The power is now 2 unit fthb program

How to buy a 2 Unit Property as First Time Home Buyer THE FIRST TIME HOME BUYER MULTI UNIT STRATEGY 1

Eric L. Frazier MBA President and CEO CAL BRE 01143485 NMLS 461807 800-401-8994 x 703 The Power Is Now Inc. CAL BRE 1980407 NMLS 1435243

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INTRODUCTION The Power Is Now Inc.  The Power Is Now is a multimedia company has been around since 2009  The Power Is Now Inc. is licensed to sale real estate CAL BRE 1980407

 The Power Is Now Inc. is license to broker mortgage loans NMLS 1435243  Founder and Broker Eric L. Frazier MBA CAL BRE 01143484 & NMLS 461807 As a Mortgage Brokerage, The Power Is Now Mortgage Services has access to many lenders that offer programs for first time homebuyers, move up buyers, investors, churches, non-profits and foreign nationals. We are a full service mortgage brokerage.

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MISSION The mission of the Power of Now Inc., is to inspire, educate, and empower real estate professionals, and consumers to build wealth through real estate with information, services and support that will give them the power to act now for their future.

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VISION The vision of the Power is Now is to be a powerful resource for real estate professionals, and consumers to buy and/or sell real estate to achieve their personal, family and business goals to build wealth and leave an inheritance and legacy for their family.

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OUR COMPANY SLOGAN IS OUR NAME The Power Is Now! We are at our best and we maximize our success when we act now.

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THE PATHWAY TO POWER AND WEALTH Is To Own Real Estate Now!

THE POWER IS NOW WEALTH INITIATIVE www.neverrentagain.com Building Wealth with Real Estate

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THE POWER IS NOW WEALTH INITIATIVE Changing your mindset toward financial literacy and wealth building. www.neverrentagain.com FIVE KEY OBJECTIVES

THE POWER IS NOW WEALTH INITIATIVE • 1.

Five Objectives: Knowledge - Knowledge is the Power you need to build wealth. 

2.

Commitment to Financial Independence – We must take Individual responsibility for our lives. 

3.

Knowledge always comes before money or the money will soon be gone.

Commitment requires disclipine and discipline requires a budget and accountability

Investment in real estate - We must prioritize ownership in real property as opposed to personal property. 

Real Property appreciates. Personal property depreciates.

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THE POWER IS NOW WEALTH INITIATIVE 4.

Financial and Credit Management - We must live within our means and not abuse credit.  

5.

Credit is not income - It is a convenience for cash.

Good credit is the beginning of building wealth. Good credit is a Fico Score of 720 to 799 higher. Great credit is 800 to 850.

Creating Wealth - We must save money to buy real estate & other assets that appreciate in value.  

Buy and Hold, or Buy, Sell and Buy again and hold - building a legacy of wealth.

We must be intentional about leaving a legacy of wealth and an inheritance for our family.

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10 POINT WEALTH BUILDING PLEDGE www.thepowerisnow.com 16

THE STATE OF HOUSING ON THE DECLINE FOR AFRICAN AMERICANS 17

MEDIAN WEALTH In 2009, a representative survey of American household revealed That the median wealth of: White families - $113,149 Latino families- $6,325 Black families - $5,677 The Gross Domestic Product of African American is 1.3 Trillion dollars and 1.5 Trillion dollars for Hispanics.

Why is the median wealth so low?

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YOUR POWER IS NOW TO BUILD WEALTH You're not building wealth if you use all your money for consumption.

The GDP of African American is 1.3 Trillion dollars (13 out of 182 countries) The GDP for Hispanics is 1.5 Trillion dollars (10 out of 182 countries)

THE STATE OF HOUSING FOR MINORITIES •

The Black/Brown-White Economic Divide Real

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African American and Hispanic communities were hit the hardest by the Great Financial Crises from 2007 to 2009

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They have the farthest to climb to get back into the home ownership before home values get back to their pre-recession prices.

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It may be too late for many because interest rates will be rising and home prices are increasing now.

LESSONS LEARNED - GREAT FINANCIAL CRISIS 1. We must save money – Make it your #1 priority now and not later.

2. We must live on a budget – Do not live by hope & faith and beyond your means 3. We must establish an emergency fund – Plan for the worse & expect emergencies.

LESSONS LEARNED - GREAT FINANCIAL CRISIS 4. We must stop long term financing vehicles - Pay cash or limit financing to 12 mos.

5. We must become debt free – Save your money to buy what you want. Stop begging for what you need.

6. We must buy real property – Buy house before you buy an expensive personal property or car.

GREAT RECESSION AND GREAT GAP The Wealth Gap Research Report Traced the same 1700 families over a 25-year period (1984-2009) and found that the total wealth gap between White and African-American families nearly tripled, increasing from:

• $85,000 in 1984 to $236,500 in 2009

The Wealth Gap: $152,000 and growing 23

1994 Blacks & Hispanic Homeownership Rates: 40 & 42% respectively.

2004 Blacks achieved a high of 50% 2014 Blacks were at 42.5% and Hispanics 43.5% Hispanics.

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THE STATE OF HOUSING FOR MINORITIES The homeownership rate in the U.S. is 62.9 percent overall. The rate among whites is 71.5%, Asians, 53.7%, Hispanic 45.1%, African Americans 41.7%

THE STATE OF HOUSING BY AGE The homeownership rate by Age of Householder. Under 35 - 34.1 percent, 35 to 44 - 58.3 percent, 45 to 54 - 69.1 percent, 55 to 64 - 74.7 percent, 65 and over - 77.9 percent.

THE STATE OF HOUSING FOR MINORITIES •

If homeownership continues to be the primary vehicle that Minorities use to create wealth then Minorities are on the path to another Economic Crisis and homelessness!

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It’s time to take action and personal responsibility.

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Great Recession further exacerbated the wealth gap as Blacks and Latinos disproportionally impacted by the bursting of the housing bubble.

Between 2007 and 2010, the average Black and Latino households lost three and four times more wealth, respectively, than the average White household.

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Extrapolating from past trends, we can estimate what the future of wealth inequality will look like in this country. Unfortunately, it doesn’t look good.

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Eric L. Frazier MBA President and CEO CAL BRE 01143485 NMLS 461807 800-401-8994 x 703 The Power Is Now Inc. CAL BRE 1980407 NMLS 1435243

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Multi Unit Strategy How to buy a 2 Unit Property as FTHB 33

MULTI UNIT STRATEGY As housing prices have begun to stabilize in most parts of the country and home sales are on the rise, it’s an indication that the housing market is indeed in the “thaw” stage and on the road to recovery.

Likewise, demand for rental property is on the rise. Housing demand has also allowed landlords to demand higher rents.

The combination of low rates and higher available rent means it’s possible that part or all of your mortgage payment can be paid for by a renter.

How can this happen?

Purchase a Two Unit Property Live in One Unit and Rent out the Other 35

DOWN PAYMENTS LESS THAN 20% ON 2-4 UNIT PROPERTIES Don’t have a 20% down payment?

FHA loans require only 3.5% down on 2-4 unit properties.

If you are eligible for a VA home loan, you may qualify for a zero-down loan of up to $1 million in some areas.

Conventional loan requires a higher down payment amount: 2-unit: 15% down payment required 3-unit: 25% down payment required 4-unit: 25% down payment required

MULTI-PLEX LOAN LIMITS Conventional and Government loans allow higher maximum loan amounts when buying a 2-4 unit property.

Multi-unit homes tend to be more expensive than 1-unit homes, so lending agencies take this into account when setting loan limits.

MULTI-PLEX LOAN LIMITS For example, High Balance Conventional & Gov. loans in Orange County, California allow a loan of up to $636,150 on a single-family home, but up to $1,223,475 on a 4-unit property.

As of 3/2 there were 68 2 unit properties for sale in Orange County.

What if you can buy a 2 unit property with No Money Down!!!!

Bob and Jackie Rentier FIRST TIME HOME BUYERS 39

BOB AND JACKIE RENTIER

• 17.7% of the OC Population total household income is between 100k to 149,999. 19% for families.

• 13.0% of the OC Population total household income is between 75k and 100,000 and the same for families • The median household income in dollars in 2015 was $76,509 • At 90k a year Jackie and Bob represent 30% of the population and exceed the median income for Orange County.

BOB AND JACKIE RENTIER Rent Mortgage Car Payment Car Payment credit cards Student Loans 50K Total Credit/Rent/Mo. Saving account

$ $ $ $ $ $ $

2,000.00 300.00 250.00 150.00 416.00 3,116.00 $500

BOB AND JACKIE RENTIER Budget Income taxes 15% Food Electric/Gas bill Water trash Cable Gasoline Household Entertainment clothes/shoe/personal Total Living Expense

$ $ $ $ $ $ $ $ $ $

1,125.00 400.00 200.00 100.00 100.00 400.00 200.00 300.00 200.00 3,025.00

Credit & Rent Mo. Total Living Expense Total Cost of Living

$ $ $

3,116.00 3,025.00 6,141.00

Total income Total Cost of Living Disposable income

$ $ $

7,000.00 6,141.00 859.00

BOB AND JACKIE RENTIER Renting an Apartment

Buying a 2 Unit Apartment

Current Housing DR. Rent Vacancy 25% Income Total Income Front DR

FUTURE Purchase Price Down Payment Loan Amount Upfront MI Total Loan Amt. Interest Rate/APR Principal and Interest Taxes Home Ins. Mortgage Ins. Total Payment PITI

Total Debt to Income Ratio.

Montly Debt Montly Income

$ $ $ $

2,000.00 7,000.00 29%

$ $

3,116.00 7,000.00 45%

2 Unit $ 439,482.00 0.035 $ 15,381.87 $ 424,100.13 0.0175 $ 7,421.75 $ 431,521.88 Rate: 4.25% APR: 5.798% $ 2,123.00 0.0125 $ 457.79 0.0035 $ 128.18 0.0085 $ 300.40 $ 3,009.38

Income Limits vary and are based on 140% of HUD AMI. Mortgage Limits vary and are based on HUD Loan Limit for the AREA.

BOB AND JACKIE RENTIER – NO HELP NO LIMITS Cash Required to Buy

Initial Out of Pocket Expenses

Cash Requried to Closed: Down payment Closing cost Total Down 3 Months PITIMI Reserves Total Cash Required to Close:

3.50% $ 15,381.87 4% $ 17,579.28 $ 32,961.15 $ $ 32,961.15

Initial of Pocket Expenses: Earnest Money Deposit $1000 to 2 % Home Ispection Appraisal Fee Credit Report Fees Total Out of Pocket Exp:

Lenders Interest Credit Seller Credit Total Credit Total Cash Required

-2.00% $ (8,789.64) -2.00% $ (8,789.64) $ (17,579.28) $ 15,381.87

Cash Needed to close:

$ 3,000.00 $ 450.00 $ 650.00 $ 100.00 $ 4,200.00

$ 19,581.87

BOB AND JACKIE RENTIER Buying a 2 Unit Apartment

New Budget

Bob Wages Jackies Wages Rental Income Total Inc.

$ $ $ $

3,000.00 4,000.00 1,600.00 8,600.00

Rent Mortgage Car Payment Car Payment credit cards Student Loans 50K Total Credit/Rent/Mo.

$ $ $ $ $ $ $

3,009.38 300.00 250.00 150.00 416.00 4,125.38

Saving account

$500

Budget Income taxes 15% Food Electric/Gas bill Water trash Cable Gasoline Household Entertainment clothes/shoe/personal Total Living Expense

$ $ $ $ $ $ $ $ $ $

1,125.00 400.00 200.00 100.00 100.00 400.00 200.00 300.00 200.00 3,025.00

Credit & Rent Mo. Total Living Expense Total Cost of Living

$ $ $

4,125.38 3,025.00 7,150.38

Total income Total Cost of Living Disposable income

$ $ $

8,600.00 7,150.38 1,449.62

BOB AND JACKIE RENTIER FUTURE Purchase Price Down Payment Loan Amount Upfront MI Total Loan Amt. Interest Rate/APR Principal and Interest Taxes Home Ins. Mortgage Ins. Total Payment PITI

2 Unit $ 439,482.00 0.035 $ 15,381.87 $ 424,100.13 0.0175 $ 7,421.75 $ 431,521.88 Rate: 4.25% APR: 5.798% $ 2,123.00 0.0125 $ 457.79 0.0035 $ 128.18 0.0085 $ 300.40 $ 3,009.38

Current Housing DR. Mortgage Vacancy 25% Income Total Income Front DR

Total Debt to Income Ratio.

Montly Debt Montly Income

$ $ $ $

3,009.38 (400.00) 7,000.00 9,609.38 31%

$ $

4,125.38 9,609.38 43%

BOB AND JACKIE HOMEBUYER – WITH NO HELP Cash Requried to Closed: Down payment Closing cost Total Down 3 Months PITIMI Reserves Total Cash Required to Close: Lenders Interest Credit Seller Credit Total Credit Total Cash Required

Initial of Pocket Expenses: Earnest Money Deposit $1000 to 2 % Home Ispection Appraisal Fee Credit Report Fees Total Out of Pocket Exp:

3.50% 4%

-2.00% -2.00%

$ $ $ $ $

15,381.87 17,579.28 32,961.15 32,961.15

$ (8,789.64) $ (8,789.64) $ (17,579.28) $ 15,381.87

$ $ $ $ $

3,000.00 450.00 650.00 100.00 4,200.00

Cash Needed to close:

$ 19,581.87

BOB AND JACKIE HOMEBUYER – WITH NO HELP Cash Requried to Closed: Down payment Closing cost Total Down 3 Months PITIMI Reserves Total Cash Required to Close: HELP PROGRAM Seller Credit Total Credit Total Cash Required

3.50% 4%

$ $ $ $ $

15,381.87 17,579.28 32,961.15 32,961.15

-4.5% -3.36%

$ $ $ $

(19,418.48) (14,766.60) (34,185.08) (1,223.93)

Initial of Pocket Expenses: Home Ispection Appraisal Fee Credit Report Fees

$ $ $

450.00 650.00 100.00

Total Out of Pocket Exp:

$

1,200.00

Cash Needed to close:

$

(23.93)

BOB AND JACKIE HOMEBUYER Debt Service Coverage Ratio Rental Unit A. (LIVE) $ Rental Unit B. $ Total $ Mortgage PITI $ DSCR 1:11

1,500.00 1,600.00 3,100.00 3,009.00 1.03

NO DOWNPAYMENT PROGRAM 2016 -ENDED-

The “HELP” Program

Not having the money for a down payment is no longer an excuse!

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THE “HELP” PROGRAM Purpose of the Program • The “HELP” Program provides financing to families and individuals who can afford a mortgage loan but do not have the resources for the down payment and/or closing costs.

What the Program provides • The “HELP” Program offers financing on FHA, USDA and VA Loans designed to increase homeownership opportunities to low-to-moderate income individuals and families in CA. 52

WHY WE NEED HELP NOW! • • • • • •

State DAP programs take too long County and City DAPs out of funds or limited funds.

County and City DAPs have more restrictive guidelines/products Low inventory – Higher prices more money Sellers market – Higher prices and zero to limited seller credit Higher cost of living = consumers have less money to save

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THE “HELP” PROGRAM HIGHLIGHTS

HELP PROGRAM The program is 1st Mortgage Loan with a 4.5% Down Payment Assistance Grant.

Grant Proceeds can be used for: • Down payment: The seller can pay the closing up to 6% • Closing costs: If you have the down payment.

• Prepaid item(s): Taxes, Hazard Ins., Mortgage Ins., • Earnest money: 1 to 2% of the Purchase price • Cost paid outside of escrow: Appraisal, Inspection, Credit 55

PROGRAM INCOME & LOAN LIMITS

HELP INCOME LIMITS (UP TO 140% AMI)

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HELP INCOME LIMITS (UP TO 140% AMI)

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HELP PROGRAM LOAN LIMITS $424,100 OR HUD LOAN LIMIT WHICHEVER IS LOWER CONFORMING LOAN LIMIT Riverside San Bernardino County Orange County Los Angeles County San Diego County San Francisco Santa Clara Contra Costa

$ $ $ $ $ $ $ $

424,100.00 424,100.00 636,150.00 636,150.00 562,350.00 636,150.00 636,150.00 636,150.00

HUD LOAN LIMIT Riverside San Bernardino County Orange County Los Angeles County San Diego County San Francisco Santa Clara Contra Costa Alameda

$ 356,500.00 $ 356,500.00 $ 636,150.00 $ 636,150.00 $ 562,350.00 $ 636,150.00 $ 636,150.00 $ 636,150.00 $ 636,150.00

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PROGRAM QUALIFYING INCOME Borrower Qualifying Income

BORROWER QUALIFYING INCOME • •

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Borrower qualifications is based on Qualified repayment Income Only the Applicants income used for Qualifying is considered in order to meet the program income limits All income documented that borrower receives on a consistent basis must meets FHA’s Effective income guidelines (2 year history and is likely to continue for 3 years) For example: Retirement income, Overtime income, Bonus income, part-time income must have a 2 year history and the likelihood to continue.

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ELIGIBILITY GUIDELINES

BORROWER ELIGIBILITY •

Borrower Eligibility: – Be a U.S. citizen, permanent resident alien, or qualified alien – Owner Occupied Primary Residence only.

– You do not have to be a first time homebuyer to participate in the program – You may own other properties – must meet FHA requirements.

– Non occupying Co-borrowers/Co-signers are ALLOWED. – Meet Credit, income & Loan requirements of the lender & NHF.

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PROPERTY ELIGIBILITY •

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Property Eligibility: – SFR Single Family Residences – PUDs Planned Unit Condominiums – Agency Approved Condos – 1 to 2 units properties only – Manufactured Homes Ineligible: – Three to four units – Rental homes – Co-ops – Investment properties – Recreational, vacation or second homes

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UNDERWRITING GUIDELINES

UNDERWRITING GUIDELINES #1 •

Minimum Credit Scores:

– Minimum Credit scores 640+ 679 – Non-traditional Trade line – Not allowed must have min. score – 1 to 2 Units properties (2nd Unit income must be included in the income limits.

–

•

Do NOT need to be a first time homebuyer (unless you are combining with an MCC – CA only – One Unit only) - No counseling classes needed.

Max Debt Ratio: – – – – –

Debt Ratio determined by AUS/DU Approved/Eligible 50% DR DU – Refer/Eligible: Housing ratio 31% Total Debt Ratio 43% 1 to 3 month reserves may be required if AUS/DU approval is not granted No reserves requirement on DU approved loans • AUS/DU Defined: Fannie Mae’s Desktop Underwriter. An automated underwriting system or decision engine that approves loans or refers them an underwriter for approval or denial 66

UNDERWRITING GUIDELINES #1 •

Minimum Credit Scores: – Minimum Credit scores 680 + – Non-traditional Trade line – Not allowed must have min. middle score 620

•

Max Debt Ratio: – – – – –

Debt Ratio determined by AUS/DU Approved/Eligible 46.99 to 56.9% DR is the Max with DU approval DU – Refer/Eligible: Housing ratio 31% Total Debt Ratio 43% 1 to 3 month reserves may be required if AUS/DU approval is not granted No reserves requirement on DU approved loans • AUS/DU Defined: Fannie Mae’s Desktop Underwriter. An automated underwriting system or decision engine that approves loans or refers them an underwriter for approval or denial

Do NOT need to be a first time homebuyer (unless you are combining with an MCC – CA only – One Unit only) - No counseling classes needed.

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PROGRAM SUMMARY

PROGRAM SUMMARY • • • • •

NOT Limited to First Time Home Buyers You Can Own other property NO “Recapture Tax” if home is sold later – Unless using the MCC NO Sales Price Limits Works with EEM and MCC Program to help borrower’s qualify CLTV’s up to 96.50% - little (.5%) to no money down & out of pocket closing costs: –

• • • • • • • • •

inspections, credit reports and appraisal fees are included

No Minimum Borrower Contribution Required Ratios stretched up to 56.9% DTI with DU approved/eligible 720 Fico Manual Underwrite 31/43 DTI with DU refer/eligible One to Four Unit Homes Manufactured Homes with minimum 680 fico score Grant of 4.5% | Seller credit up to 6% Works with FHA, VA, USDA only – No conventional financing Maximum Loan amount 424.1k or HUD County Loan Limit which ever is lower.

Available in State of California only.

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HELP GRANT PROGRAM

Eric L. Frazier MBA President and CEO CAL BRE 01143484 NMLS 461807 Office: 800-401-8994 x 703 Mobile: 714-475-8629 CAL BRE 1980407 NMLS 1435243

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