Why Flagstar Bank When Buying a Home?

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1 Section I Why Flagstar Bank When Buying a Home? Section I Est Member FDIC Page 1

2 We ll walk you through each stage of the home-buying process. Buying a home is a big decision. Is it the right time? Where should I move? How much should I spend? Would renting be a better option? Regardless of how you answer these questions, one thing is certain this could be the biggest financial decision you ll ever make. Of all first-time home buyers 58% 18% 14% 8% are married couples are single females are unmarried couples are single males Flagstar Bank is one of the nation s leading mortgage lenders. Our associates have guided thousands of home buyers like you through the process in a friendly, helpful and supportive way. We listen. We explain things in simple, easy-to-understand language. We re clear about the timing, expectations and costs involved. When you re ready to make the move, there ll be no surprises. You ll be confident in your home-buying decision and that Flagstar Bank has crafted a mortgage solution that best fits your needs. We re here to answer any questions along the way and help with future plans. To get started, just reach out to one of our loan officers nearest you. We can t wait to get you settled in your new happily-ever-after home. National Association of Realtors Annual Profile of Homebuyers and Sellers, November 2016 Section I Est Member FDIC Page 2

3 Questions to Ask Your Mortgage Lender 1. What s the interest rate? This includes the interest rate, points, fees and other charges you ll pay for a mortgage. 2. What are the closing costs? Borrowers pay fees at closing for services provided by the lender and other parties, such as title companies. Lenders are required to provide a written estimate of these costs within three days of receiving a loan application. 3. Can I lock in an interest rate? Typically, yes. However, there may be costs to do so. Consult with your loan officer to understand what all your options are. 4. What s the minimum down payment required? Down payment amounts can vary. It s important to know that larger down payments may mean lower interest rates and better terms. 5. What are the qualifying guidelines? These may involve income, employment, assets, liabilities and credit history. VA loans and other government-sponsored mortgages are typically less stringent. 6. What documents do I have to provide? Bank statements, tax forms, W-2s and recent pay stubs are commonly needed. More may be needed to show your down payment and ability to pay closing costs. 7. How long will it take to process my application? It could take a few weeks or as long as 60 days. Be patient and forward any requested documents quickly to speed up the process. 8. What might delay my approval? Changes in salary, new debt or change in marital status could delay your approval. The best way to avoid a situation like this is to put your financial life in a holding pattern until you reach the closing table. bankrate.com, July 2016 Section I Est Member FDIC Page 3

4 Section II Some Things to Consider Before Buying a Home Section II Est Member FDIC Page 4

5 It s a big decision. We ll help you get it right. If you re buying a home for the first time, you may not even know the right questions to ask. Flagstar Bank can help you think through those things that haven t occurred to you. For example, does owning a home make sense for you in your particular circumstance? There are benefits to renting, especially if you plan to move in the not too distant future. Or if you currently own a home, would you be better off fixing it up or adding a room? We want to help you make the right decisions and not feel pressured to buy the perfect property. Your Flagstar Bank loan officer can help evaluate these situations in light of the costs involved. We can also help you explore other financing options that may include home equity loans or lines of credit. If buying a new home is the right decision, we can help you determine how much you can afford, the costs that are involved (over and above the new home price) and the size of a required down payment. We can also discuss ways to fund that down payment. Look to us as your partner in this process. We want you to buy a home you can afford now and later. We want to help you make the right decisions and not feel pressured to buy the perfect property. These are just some of the ways our loan officers will help build the right mortgage solution for you. Section II Est Member FDIC Page 5

6 The Hidden Costs of Buying a Home Many first-time homeowners are surprised by how much it costs to maintain a property. Here are some of the hidden costs of homeownership that you may pay in addition to your mortgage. The Hidden Costs of Buying a Home 1. Homeowner s association (HOA) fee. These fees apply in some neighborhoods for the upkeep of common areas, pools, tennis courts, etc. In some cases, they may also cover some exterior maintenance and trash collection. 2. Maintenance and repairs. U.S. households pay an average of $3,435 each year to maintain their homes. It s cheaper to do what you can yourself, but even then it s far from free. 3. Home insurance. The cost varies depending on where you live. People living in areas more prone to natural disasters or crime can expect to pay more. The national average is $1,000 a year. 4. Utilities. Factor in an extra $3,000 annually to cover utility costs such as electricity, gas and water. 5. Property tax. This is expressed as a percentage of your home s value and varies depending on location. Americans pay an average of $2,216 in property taxes. 6. Renovations. It varies from person to person and from year to year. Plan on setting aside some extra cash for updates to your home as needed. Zillow, Credit.com, Bankrate, August 2016 Section II Est Member FDIC Page 6

7 Questions to Ask Before Buying a Home As you prepare to buy a home, finding the right realtor is important. Here are nine questions you should ask your realtor before making an offer: 1. What s the home s sales history? When was the last time the house sold, and how much did the current owners pay for it? But keep in mind that a home s true market value is based more on what comparable homes are selling for now rather than what it went for in the past. Sales history can help you hone your negotiating stance. 2. Did the sellers make any major renovations or additions? Ideally, you ll want to see receipts from contractors to get a sense of what the previous owners paid for these upgrades. Don t assume that you ll have to fork over as much cash as they put in. Home improvements generally reap only a 64% return on average. 3. How much are the property taxes? You ll want to find out what previous owners paid, but understand that the property tax will probably be affected by your purchase price. This could be a huge additional expense, and you ll need to budget for that when putting together your offer. 4. What are the monthly maintenance and utility costs? Is there a homeowner s association fee? You ll want to know what kind of power the house uses gas, oil, electric or a combination and ask what the average monthly bill for each is. Also inquire about water, waste removal and any other utility costs that are applicable. 5. Has there ever been a broken pipe? Sewer backup? This may sound trivial (not to mention unpleasant), but according to the Insurance Information Institute, broken pipes account for an estimated 22% of all home insurance losses. You might want to put these on your list of questions to ask your inspector, too. Section II Est Member FDIC Page 7

8 Questions to Ask Before Buying a Home cont d 6. How old is the roof? The 2015 Remodeling Impact Report from the National Association of REALTORS says the national median cost of an asphalt roofing replacement is about $7,600. It would be good to know how soon you might need to lay out that substantial amount of cash. 7. Has there ever been any pest infestations? If there was an infestation, when were the pest control procedures undertaken? Many buyers require that a termite treatment be included in the price. 8. Are there warranties on the appliances, HVAC system, garage door, etc.? And if so, can the homeowner provide the documentation? This can establish how old these features are and give you an idea of when they might need to be replaced and how expensive it could be. It will also help you decide whether or not to buy a home warranty. 9. What are the parking restrictions around the house? Will guests need parking permits? How many permits are you, as the homeowner, allowed, and can you obtain more if you decide to throw a party? Also, check out the parking situation on the property itself. Will your car(s) fit in the garage? Is there room to park anywhere else on the property other than the driveway? realtor.com, August 2016 Section II Est Member FDIC Page 8

9 Section III Which Home Loan is Right For You? Section III Est Member FDIC Page 9

10 We help you explore your mortgage options. When it comes to financing a home, you have many choices. We can recommend one that would make the most sense using language that s clear and straightforward. Here are some of the most common options and the benefits of each: 30-Year Fixed The longest-fixed term available makes this a popular choice. The interest rate set at closing remains constant so your principle and interest payment always remain the same. 15-Year Fixed Great if you re comfortable with a monthly payment that s typically higher than a longer term, fixed-rate mortgage. Your home will be paid off sooner with substantially lower interest costs. 5/1 Adjustable The interest rate is fixed over the initial five-year period, then it adjusts on an annual basis increasing or decreasing. You benefit from lower initial monthly payments than fixed-rate mortgages, which give you the opportunity to qualify for larger loans, lower payments and short-term savings. FHA 30-Year Fixed Insured by the Federal Housing Administration, this mortgage offers more flexible qualifying criteria. It s ideal for those with less-thanoptimal credit, little-to-no formal credit history or limited cash for down payments. Section III Est Member FDIC Page 10

11 Fixed vs. Adjustable Which type of loan is best for you? Here are some reasons you might choose one type of loan over another: Fixed-Rate Mortgage You re more risk-averse and don t want to stay up at night worrying about your mortgage rate rising. You can t handle a larger monthly mortgage payment if your mortgage rate adjusts higher. You plan to stay in your home for the long haul and pay off your mortgage. Mortgage rates are so low that locking in a fixed-rate now could save you significant money long-term. Adjustable-Rate Mortgage You don t plan on staying in your home for a long time (you may move or upgrade). You think mortgage rates may hold steady or drop in the future, allowing you to refinance to a lower rate later on. You don t want to pay off your mortgage because you think you can do better investing your money elsewhere. VA 30-Year Fixed Designed specifically for veterans and active-duty military personnel, this loan often requires no down payment on new purchases. It features a fixed-interest rate and favorable loan terms. Activeduty service members, veterans and some surviving spouses may be eligible to finance 100% of the home price up to current conventional loan limits. Jumbo 30-Year Fixed A nonconforming mortgage for loan balances up to $2.5 million. Available for either a new purchase or refinance. After qualifying, a jumbo mortgage could help you purchase your dream home without requiring a second mortgage. These are just a sampling of our current loan offerings. We can help you determine which loan makes the most financial sense for your homeownership goals. If the home of your dreams isn t on the market, then why not build it? While few lenders offer new construction loans these days, a Flagstar Bank loan officer may be able to offer you a simpler way to build and finance your perfect home. TheTruthAboutMortgage.com Section III Est Member FDIC Page 11

12 Section IV Managing Your Transition to a New Home Section IV Est Member FDIC Page 12

13 Buying a new home before selling your old home? It s not an uncommon challenge. According to the National Association of REALTORS, 68 percent of home buyers were purchasing a home for at least the second time. Undoubtedly, many of them had to sell a home while buying a new one. The Top Considerations when Buying a New Home Quality of Construction Neighborhood Safety Better Floor Plans Across all regions and metropolitan areas, these are the three attributes that consumers agree are the most important. Builders Homesite, Inc., National Home Shopper Survey 2012 If you re a repeat home buyer, Flagstar Bank may be able to craft a solution even when your buy-and-sell timelines don t fall into place. Obviously, you gain some flexibility if you can qualify for and are comfortable making two mortgage payments temporarily. But this can be a financial challenge for most. You ll also have to decide how to make a down payment on the new home. A contingent offer allows you to place a bid on a home, and if it doesn t sell to someone else before your existing home sells, you benefit without having to worry about two mortgages. Of course, you also risk losing that home. Some homeowners benefit from selling their existing home first and then start looking for a new property to buy. This solution most likely involves setting up temporary living arrangements and probably renting a storage unit. Although it also requires moving twice, the extra logistics can pay off. With your current home sold, you are free not to compromise on must-have home amenities or your desired location. If you re wrestling with the best way to handle this situation, speak with a Flagstar loan officer. Whatever your home-buying situation, we have seen it before and have helped buyers manage the transition so they can end up in the home of their dreams. Section IV Est Member FDIC Page 13

14 What are buyers looking for in a home today? Here are the home features sought by at least 80% of American home buyers in It s a great reference for things you may want to upgrade in your current home before you sell. Laundry room. A separate laundry room topped the National Association of Home Builders list of most-wanted home features for buyers of all ages from millennials to seniors. Exterior lighting. Exterior lighting is the most-wanted outdoor feature, according to the NAHB. Options include spotlights, walkway lights and pendant lights. Energy-efficient appliances and windows. Buyers are most impressed with smart, energy-efficient choices that in no way limit their comfort, but in every way save them money in the long run. Patio. In today s housing market, outdoor living spaces are quickly becoming one of the most coveted home features. Hardwood floors. Hardwood flooring offers a cleaner look, is easier to maintain and is more durable than carpet. Garage storage space. Unlike an attic or a backyard shed, the garage is generally accessible, just a few steps away from the rest of the house. Eat-in kitchen. These eat-in kitchens are a must-have for many buyers, especially families with children. It s where they congregate in the morning or evening to connect and share highlights from their day. National Association of Home Builders (NAHB) 2016 Housing Preferences Across Generations report, surveying 4,300 buyers nationwide. Section IV Est Member FDIC Page 14