Are you a First Time Home Buyer? Find out what you need to know in order to purchase your first home.

1. First Time
Home Buyer
Seminar:
The Keys to Home
Ownership
Presented by
Lacy Williams
Joyner Fine Properties
804-864-0316
www.RichmondHousingToday.com
1

2. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
3. Find a Realtor
4. Find a Home
5. Offer and Contract
6. Mortgage
7. Inspection
8. Appraisal, Survey, Homeowners Insurance,
Title Search
9. Closing
2

3. Step 1: Rent vs. Buy
• There is no right or wrong answer when deciding to
buy or rent… a good decision is the one that’s right
for you.
• Renting provides both equity & tax benefits for the
landlord only. When you rent, you are buying
someone else’s home for them.
• Buying a home should be a good long-term
investment, providing equity and tax benefits.
• Mortgage interest, real estate taxes &
some closing costs are tax
deductible.
3

4. The Value of Homeownership
Price Appreciation Return on Equity
498%
Purchase Price $100,000
Down Payment 25% $25,000
Appreciation in 5 years 35%
Value of Home
Equity
$135,000
$35,000
301%
Return on $25,000
investment 140%
140%
110%
71%
35%
5 Years 10 Years 15 Years
Source: PMI October 2007
(Based on National Data)
4

5. Home Ownership
Has been a Good
Investment during
the 2000s unless
you lived in the city
of Detroit!
5

6. Stocks vs. Real Estate
Index % Change 2000 – July ‘08
Dow 5
NASDAQ - 41
S&P 500 -8
Real Estate 86
Composite 10 Cities
Real Estate 72
Composite 20 Cities
6

7. Housing Has Been A Good Value in
Richmond!!
Price Per Square Foot For Closed House Sales By Year
Price Per Square Foot
$150 $139.64
$140 $135.82 $132.43
$130 $123.38
$117.82 $114.46
$120
$107.60
$110 $99.65
$100 $92.37
$90
$80
00
2
00
3
00
4
00
5
00
6
00
7
00
8
00
9 0)
2 2 2 2 2 2 2 2 7/1
9/
h ru
(T
10
20
Year
A 24% increase since 2002!!!
7

8. Rent vs. Buy
Example: House for $250,000 vs. Apartment for $1200/month
RENT BUY
Monthly Rent $1,200/month $1,207/month Mortgage Payment
Annual rent 4% 0% Fixed mortgage payment
Increase (No increases!)
Renters Insurance $180/year $600 year Homeowners Insurance
$250,000 Purchase Price
$25,000 Downpayment 10%
$2,025 Annual Lock Lane condo Fees
2% Annual appreciation
5 Years before selling
5.25% Mortgage rate – 30 Years
$1,500 Property Taxes *
28% IRS tax rate
8

9. Rent vs. Buy
Example: Buy a house for $250,000 vs. Apartment for $1200/month
RENT BUY
Monthly Rent $1,200/month $1,207/month Mortgage Payment
Annual rent 4% 0% Fixed mortgage payment
Increase (No increases!)
Renters Insurance $180/year $600 year Insurance
$250,000 Purchase Price
$25,000 Downpayment 10%
$2,500 Maintenance
2% Annual appreciation
5 Years before selling
5% Mortgage rate – 30 Years
$3,000 Property Taxes
28% IRS tax rate
9

10. Rent vs. Buy
RENT BUY
5 year rental $78,895 $72,470 5 year total buying expenses
expenses
5 year difference $6,424
$15,927 5 year tax savings
$27,122 5 year equity appreciation*
$43,049 Net value gain (tax savings + equity)
($16,561) Cost for selling home in 5 years (6%)
$26,488 Net benefit of ownership
$30,836 Purchase Benefit
10

11. Rent vs. Buy
RENT BUY
5 year rental $78,895 $72,470 5 year total buying expenses
expenses
5 year difference $6,424
$15,143 5 year tax savings
$27,122 5 year equity appreciation*
$43,049 Net value gain (tax savings + equity)
($16,561) Cost for selling home in 5 years (6%)
$26,488 Net benefit of ownership
$30,836 Purchase Benefit
11

12. Rent vs. Buy
RENT BUY
5 year rental $78,895 $72,470 5 year total buying expenses
expenses
5 year difference $6,424
$15,143 5 year tax savings
$27,844 5 year equity appreciation*
$43,049 Net value gain (tax savings + equity)
($16,561) Cost for selling home in 5 years (6%)
$26,488 Net benefit of ownership
$30,836 Purchase Benefit
12

13. Rent vs. Buy
RENT BUY
5 year rental $78,895 $72,470 5 year total buying expenses
expenses
5 year difference $6,424
$15,143 5 year tax savings
$27,844 5 year equity appreciation*
$42,988 Net value gain (tax savings + equity)
($16,561) Cost for selling home in 5 years (6%)
$26,488 Net benefit of ownership
$30,836 Purchase Benefit
13

14. Rent vs. Buy
RENT BUY
5 year rental $78,895 $72,470 5 year total buying expenses
expenses
5 year difference $6,424
$15,143 5 year tax savings
$27,844 5 year equity appreciation*
$42,988 Net value gain (tax savings + equity)
($16,561) Cost for selling home in 5 years (6%)
$26,488 Net benefit of ownership
$30,836 Purchase Benefit
14

15. Rent vs. Buy
RENT BUY
5 year rental $78,895 $72,470 5 year total buying expenses
expenses
5 year difference $6,424
$15,143 5 year tax savings
$27,844 5 year equity appreciation*
$42,988 Net value gain (tax savings + equity)
($16,561) Cost for selling home in 5 years (6%)
$26,427 Net benefit of ownership
$30,836 Purchase Benefit
15

16. Rent vs. Buy
RENT BUY
5 year rental $78,895 $72,470 5 year total buying expenses
expenses
5 year difference $6,424
$15,143 5 year tax savings
$27,844 5 year equity appreciation*
$42,988 Net value gain (tax savings + equity)
($16,561) Cost for selling home in 5 years (6%)
$26,427 Net benefit of ownership
$32,851 Purchase Benefit
* When you sell, an individual can exempt $250,000 in gain if you have lived
in the home for 2 out of the last 5 years. Married couples can exempt
$500,000 in gain.
Try a scenario yourself at www.vlender.com/cgi-bin/calc/rent_vs_buy.cgi
16

17. If prices go down by 10% and the Interest Rate
Increases my only 1%, you LOSE!!!
Interest Rate MONTHLY PAYMENT
8.00% $1,321 $1,357 $1,394 $1,431 $1,468 $1,504 $1,541 $1,578 $1,614
7.75% $1,290 $1,325 $1,361 $1,397 $1,433 $1,469 $1,504 $1,540 $1,576
7.50% $1,259 $1,294 $1,329 $1,363 $1,398 $1,433 $1,468 $1,503 $1,538
7.25% $1,228 $1,262 $1,296 $1,330 $1,364 $1,398 $1,433 $1,467 $1,501
7.00% $1,198 $1,231 $1,264 $1,297 $1,331 $1,364 $1,397 $1,430 $1,464
6.75% $1,167 $1,200 $1,232 $1,265 $1,297 $1,330 $1,362 $1,394 $1,427
6.50% $1,138 $1,169 $1,201 $1,233 $1,264 $1,296 $1,327 $1,359 $1,391
6.25% $1,108 $1,139 $1,170 $1,201 $1,231 $1,262 $1,293 $1,324 $1,355
6.00% $1,079 $1,109 $1,139 $1,169 $1,199 $1,229 $1,259 $1,289 $1,319
5.75% $1,050 $1,080 $1,109 $1,138 $1,167 $1,196 $1,226 $1,255 $1,284
5.50% $1,022 $1,050 $1,079 $1,107 $1,136 $1,164 $1,192 $1,221 $1,249
5.25% $994 $1,022 $1,049 $1,077 $1,104 $1,132 $1,160 $1,187 $1,215
5.00% $966 $993 $1,020 $1,047 $1,074 $1,100 $1,127 $1,154 $1,181
4.75% $939 $965 $991 $1,017 $1,043 $1,069 $1,095 $1,122 $1,148
4.50% $912 $937 $963 $988 $1,013 $1,039 $1,064 $1,089 $1,115
4.25% $900 $910 $935 $959 $984 $1,008 $1,033 $1,058 $1,082
4.00% $859 $883 $907 $931 $955 $979 $1,003 $1,026 $1,050
205,00
Loan Amount 180,000 185,000 190,000 195,000 200,000 0 210,000 215,000 220,000
17
Price Change -10.00% -7.50% -5.00% -2.50% Loan 2.50% 5.00% 7.50% 10.00%

18. Mortgage Rates – 30 year fixed
NAR Projections MBA Projections
5.8%
5.4%
18 National Association of Realtors, Mortgage Bankers Association 10/2010

19. Housing Affordability
More affordable than any
time in the last 30 years!
19

20. Owning Your Own Home is More
than a Good Investment
• Good place to raise and educate children
• A place where you and your family can feel safe
• You have control over your own living space
• You and your neighbors have a sense of
ownership and responsibility.
20

21. Once I decide to buy
what do I do next?
21

22. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
22

23. Step 2: Mortgage Pre-Approval Process
• Start the process early!!!
• Mortgage professional will check your credit report to
make sure you can get a loan
• How much will I be able to afford?
• What kind of loans are available for me?
• What are my closing costs and how much?
• Start saving money now!
• Typical down payment is 3.5-5%
23

24. Types of Loans
• Conventional
– Fixed rates and ARMs
– 5% minimum down payment
– 10% minimum down payment for condominiums
• VA
– 100% financing for veterans with no mortgage insurance
• FHA
– Government loan with 3.5% down payment. Gifts allowed
• ARM
– Adjustable Rate Mortgage. Lower fixed rate for short period (3 ½
or 7 years)
• VHDA
– Virginia Housing Development Authority has a variety of first
time buyer loans with minimum down payment. Usually have
income restrictions.
24

25. Closing Costs
• Lender Costs
– Appraisal, administrative fee, Origination fee
• Attorney Fees
– Includes fee to close and title insurance ($4 per $1000 of
purchase price)
• Government Recording
– Includes tax stamps for the deed and county and state charge
$3.33 per $1000 for both deed and note
• Escrows
– Usually 3-4 months of homeowners insurance and real estate
taxes are put into an escrow account by the lender
• The total closing costs typically are $5,000 to $7,000 on
a $250,000 purchase.
25

26. More on the Mortgage Process
• Gifts are allowed with some loans.
• First time home buyer programs.
• Important to have easy access to your loan officer.
• Deal with someone you trust!
26

27. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
3. Find a Realtor
27

28. Step 3: Find a Realtor
What is the benefit of having an agent to represent me?
We help you through the process.
1. Market Knowledge – We will help you make a smart buying decision.
a. Neighborhood
b. Price
c. Style of home
d. Resale value
2. Negotiating – We are experienced in developing and negotiating
competitive offers.
3. Inspection – Identifying and resolving issues with the home.
4. Advocacy – we do everything we can to find your home and
represent YOU in the process.
5. Questions – We will answer your questions throughout the buying
process.
Remember: The total real estate commission is paid by the Seller.
You don’t have to pay any of it... You get representation for Free!!
28

29. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
3. Find a Realtor
4. Find a Home
29

30. Step 4: Find the New Home
• Assess your wants & needs:
• Define your criteria (Price range, area, neighborhood,
style of home, number of bedrooms, etc)
• Shop for a Home:
• Realtor will email you properties that meet your criteria
• Realtor will help you select homes to see
• While viewing a home, Realtor will add expert opinion
of home
• Factors to consider:
• Neighborhood profile
• Type of home, square footage, # bedrooms, # baths
• Price and comparable sales
• Quality of schools
• Amenities
30

31. House vs. Condominium?
• House: You own the house, the land and are responsible
for everything
• Condominium: You own the inside. The outside of the
building, the land, and the amenities are owned in common.
You pay a monthly fee for the maintenance of the common
areas. (Not included in mortgage payment)
• Townhouse: You own the land. Exterior maintenance may
or may not be included.
• Factors to consider:
– Cost for upkeep
– Ability or willingness to do exterior maintenance
– Do I want or need a yard? Do I want to maintain it?
– Amount of living space needed
– Amenities, pool, fitness center etc.?
– Parking?
31

32. New vs. “Used” Home
• New Home or condominium allows you to pick your floor
plan and your finishes.
• New home or new condominium have warranties.
• VA Condominium Act requires the Developers to provide
a 2 year warranty on the structure of the building.
• You can do a walkthru and create a “Punch List”.
• New homes tend to be a bit more expensive than
resales.
• For new homes, you can save on the inspection costs.
• For new homes, the price is usually fixed-- you can
negotiate the price on resales.
• For Used Homes, we recommend that you purchase a
Home Warranty.
32

33. Association Documents
• Docs, Association documents, Public Offering Statement
(POS), or Condo Docs are the rules and regulations for
neighborhoods of single family homes or condominiums.
• Documents specify what you can and can’t do e.g., fence
requirements, pet restrictions, rental restrictions.
• The Docs also contain the association budgets
• Seller must deliver a current copy of the Docs to the
Purchaser.
• Purchaser has 3 days (resales) or 10 days (new homes) to
review docs and rescind the contract. Rescission must be in
writing.
• Read the documents and ask your realtor if you have
questions.
33

34. Foreclosures and Short Sales
• What a deal!!! But…..
• Sold “As Is”. Purchaser takes all the risk. You can have
an inspection but they are not going to pay for anything.
• Banks respond fairly quickly on foreclosures but...
• There are often multiple offers and sometimes they sell
for more than asking price
• 3 out of 4 short sales do not close. You make the offer
and it may take months for the bank to reject the offer.
• Things may be missing and you may not be able to get a
loan.
34

35. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
3. Find a Realtor
4. Find a Home
5. Offer and Contract
35

36. Step 5: Offer and Contract
• Congratulations! We found the right home… now what?
• Your agent will evaluate comparable sales and write a competitive offer for
you.
• Seller contributions: Buyer may ask Seller to pay some of the closing costs.
• Strategies to make your offer competitive: Price, terms and conditions.
• Agent will explain the contract, attached forms and offer process to you.
• Be prepared…
1. Have your mortgage preapproval ready.
2. Have your funds available – Earnest money deposit with contract.
3. Ask questions about the contract and the process.
Buyer Offer Seller
Buyer Counteroffer Seller
Buyer Seller Ratified
Counteroffer
Contract!
36

37. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
3. Find a Realtor
4. Find a Home
5. Offer and Contract
6. Mortgage
37

38. Step 6: Mortgage
• Prequalification letter does not obligate you to use a
mortgage company.
• Mortgage may come from a mortgage company, savings
& loan, bank, or credit union.
• Closing costs and Good Faith Estimate… being able
to compare apples with apples!
• Your mortgage lender will need things like the following
(Pay stub, copies of your tax returns for the past few
years, bank statements…….)
• Interest rate is not the only important thing.
• Important to have easy access to your mortgage lender.
• Respond quickly to your lender!!
38

39. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
3. Find a Realtor
4. Find a Home
5. Offer and Contract
6. Mortgage
7. Inspection
39

40. Step 7: Inspection
Home Inspection:
• Your realtor can recommend inspectors. Typical costs
below:
1. Whole House inspection ($300-$400)
2. HVAC inspection ($150)
3. Chimney inspection ($100)
4. Roof inspection ($150)
5. Radon inspection ($350)
• Your realtor will help you address inspection issues – credit
or fix prior to closing.
Home Warranty: We recommend a home warranty for “used”
homes. It is usually not necessary for new homes. Cost is
generally $350-400 for first year and can be paid for as part of
closing costs.
Negotiation: Your realtor will address any issues that change
your contract. 40

41. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
3. Find a Realtor
4. Find a Home
5. Offer and Contract
6. Mortgage
7. Inspection
8. Appraisal, Survey, Homeowners Insurance,
Title Search
41

42. Step 8: Appraisal, Survey,
Homeowners Insurance, Title Search
• Appraisal: Your lender will have this done to make sure
your home is worth equal or more than they are loaning you.
• Survey: Your lender or attorney may require a survey of the
lot showing dimension, house placement and easements.
• Home or condo insurance: Get quotes, select agent and
get information to closing attorney.
• Title Insurance: Your closing agent will have a title
company do a title search to make sure that the title to the
property is free and clear. All existing loans (liens) on the
property will be paid off when you buy the property. You will
pay for title insurance to protect you after you buy the
property.
42

43. Steps to Home Ownership
1. Rent vs. Buy
2. Mortgage Preapproval Process
3. Find a Realtor
4. Find a Home
5. Offer and Contract
6. Mortgage
7. Inspection
8. Appraisal, Survey, Homeowners Insurance,
Title Search
9. Closing
43

44. Step 9: Closing
Attorney or non-attorney for your closing agent?
We strongly recommend using an attorney.
• Attorneys are most knowledgeable about the RESPA laws
(Real Estate Settlement Procedures Act).
• You receive your own legal representation & protection.
• Attorneys will lead your through the settlement and have your best
interests in mind.
• Attorney is there to deal with any issue that may arise!!!
44

45. Step 9: Closing
• Your contract has a closing date. If closing date changes, all
parties need to agree on it.
• Remember your mortgage has an expiration date for your
rate… get closed before it expires.
• Set up all your utilities prior to closing to start on closing date.
(electric, gas, water & sewer, propane, oil delivery)
• Don’t forget to set up trash pickup, TV, Internet, telephone.
• Be flexible on your moving date. Closings are often delayed by
lenders, new Federal regulations, etc.
• Attorney will explain the closing costs.
• Who is at closing? You, your attorney and your realtor.
• Bring your funds (cashiers check) or arrange for
electronic transfer.. And don’t forget… bring a picture
ID!
• You will sign lots and lots of papers.
45
• Congratulations!! Enjoy your new home!

46. Questions???
Mortgage PreQualifications Available-
Christy Feiler
Richmond Mortgage Funding/SunTrust
(804) 673-1793 Office
(804) 673-1794 Fax
(804) 305-0464 Cell
319 Maple Avenue
Richmond, VA 23226
46

47. Why You Should Buy Now
47

48. Return on Investment
(January 1, 2000 –December 1, 2010)
48 MSN Money.com, Case Shiller

49. Home Price Expectation Survey
% Cumulative Price Change from Year End 2009
49 Macro Market Home Price Expectations Survey 11/2010

50. Foreclosures Will Be Dropping
50

51. Future House Sales – Fannie Mae & NAR
NAR Fannie Mae
51 Fannie Mae and NAR 11/2010

52. “If you don’t own a
home, buy one.
If you own one home,
buy another one.
If you own two homes,
buy a third.
And, lend your
relatives the money to
buy a home.”
– John Paulson 9/27/2010
52

53. Your realtor:
Lacy Williams
Joyner Fine Properties
804-864-0316
Lacy.Williams@JoynerFineProperties.com
www.RichmondHousingToday.com
53

54. Handouts
54