
Allows family to continue to live in the
property
Always optional
67. 67
HOME WARRANTY POLICY
Protects the homeowner in the event of
costly repairs
Covers items such as heating, plumbing,
air conditioning
Annual Premium (renewable)
Flat fee per service
Buyer may request seller provide
policy
68. 68
Know Your Community
Meet your neighbors
Read weekly community newspapers
Accept the Welcome Wagon
Visit city, town hall and library
Volunteer for special events
Attend neighborhood association
meetings
69. 69
Know Your Community
Police Department
Where is the nearest station
Fire Station
Which station services your area
Hospital
Where is the nearest hospital
Elected Officials
Who are your representatives
70. WELCOME HOME
FOLLOW THESE SIMPLE INSTRUCTIONS TO
GET YOUR ONLINE HOMEBUYER EDUCATION
CERTIFICATION
1. ONCE YOU COMPLETE THE PRESENTATION CLICK
FIRST TIME HOMEBUYER MORTGAGES TO PAY
FOR YOUR CERTIFICATE
2. ONCE YOU PAY CLICK FIRST TIME HOMEBUYER
MORTGAGES AND TAKE EXAM
3. ONCE EXAM IS COMPLETE, CLICK EMAIL, TO
EMAIL YOUR EXAM
4. YOUR CERTIFICATE WILL BE EMAILED TO YOU
AND YOUR LOAN OFFICER WITHIN 24 HOURS
70
