First Time Home Buyer Class Sacramento California

First-Time Homebuyers Presenation

Land HomeFinancial Services

Sean Safholm, RVP, Northern CaliforniaNMLS/CA-DOC #121627

Land Home Financial Service’s Inc.

To provide diversified funding options and consistent,

superior, personalized service to our clients and partners,

including: homebuyers, mortgage brokers, builders,

manufactured home retailers, and real estate agents.

Built on Knowledge, Commitment & Trust Since 1988

Our Mission…

Are you ready to buy a home?

If you’re like many today, owning your own home is a major part of the your dreams.

Are You Ready to Buy a Home?

• Your Employment Status

• Your Credit History

• Down Payment

• Can you afford the monthly mortgage payment?

• How much home can you afford?

Your Employment Status

• If you have been working for two years or more, you are considered to have steady employment.

• You do not have to have held the same job for two years in order to be approved for the loan.

• If you have been fired because of excessive absences, have large gaps in your employment history, or have dips in your income level that are difficult to explain, you most likely should delay purchasing a home until you have a more consistent work history.

Your Credit History

• You will be asked to list all your debts, the amount you pay each month, and how long before these debts are paid in full.

• It’s important to disclose all debts and any difficulty you may have had in the past in repaying these loans.

• Land Home will order a credit report to verify the information and to check on how well you have paid your bills.

• Three credit reporting companies provide credit reports: Experian, Trans Union Corporation, Equifax

• If your credit report shows that you do not have good credit you may need to delay trying to buy a home and take steps to improve your credit.

Down Payment

• When you are purchasing a home, you will need a down payment and “closing costs.”

• Down payment can be as low as 3.5% (FHA products) or as much as 20% (Conventional Financing).

– There are some loan programs that provide down payment assistance.

• Some areas have programs to help first-time homebuyers.

• 3% down payment conventional programs

• VA 100% financing options for those who qualify

Can you afford the monthly mortgage payment?

• The amount of your home loan payment will depend on how much you borrow, the term of the loan, and the interest rate.

• There are other expenses that will be added to your monthly payment.

– taxes, homeowner’s insurance, PMI Insurance

• If your down payment is less than 20 percent, you should not need to pay private mortgage insurance (PMI).

Facts About the Lending Process

You’re ready to buy a home. What do you do first?

Facts About the Lending Process

• The Advantages to Becoming Pre-approved

• What Documents Will I Need for My Loan Application?

• Mortgage Products

The Advantages to Becoming Pre-approved

• You will know exactly how much house you can afford, eliminating the guesswork and potential disappointment.

• You’re in a better position to negotiate a lower price because the seller knows your offer is good.

• Once the appraisal and title work’s done, you could close on a home faster.

• It’s like shopping for a home with the money in your pocket.

• A pre-approval is generally good for approximately 90 days.

What Documents Will I Need for My Loan Application?

• Personal Information

• Pay Stubs/W2s

• Other Income

• Child Support

• Rental Income

• Bank Account or Other Asset Verification

• Debt Disclosure

• Income Tax Returns

• Loan Application for Home Purchase

• Evidence of Funds for Down Payment

• Other

Mortgage Products

• Government

– FHA Loans

– Veterans Administration

– USDA

– HomePath

• Fixed-Rate Mortgages

• Adjustable Rate Mortgages (ARM)

• Conforming Loans

• Jumbo Loans

• Non-Conforming Loans

Finding the Right Home For You

Now that you have been pre-approved it’s time to starting hunting for your dream home.


• Where do you want to live? What type of home do you want? How much should you offer? These are some of the questions that are most likely going through your mind.

• One of the best ways to start this process is to hire a reputable Real Estate Agent.

What to look for in a Real Estate Agent• A Full Time, Hard-Working Professional• Fully Aware of Market Conditions and Available Financing• Backed by Professional Marketing Management• Associated with a Reputable Real Estate Firm• Aware of Recent Property State and Local Requirements• Willing to Cooperate with All Brokers• Committed to the Highest of Ethical Standards• Associated With a Strong Team of Lenders, Inspection

Companies, Title Companies and other Real Estate Service Professionals

• Last but not least – Do you like this person?


The Home Buying Process

After searching and looking at many houses, you succeeded in finding the home of your dreams.

The Home Buying Process

• No doubt you are very excited and ready to start packing. But, there are still a few more things that have to happen before you can move in.

• The following slides will give you insight on what the final process will involve.

Making an Offer

1. Asking price vs. comparable home sales

2. Current market conditions

3. Other potential offers

4. How much you want the house

5. The home’s condition

6. If you’re approved for a loan, etc.

You should consider several things when deciding how much to offer:

Making an Offer

• Your agent will supply you with the purchase agreement to sign. This indicates the amount of your offer.

• You’ll put down “earnest money,” a deposit to show that you’re willing and able to buy the home.

• Earnest money is generally a small percentage of the asking price and is later applied to your home’s down payment.

Next is the Purchase Agreement:

Making an Offer

• Your agent presents your offer to the seller’s agent who in turn presents it to the seller.

• Most offers request a response within 24 to 72 hours. They will sign your contract accepting your offer, decline your offer or submit a counter offer.

• If they present you with a counter offer, you can either agree with their terms or make another counter offer. This process continues until everyone comes to an agreement.

The Counter Offer:

Escrow

• Escrow is the neutral third party who handles the transfer of documents and monies involved in the closing of a Real Estate Transaction based upon written instructions from the buyer, seller and lender involved.

• After the offer is accepted you would put an “Earnest Money” deposit with an Escrow Company, Attorney, or a closing company depending upon the State in which you live.

Escrow

• Lender’s/Real Estate Agent’s request to open escrow is received.

• Title Insurance is/or has been ordered.

• Lien information is requested and loan payoff information is ordered.

• Title is reviewed for Judgments., Assessments, Homeowner Dues, Leased Fixtures, Probate Matters, Encroachments.

• Loan documents are prepared by Lender and received by escrow.

• Escrow prepares closing documents and estimated settlement statement.

The Escrow Process:

Escrow

• Separate appointments are scheduled for buyer and seller to sign closing documents.

• Buyer deposits necessary funds to close transaction.

• Escrow prepares funding package which is delivered to the lender for approval.

• Recording documents are delivered to Title Company.

• Upon lender approval, closing documents are recorded and wired funds are received.

• Upon receipt of recording numbers, final settlement statements are issued and checks are disbursed.

The Escrow Process Continued:

The Home Inspection Process

• After your offer has been accepted you will need to set up a home inspection.

• Your real estate professional can help find a reputable inspector, and will negotiate to get you the most for your money once the inspector’s report is final.

• If you negotiate repairs as part of the purchase, ask for a “walk through” before finalizing the paperwork.

• Ask your real estate expert about home protection plans, which may save you money in the near future.

The Appraisal Process

• Your lender will require that an appraisal of the property be completed by a certified appraiser.

• You will normally have to bear the expense of the appraisal.

• The appraisal compares the home you are purchasing to similar homes that have recently sold in the surrounding area.

• The purpose of the appraisal is to ensure that the appraised value of the home, based on comparable sales, justifies the loan amount you will obtain from the lender.

The Title Search

• A title search is the process of investigating the ownership history of the property you plan to purchase.

• Trained personnel investigate public records to determine the “chain of title,” which is the history of the ownership and claims upon a piece of land.

• By law, county records have to be kept on all property transfers, wills, liens, tax matters, etc., and these are the types of records searched in order to determine a “chain of title.”

• The end product of a search is knowledge of potential and actual encumbrances upon a title.

The Title Search

• Liens on a property need to be paid off or knowingly assumed by the new owner before transfer of title can occur.

• A Title Company will make sure that this happens.

• Easements and other factors need to be known.

• It has to be determined whether the seller of a property actually has the right to sell that property.

Title Insurance

• Title Insurance is insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against loss arising from disputes over ownership of a property.

• If a claim is filed against the property, you could lose your entire home and property and still be liable to pay off the balance of your mortgage.

• Title insurance will, in accordance with the terms of your policy, assure you of a legal defense – and pay all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.

Homeowner’s Insurance

• You’ll need homeowner’s insurance before you close.

• No lender will give you a mortgage without it.

• It’s important that your equity in the home and your lender’s investment are insured against damage. And you’ll want a policy that covers your personal belongings too.

• It is best to contact three reputable Insurance agencies to compare pricing.

• Check with your loan agent for the minimum requirements.

Closing

• The closing is the finalization of a real estate sale and loan transaction.

• It’s customary to take a final walk through of the property before the closing.

• At the time of closing you will need to pay the closing costs.

• Closing costs are estimated at the beginning of loan processing with a “Good Faith Estimate” of settlement charges.

• When borrowers sign their closing documents, a final statement showing all fees will be provided.

• The timing of your closing is important schedule it to your best advantage.

• Before your closing, you’ll receive a document that outlines all of the costs you’ll be paying at closing.

Closing

• You’ll be asked to bring a valid picture ID, a certified check, if applicable, and any other additional required documents.

• Closing can be attended by any number of people and may or may not include the seller, the lender, you, the seller’s mortgage holder, respective attorneys, the real estate agent, the managing agent (if it’s a condo) and the title company representative.

• Everyone signs the documents and they are then sent to the lender for review.

• Once the lender has approved the documents funding is done and the recording takes place the following day.

• After all has taken place you will then receive the keys to your new home.

Closing

• Credit Report

• Processing Fee

• Escrow Deposit for Taxes and Insurance

• Transfers Taxes

• Loan Discount Points

• Title Company

• Closing Fee

• Buyer’s Attorney Fee

• Title Insurance

• Homeowner’s Insurance

• Underwriting Fee

• Survey Fee

• Home Inspection

• Pest Inspection

• Recording Fees

• Courier Fee

• Prepaid Interest

• Application Fee

Possible Closing Cost:

Prepare to Move-in

• Before rolling out the welcome mat, consider some moving-in basics, such as, arranging for the electricity, water and gas to be turned on, cleaning or replacing the carpet, and notifying your local post office of your new address.

• Keep in mind the best time for renovations is often before you move in.

Why You Should Choose Land Home…

We’ve built our reputation on Knowledge, Commitment, and Trust Since 1988.


You have a lot invested – emotionally, financially, and mentally – in this process. We’ve been helping to create and

advise homeowners for more than 25 years.

Our products and services are custom-built around the understanding of a your needs and how to best enable you,

the possibility of homeownership.


• Mortgage banker, in business since 1988

• Celebrating 25 successful years in business

• Fannie/Freddie seller servicer

• In-house underwriting, doc drawing, and funding to insure a smooth loan transaction!

• Staffed with several on site direct endorsement underwriters.

• On-site Appraisal Management Team

• Excellent personalized customer service

858-774-0009 • [email protected]/CA-DOC #121627

Sean SafholmRVP, Northern California

Equal Housing Opportunity Lender. Rates, Program, Fees, and Guidelines are subject to change without notice. Restrictions apply. Not a commitment to lend. Land Home only conducts business in states we are approved to. Land Home Financial Services 2356 Gold Meadow Way, Suite 120, Gold River, CA 95670. NMLS #1097894. Licensed by the Department of Business Oversight under the California Finance Lenders law - #6073599. CA Department of Business Oversight - 916-324-6624. California - Bureau of Real Estate Branch Office License Endorsement #00988341. 10-15-13