Home Financing. Helping you achieve the American Dream. Equity & Tax Advantages Financing a Home Types of Loans Do s and Don ts When Applying

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1 Home Financing Helping you achieve the American Dream Equity & Tax Advantages Financing a Home Types of Loans Do s and Don ts When Applying

2 Owning Your Own Home A Serious Commitment Owning a home requires preparation and is not something that should be taken lightly. You Are In Control You own your home, you are the landlord, and you must make responsible decisions.

3 Advantages Equity Advantage Buying a home builds equity; renting does not. After paying rent for 30 years, you ll own nothing. After paying a mortgage for 30 years, you ll own it free and clear. The equity in your home can help meet other financial needs, like retirement or a college education or a vacation home! Tax Advantage When you own your home, your property taxes are deductible. In most cases, the interest you pay on your mortgage is tax deductible as well.

4 Understanding Financing How much can you afford? - The answer may depend on the lender you choose Where do you go for financing? - Start with your primary financial institution (Credit Union, Bank, or Mortgage Broker) - Look for a lender that offers a wide variety of programs - Some programs require as little as 3.5% to 5% down What types of home loans are available? - Conventional Fixed or Adjustable Rate - FHA: low down payment requirements - VA: no down payment requirements, available to qualified military service

5 Financing Factors Income Annual income: Lenders will want to know how much you make each year and where it comes from, for example; your job, investments, or other sources Employment history: Lenders also want to know how long you have been at your current job and how long you have been at your current income level Assets Checking and savings accounts Money market accounts Mutual funds, stocks, and bonds Retirement plan with loan options

6 Financing Factors Debt Amount of debt Type of debt: Revolving debt and installment debt How fast you repay your debts Credit Lenders will look at how you have handled credit in the past Lenders will order a credit report which will reflect your payment history and credit score from all three credit bureaus

7 APR Education The true cost of credit is expressed as the annual percentage rate, or APR. This is not your note rate that you will make your payments on. The APR is normally higher because it takes into account both the interest rate and any finance charges that will be charged in connection with the loan. The APR can be useful when shopping for loans by making them more comparable.

8 How to Finance a Home Pre-approval and Online Application Gives you more control Makes your offer more attractive May give you priority consideration Speeds up the entire process You know exactly what you can afford Your search is more focused Your offer is stronger

9 Taking Action Get Pre-Approved Before Calling a Realtor Step 1: Gather your financial data, plus data for your coborrower, if applicable Social Security Numbers Two years W-2 s Your pay stubs for the past 30 days If Self-Employed: tax returns for the past two years Your bank, retirement and investment statements Your employment history Your addresses for the past two years

10 Taking Action Step 2: Call your credit union or apply online If applying in person: Make an appointment for application (Most financial institutions require an appointment) If applying online: Make sure you have all your information gathered before you begin

11 Applying for a Mortgage Helpful DO s DO keep originals of all pay-stubs, bank statements and other important financial documentation. DO provide all documentation for the sale of your current home. DO notify your Loan Officer if you plan to use gift funds for closing costs. DO notify your Loan Officer of any employment changes during the process.

12 Applying for a Mortgage Helpful DON Ts DO NOT change jobs/employer without inquiring about the impact this change would have on the approval of your mortgage loan. DO NOT make major purchases during or prior to closing (new car, furniture, appliances, electronics) DO NOT obtain and/or deposit unusually large sums of money without notifying your Loan Officer. DO NOT close/open or transfer any asset accounts without inquiring about the proper documentation required for your loan file. DO NOT open or increase any liabilities, including credit cards, signature loans, etc., during the loan process.

13 Questions? Contact your Loan Officer in the Partners 1st Mortgage Department. Learn more about mortgages, amortization, foreclosure, escrow and more by visiting: