The power is now cal hfa my home & zip

How to buy a 4 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 & Wealth Is To Own Real Estate Now!

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The Power Is Now Wealth Initiative www.neverrentagain.com

Building Wealth with Real Estate 11

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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

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The Power Is Now Wealth Initiative • 1.

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

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

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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.

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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.

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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.

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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

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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)

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The State of Housing for Minorities • The Black/Brown-White Economic Divide Real •

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.

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Lessons Learned - Great Financial Crisis 1.

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We must save money – Make it your #1 priority now and not later.

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

We must stop long term financing vehicles - Pay cash or limit financing to 12 mos.

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

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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%

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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.

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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 4 Unit Property as FTHB 32

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 Four Unit Property Live in One Unit and Rent out the Other Three Units 34

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 singlefamily 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.

San Diego, Contra Costa, Alameda, San Franciso.

Add the HUD Limit Work Sheets

Bob and Jackie Rentier FIRST TIME HOME BUYERS 38

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

Bob and Jackie Rentier

Bob and Jackie Rentier Renting a Apartment

Buying a 4 Unit Apartment

Bob and Jackie Rentier Cash Required to Buy

Initial Out of Pocket Expenses

Bob and Jackie Rentier Buying a 4 Unit Apartment

New Budget

Bob and Jackie Rentier

Bob and Jackie Rentier

Bob and Jackie Rentier

HOW TO QUALIFY TO BUY 4 UNITS The Power of Four Program 48

The Power Of Four Program Purpose of the Program • The Power of Four Program provides two objectives: • 1. Provide financing to families and individuals who want to share the expense of a mortgage with other families or tenants so they can eliminate a mortgage payment completely.

• 2. Provide assistance to families who have the resources for the down payment but not the closing costs or reserve requirements.

What the Program provides • The Power of Four Program offers financing on FHA, USDA and VA Loans designed to increase homeownership opportunities to low-to-moderate income individuals and families in CA and eliminate burden of the mortgage payment or share the cost of the mortgage to significant decrease it.

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Why We Need The Power of Four Now! • • • • • • •

State DAP programs, County and City DAPs do not support 4 unit transactions.

Low inventory – Higher prices require more money & lack of affordability Sellers market – Higher prices and zero to limited seller credit Less competition in many areas and easier to buy.

Faster Appreciation of value and annual increases in rent.

Family’s are able to pool their money and have a unit of their own.

3.5% down payment – the lowest down payment in the industry for investment properties.

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The “Power of Four Program” Highlights

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The Power of Four Program The program is 1st Mortgage Loan with a Minimum Required Down Payment for the following loans: FHA 203k and 203B: 3.5% VA: Zero Down Down Payment can come from the following sources: • Down payment: Gift from Family Member • Closing costs & Prepaid item(s): Taxes, Hazard Ins., Mortgage Ins., • The seller can pay the closing up to 6% • Earnest money: Gift from Family Member • Cost paid outside of escrow: Appraisal, Inspection, Credit 52

THE POWER IS NOW MORTGAGE SERVICES • The Federal Housing Administration (FHA) was created as part of the National Housing Act of 1934 in response to the struggling housing industry following the Great Depression.

• Before its creation, only 40% of Americans were homeowners. This low homeownership rate was largely due to the limited short-term financing available, • Most loans were offered with three to five-year payment plans and required large down payments often consisting of 50% of the purchase price.

• Only the very wealthy were able to purchase a home.

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THE POWER IS NOW MORTGAGE SERVICES • The FHA's ability to assume the lender's risk allowed home loans to be spread out over longer terms, resulting lower monthly payments and greater access to mortgage funds.

• The FHA established two mortgage insurance programs; one for one-to-four-unit single-family residences (SFRs) and one for multifamily housing units. In 1965, the FHA became part of the U.S. Department of Housing and Urban Development (HUD).

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THE POWER IS NOW MORTGAGE SERVICES • The FHA is a government agency, however its funding is self-generated. It has insured over 34 million home mortgages and over 47,000 multifamily projects since its inception.

• Mortgage Insurance premiums fund the program

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Program Income & Loan Limits

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2017 MORTGAGE LIMITS FHA INSURED LOANS

FHA AREA Between Floor & Ceiling

FHA AREAS at Ceiling – 2017

FHA 203B • Down Payment:

– 10% down payment 500 to 579 FICO – 3.5% down payment 580 +

• Minimum Credit Scores:

– Minimum Credit scores 500+ – Non-traditional Trade line – Allowed – 3 years seasoning on Foreclosure, Shortsale and Bankruptcy.

– 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.

• Back to Work Program:

– 12 months seasoning on Foreclosure, Short Sales and Bankruptcy.

FHA 203 B • Max Debt Ratio:

Debt Ratio determined by AUS/DU Approved/Eligible No DR Max with AUS 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 – – – –

FHA 203 B • Property Types: – – – –

OWNER OCCUPIED ONLY. 1 to 4 Units properties Condominiums/Town Homes/PUD – FHA approved.

SFR – Fixer Upper - 203k LOAN.

VA HOME LOAN The original Servicemen’s Readjustment Act, passed by the United States Congress in 1944, extended a wide variety of benefits to eligible veterans. – Under the law, as amended, the VA is authorized to guarantee or insure home, farm, and business loans made to veterans by lending institutions.

VA HOME LOAN • Big Opportunity

– Over the history of the program, 18 million VA home loans have been insured by the government.

– Currently there are 22 million veterans and only 2 million loan in servicing.

VA Loan Limits • VA's 2017 Loan Limits are the same as the Federal Housing Finance Agency's limits - 2017 Loan Limits (Effective January 1, 2017).

• For purposes of determining the VA guaranty, lenders are instructed to reference only the One-Unit Limit column in the FHFA (Federal Housing Finance Agency) Table “Fannie Mae and Freddie Mac Maximum Loan Limits for Mortgages Acquired in Calendar Year 2017 and Originated after 10/1/2011 or before 7/1/2007”.

VA Loan Limits • VA does not set a cap on how much you can borrow to finance your home.

• The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a downpayment and vary by county, since the value of a house depends in part on its location.

• The basic entitlement available to each eligible Veteran is $36,000.

Lenders will generally loan up to 4 times a Veteran's available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price.

VA HOME LOAN • Purchase/Refinance/Construction 1 to 4 Units

– VA loans may be used to finance the purchase or construction of a one- to four-unit residence.

– Can’t be used for investor loans.

– Veteran must occupy home.

VA HOME LOAN • Features and Benefits – – – – – – –

No down payment required (100% financing).

No maximum loan amount set by VA. No maximum income limits.

Less stringent qualifying standards.

Can be fixed-rate loan or ARM. No mortgage insurance required.

No reserves after closing required.

VA HOME LOAN • Features and Benefits

– Lender may charge flat fee of no more than 1% of amount financed to cover cost of making loan.

– No prepayment penalties.

– Can be assumed by creditworthy buyer, veteran or non-veteran.

– Forbearance extended to veterans in financial difficulties.

VA HOME LOAN • No Mortgage Insurance

– Instead of mortgage insurance premiums, VA borrowers must pay VA a funding fee to defray administrative costs of loan program.

– Funding fee is percentage of loan amount.

– Can be paid at closing or financed.

VA HOME LOAN • VA Funding Fee - First Time Use

Down Payment Veteran/Active Duty Reservist/Nat. Guard 2.15% 2.40% – Less than 5%* 1.50% 1.75% – 5% to 9.99% 1.25% 1.50% – 10% or more

VA HOME LOAN • VA Funding Fee - Second Time Use

Down Payment Veteran/Active Duty Reservist/Nat. Guard 3.30% 3.30% – Less than 5%* 1.50% 1.75% – 5% to 9.99% 1.25% 1.50% – 10% or more

VA HOME LOAN • VA Streamline Refinance / IRRL (interest Rate Reduction Refinance Loan) Type of Loan Veteran/Active Duty Reservist/Nat. Guard 0.50% 0.50% – 1st Time Use 0.50% 0.50% – 2nd Time Use

VA HOME LOAN FUNDING FEE • Exempt from funding fee requirement:

• Veterans entitled to receive VA compensation for service-related disabilities.

• Surviving spouses of veterans who died in service or from servicerelated disabilities.

VA HOME LOAN ELIGIBILITY • Eligibility for VA loans is based on length of active duty service in U.S. armed forces.

• Honorably discharged veterans who served: • • • • • •

2 years on active duty 6 years in the Reserve/National guard POW’s held in captivity for 90 days of more 90 days of wartime duty when called up or ordered under U.S.C. Title 10 (this US code must appear on DD214).

181 days of peacetime duty called up under U.S.C. Title 10 Some unmarried surviving spouses

VA HOME LOAN CERTIFICATE OF ELIGIBILITY • Obtaining your COE

• VA Form 26-1880 • Proof of service documentation (DD214, active duty statement of service or Reserve/National Guard points statement) • If veteran had previous VA home that was sold, a copy of the HUD-1 Settlement Statement

 VA has an automated system used by lenders to obtain an online certificate of eligibility

VA HOME LOAN CERTIFICATE OF ELIGIBILITY • Obtaining your COE

• VA Form 26-1880 • Proof of service documentation (DD214, active duty statement of service or Reserve/National Guard points statement) • If veteran had previous VA home that was sold, a copy of the HUD-1 Settlement Statement

 VA has an automated system used by lenders to obtain an online certificate of eligibility

Program Qualifying Income Borrower Qualifying Income

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Borrower Qualifying Income • • •

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

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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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Underwriting Guidelines

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Underwriting Guidelines •

Minimum Credit Scores: – Minimum Credit scores 580 + – Non-traditional Trade line – Not allowed must have min. middle score 580

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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% – 3 month reserves may be required • 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 85

Program Summary

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The Power of Four Program

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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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