Homebuying 101 Seminar with Hinrichs Group Realtors & FNBO

Mark Hinrichs & Anne Duggins - Hinrichs Group Realtors Gabe Kopun - First National Bank of Omaha

Fears vs. Facts Six Simple Steps to Home Ownership Financing What’s Next / Q & A

Hinrichs Group Realtors

I can’t afford to buy a home right now.

I should wait until the market gets better.

I don’t have the money for the down payment.

I can’t afford to buy my dream home.

Until you do the math, you don’t know what you can or can’t afford.

There is never a bad time to buy the RIGHT home.

There are a variety of down-payment options available to you.

The best way to get closer to buying your dream home is to buy your first home.

Hinrichs Group Realtors

• Mortgage rates are historically low

• Equity build-up • Value appreciation • Debt pay-down

• • • • •

Stability and security Sense of community Freedom to customize Tax benefits Wealth building

Hinrichs Group Realtors

Purchase a home for $250,000 - pay $1,200 per month toward your mortgage.

Pay $1,200 per month* toward your landlord’s mortgage.

$435,000

$432,000

You own an asset that has grown in value well over this amount.

And … you own nothing! (*assuming your rent never goes up!)

Hinrichs Group Realtors

• Job security • New company

• House poor

• Credit score • Down payment

• No equity • No appreciation

Ready to move forward?

Make an offer & negotiate

Secure pre-approved financing

Hire your agent

Find your home

Close & be a homeowner

Get home inspected & negotiate repairs

STEP 1: Hire Your Agent

1.

Educate you about the market.

2.

Analyze your wants and needs.

3.

Steer you to homes that fit your criteria.

4.

Coordinate with other professionals.

5.

Negotiate on your behalf.

6.

Solve any problems that may arise.

Start working with me _________ Finances in order

_________

Pre-approval

_________

Start looking

_________

Under contract

_________

Take ownership/close ________ Move into new home __________

STEP 2

CREDIT SCORE RANGE EXAMPLE You are at the top. Best rates and terms.

> 740

A+

720-740

A-

700-720

B+ You should be in strong shape to buy.

680-700

B

660-680

B-

640-660

C

620-640

D

The rest of the file must be good.

620 or less

F

Try to fix up your credit.

You may have to pay a higher rate or fees.

DETERMINING THE CREDIT SCORE

What’s in a score?

DETERMINING THE CREDIT SCORE Payment History

35% •

Number of accounts paid as agreed

•

Number of delinquent accounts and severity

•

Previous bankruptcies, judgments, liens

DETERMINING THE CREDIT SCORE Amounts Owed

• How much of possible credit lines are used • Amounts owed on installment accounts compared to original balances • Number of zero balance

30%

accounts

DETERMINING THE CREDIT SCORE Length of History

15% • Total time of credit history tracked Length of History

• Length of time since accounts were opened • Frequent credit card balance

transfers are viewed negatively

DETERMINING THE CREDIT SCORE New Credit

New Credit

10% • Number of recent new accounts compared to old • Number of recent credit

inquiries

DETERMINING THE CREDIT SCORE Types of Credit Used

Types of Credit

10% • Lenders want to be sure you

can handle a variety of credit line types (installment loans, credit cards, etc.)

PRE-APPROVAL Consumers with lower credit scores will typically pay a higher interest rates on both mortgage loans and consumer loans.

1100.

1013.37

On a $200,000, 30 year loan, the difference between a 740 score and a 640 score could cost you $115.28 per month, a total of $41,500.80 over the life of the loan.

898.09

825.

573.03

586.98

550.

275.

0.

Mortgage Loan

Consumer Loan

<740 >640

On a $30,000, 5 year loan, you may only see a small monthly difference of $13.95 per month, but that adds up to $837 over 5 years.

Hinrichs Group Realtors

• 30 days recent paystubs • 2 years most recent W-2s • 2 years most recent tax returns

(self-employed only) • Homeowner’s insurance quote

(after you’re under contract for new home) • 2 months recent bank statements showing assets

for down payment & closing costs

Hinrichs Group Realtors

• Identify fixed expenses.

• Determine the amount you can comfortably

spend on your new home.

• Make simple changes.

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• How much?

• At what rate?

• How long?

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Pays toward the equity on your home

Pays the state and local entities for owning a home

Pays the lender for the loan

Pays to protect your investment

• Based on your pre-approval amount • Depending on the loan, can vary from

3% to 20% down • Where will these funds come from?

• Side jobs

• Savings • Parents/in-laws gifts

Hinrichs Group Realtors

• Closing costs (2%–3% of loan amount, • •

• • •

• •

includes lender & title fees, appraisal, etc.)

Earnest money (1% of purchase price) Option period money ($100–$400) Inspections ($300–$600) Survey ($400) Miscellaneous fees One year of homeowners insurance Reserves for improvements and repairs after the sale

Hinrichs Group Realtors

• No big purchases!

• No new credit or debt added!

• No job changes!

• Protect your down payment.

STEP 3

• Define what you’re looking for Needs • Wants • Negotiables Understand the current market Refine your search •

• •

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AGENT LOOKS FOR

• Layout

• Competitive analysis

• Space

• Potential resale value

• Location

• Big-ticket items/possible repairs

• Features & amenities

STEP 4

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• Offer must reflect true market value of the home.

• Address timing and financial considerations.

• Identify stipulations: inspections and contingencies.

STEP 5

Get home inspected and negotiate repairs

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• Health and safety issues • Cracks or crumbling in the foundation • Water stains in ceilings, floors, or walls • Faded or worn shingles • Plumbing or electrical problems • Mold or termite issues • Wood rot • Window functionality

Hinrichs Group Realtors

• Buyer to get all paperwork/documentation to lender • Appraisal ordered by lender • Title work begins • Termite inspection ordered by title company • Repair work completed by sellers • Movers arranged • Utilities scheduled • Final walk-walkthrough

STEP 6

Last few steps to home ownership!

Hinrichs Group Realtors

• Certified funds • Valid ID

• Settlement statement • Transfer of clear title • Keys to your new home!

1. Educate you about the market.

2. Analyze your wants and needs.

3. Steer you to homes that fit your criteria.

4. Coordinate the work of other professionals.

5. Negotiate on your behalf.

6. Solve any problems that may arise.

Ahas?

Takeaways?

Hinrichs Group Realtors

Mark Hinrichs

Anne Duggins

Gabe Kopun

(402) 850-4201

(402) 707-3203

(402) 250-9530

mhinrichs@kw.com

aduggins@kw.com

gkopun@fnni.com