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Realizing the American Dream

Realizing the American Dream. Are You Ready to Buy a Home?. Agenda. Is owning a home right for you How you buy a home Your homeownership team Mortgage payment and other costs How much you can afford Qualifying ratios. Advantages of Homeownership. Stable housing costs Tax benefits

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Realizing the American Dream

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  1. Realizing the American Dream Are You Ready to Buy a Home?

  2. Agenda • Is owning a home right for you • How you buy a home • Your homeownership team • Mortgage payment and other costs • How much you can afford • Qualifying ratios

  3. Advantages of Homeownership • Stable housing costs • Tax benefits • Equity • Control over your environment • Stability

  4. Disadvantages of Homeownership • Monthly costs • No guarantees • Maintenance and repairs • Decreased mobility • Fewer features included

  5. Steps in the HomebuyingProcess • Attend homeownership education class • Determine how much you can afford • Meet with lender for pre-approval • Determine wants and needs in a home • Shop for a home

  6. Steps (Cont’d) • Make an offer • Have professional home inspection • Apply for mortgage loan • Obtain homeowners insurance • Close the loan

  7. Your Homebuying Team • Homeownership Counselor • Real Estate Agent • Lender • Attorney or Escrow Agent • Title Insurance Agent • Home Inspector • Appraiser • Surveyor • Homeowners Insurance Agent

  8. The Mortgage Payment • Principal • Interest • Taxes • Insurance

  9. Costs of Buying a Home • Upfront Costs • Down payment • Closing costs • Escrows • Reserves • Moving costs • Ongoing Costs • Mortgage payment • Utilities • Maintenance and repairs

  10. The 4 Cs of Credit • Capital • Capacity • Credit History • Collateral

  11. Ordering a Credit Report Experian www.experian.com (800) 831-5614 TransUnion www.transunion.com (800) 888-4213 Equifax www.equifax.com (800) 685-1111

  12. How Much Can You Afford? 5%–10% of monthly income $36,000 ($3,000/mo.) $90,000 – $108,000 Income Debts 2.5– 3 times Home Price

  13. Qualifying Ratios Housing 33% Debts 5% Other Expenses 62%Expenses 62% 38% for housing plus all other long-term debt 62% 33% 5%

  14. Prequalification • Financial Calculations • How much money the lender will lend you • What price home you can afford • How much down payment you need • How much your monthly payments will be This is not a guarantee

  15. Summary • Pros and cons of ownership • Key steps and professionals involved in the homebuying process • Mortgage payment and other costs • How lenders determine creditworthiness and affordability

  16. Next Steps • Sign up for education or counseling • Order copies of your credit report

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