The Power Is Now First Time Home Buyer Live Seminar Richmond, CA 7:00 PM to 8:30 PM 3/23/2017 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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The PowerPoint Presentations Are Available Now http://thepowerisnow.com/events/ Download Mobile App & the flyers on the program you are interested in Get started with your loan application online Tonight Buyers: www.applytobuynow.com Real Estate agents: www.neverleaseagain.com Need help?: www.neverrentagain.com
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. 7
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.
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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.
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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.
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. 16
10 POINT WEALTH BUILDING PLEDGE www.thepowerisnow.com 17
THE STATE OF HOUSING ON THE DECLINE FOR AFRICAN AMERICANS 18
Research Study on the Wealth Gap Brandeis University Institute of Asset and social Policy
RESEARCH AND POLICY BRIEF FEBRUARY 2013 The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide
Authored by: Thomas Shapiro Tatjana Meschede Sam Osoro 19
RESEARCH STUDY ON THE WEALTH GAP Data for this analysis was derived from the Panel Study of Income Dynamics (PSID), a nationally representative longitudinal study that began in 1968. They followed nearly 1,700 working-age households from 1984 through 2009.
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RESEARCH STUDY ON THE WEALTH GAP â—? The goal of the study was to examine the effect of policy and institutional decision-making on how average families accumulate wealth.
â—? There was a insufficient number of Latino, Asian American, or immigrant households to include in this report but the results can be applied across communities of color.
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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? 22
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)
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 24
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.
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. 26
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.
THE STATE OF HOUSING FOR MINORITIES •
The homeownership rate in the U.S. is 63.5 percent overall. The rate among whites is 72.2%, Asians, 56.6%, Hispanic 46.3%, African Americans 41.7%
https://www.census.gov/housing/hvs/files/currenthvspress.pdf
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THE STATE OF HOUSING BY AGE •
The homeownership rate by Age of Householder. Under 35 - 34.7 percent, 35 to 44 - 58.7 percent, 45 to 54 - 69.8 percent, 55 to 64 - 74.8 percent, 65 and over - 79.5 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 and build wealth.
WEALTH IS THE DIFFERENCE Wealth provides a measure of security when a job loss or personal crisis occurs.
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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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WHY ARE WE BEHIND? •Number 1, We were brought here as slaves in 1619 in Jamestown Virginia to aid in the production of tobacco & cotton crops. •After 238 years of degradation and abuse the legal case of Dred Scott v. Sandford – 1857. The Supreme Court said that Blacks were not citizens under the Constitution and therefore were not entitled to rights and privileges it promises. 37
WHY ARE WE BEHIND? •Number 2, the emancipation proclamation and the 13th amendment that passed the Senate April 8th, 1864 and House Jan. 31, 1865. •Should have made things better for blacks but life became even worse. Some slaves stay on the plantation for protection because freedom meant giving up their lives. •Lynchings and beatings and house burnings were common placed and accepted by society. 38
WHY ARE WE BEHIND? •Number 3, we can never forget the constitution did not view Blacks as citizen until 1866. The Civil Rights Act of 1866 made blacks full U.S. citizens (and this repealed the Dred Scott decision). •In 1868, the 14th amendment granted full U.S. citizenship to African-Americans. •The 15th amendment, ratified in 1870, extended the right to vote to black males. We have only had the right to vote for 147 years. 39
WHY ARE WE BEHIND? •Number 4, we can never forget the Louisiana General Assembly passed a law in 1890 to prevent black and white people from riding together on railroads. In 1896 Plessy vs. Ferguson, a case challenging the law, the U.S. Supreme Court upheld the law. •The courts decision was the catalyst to make all public facilities to be separate and unequal throughout the South.
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WHY ARE WE BEHIND? •Two years later 1898 the Supreme Court upheld a Mississippi law designed to deny black men to vote. The South then limited the voting rights to those who owned property and other arbitrary and subjective rules. •In South Carolina, black and white workers could not work in the same room or come in the same door in many industries. 41
WHY ARE WE BEHIND? •In 1914 Texas had six entire towns in which blacks could not live. •Mobile passed a Jim Crow curfew where Blacks could not leave their homes after 10pm. •These and many other laws were the precursor to separate but unequal in every aspect of black life: separate bathrooms, water fountains, schools, theaters, hospitals, restaurants, parks and even entertainment venues. 42
WHY ARE WE BEHIND? •Number 5, we must never forget that more than 360,000 black men served in World War I. •The country welcomed them home with 25 major race riots, the most serious in Chicago. White mobs lynched veterans in uniform. Black Americans fought back. •The National Association for the Advancement of Colored People, founded in 1909, and the Urban League publicized abuses and worked for redress which has never been fully realized. 43
WHY ARE WE BEHIND? •Title VI of the Civil Rights Act of 1964 prohibits discrimination based on race, color, or national origin in programs and activities receiving federal financial assistance. •Title VIII of the Civil Rights Act of 1968 (Fair Housing Act), as amended, prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, on the basis of race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and disability. 44
WHY ARE WE BEHIND? •We have the lowest rate of homeownership 41.7% to compared to Latinos at 46.3% and whites at 72.2% •We have the highest unemployment rate of 8.1% compared to Latino at 5.6% and whites at 4.1%.
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WHY ARE WE BEHIND? •The black tradition family is under stress: 71% of births outside of marriage is to black woman compared to 29% of births to white women. In 1970, 38% of all births to black women occurred outside of marriage. 50% of black children are being raised by a single parent as opposed to 19% among whites. In 1970 35% of children where living with a black parent as opposed to 10% of white families. •We have highest level of high school drop outs, sexually transmitted disease and the highest black on black crime than any other ethnic group in addition to the highest level of incarnation of black men of any other ethnic group. •This is where we are. Today 2017. 46
WHY ARE WE BEHIND? •Every freedom we enjoy today has been paid for by blood. It has been a fight for freedom for African American from our capture in Africa, the middle passage unto the day we step foot on American soil had to survive in country among people who viewed us as less than human. •In spite of these things: We are 12% of the population, born out of slavery, poverty and our homeowner ship is on its way to 50% •We are 12% of the population and our GDP 1.3 Trillion 13 out of 182 Countries. 47
WHY ARE WE BEHIND? •We are only 12% of the population and we leaders in sports & entertainment, business, science, medicine, education, law, engineering, computers, software development, and have achieve the highest office in the land.
Can we buy a home? Of course we can!!! 48
How do we close the Gap?
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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How do we close the Gap?
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THE POWER IS NOW MORTGAGE SERVICES •FHA/VA Home Loan Program •FHA/VA Loan Limits •Multi Unit Strategy •1% Down Payment Conventional Mortgage
•Help and Sapphire Mortgage Program
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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. 52
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 selfgenerated. 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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2017 MORTGAGE LIMITS FHA INSURED LOANS
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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 +
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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.
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Back to Work Program: – 12 months seasoning on Foreclosure, Short Sales and Bankruptcy. 58
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 – – – –
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FHA 203 B • Property Types: – OWNER OCCUPIED ONLY. – 1 to 4 Units properties – Condominiums/Town Homes/PUD – FHA approved. – SFR – Fixer Upper - 203k LOAN.
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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. 61
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. 62
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 down payment 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.
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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. 68
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.
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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.
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VA HOME LOAN • VA Funding Fee - First Time Use Down Payment – Less than 5%* – 5% to 9.99% – 10% or more
Veteran/Active Duty 2.15% 1.50% 1.25%
Reservist/Nat. Guard 2.40% 1.75% 1.50%
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VA HOME LOAN • VA Funding Fee - Second Time Use Down Payment – Less than 5%* – 5% to 9.99% – 10% or more
Veteran/Active Duty 3.30% 1.50% 1.25%
Reservist/Nat. Guard 3.30% 1.75% 1.50%
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VA HOME LOAN • VA Streamline Refinance / IRRL (interest Rate Reduction Refinance Loan) Type of Loan – 1st Time Use – 2nd Time Use
Veteran/Active Duty 0.50% 0.50%
Reservist/Nat. Guard 0.50% 0.50%
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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.
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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 75
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 HUD1 Settlement Statement
VA has an automated system used by lenders to obtain an online certificate of eligibility 76
Multi Unit Strategy How to buy a 2 – 4 Unit Property as FTHB
MULTI UNIT STRATEGY As housing prices have begun to stabilize in most parts of the country and home sales are on the rise, 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 MULTI-UNIT PROPERTY Live in One Unit and Rent out the Other
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.
What if you can buy a 4 unit property with No Money Down!!!!
BOB AND JACKIE RENTIER FIRST TIME HOME BUYERS
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:
3.50% 4%
Lenders Interest Credit Seller Credit Total Credit Total Cash Required
-2.00% -2.00%
Initial of Pocket Expenses: Earnest Money Deposit $1000 to 2 % Home Ispection Appraisal Fee Credit Report Fees Total Out of Pocket Exp: Cash Needed to close:
$ $ $ $ $
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 $ 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: 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 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)
The “HELP” Program
Not having the money for a down payment is no longer an excuse!
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.
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
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
PROGRAM INCOME & LOAN LIMITS
HELP INCOME LIMITS (UP TO 140% AMI)
HELP INCOME LIMITS (UP TO 140% AMI)
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
$ 424,100.00 $ 424,100.00 $ 636,150.00 $ 636,150.00
San Diego County
$ 562,350.00
San Francisco
$ 636,150.00
Santa Clara Contra Costa
$ 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
PROGRAM QUALIFYING INCOME Borrower Qualifying Income
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.
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.
PROPERTY ELIGIBILITY 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
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
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.
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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NO DOWN PAYMENT Program 2016
– ENDED –
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HELP Grant Program
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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
$ 350,000 0.03 $ 10,500 $ 339,500 0.00% $ $ 339,500 Rate: 4.25% APR: 5.798% $ 1,691 1.25% $ 365 0.35% $ 102 0.85% $ 240 $ 2,398
Cash Requried to Closed: Down payment Closing cost Total Down
3.00% $ 10,500.00 4% $ 12,250.00 $ 22,750.00
Lender Credit 2% DP Seller Credit Total Credit
-2% $ (7,000.00) -3.50% $ (12,250.00) $ (19,250.00)
Total Cash Required
$ 3,500.00
Out of Pocket Expenses: Home Ispection Appraisal Fee Credit Report Fees
$ $ $
350.00 500.00 100.00
Total Out of Pocket Exp:
$
950.00
Cash Needed to close:
$
4,450.00
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1% DOWN-PAYMENT • • • • • • • •
97% Loan To Value – 3% Down Payment Lender Contributes 2% of 3%the down payment of FICO 700 Minimum 1x30 day late if FICO >=720, otherwise 0x30. DITI 43% Maximum Loan $424,100 Maximum No Mortgage Insurance with Pay Advantage Single Family Residence only – Manufacture home no eligible 117
1% DOWN PAYMENT Owner Occupied Cannot own other property at the time of purchase. Income Limits established by FHLMC Loan Prospector No Income Limits if property located in underserve area.
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3 TO 5% DOWN PAYMENT •
FICO 640 –
• •
1x30 Day late in the last 12 months >680
Non – Occupied Co borrower not eligible First Home Buyer Class Required if you are a FTHB. – You do not have to be a FHTB to participate in the program.
• HOME POSSIBLE - 95% LTV / 95% CLTV
– 2 to 4 unit Not Eligible – Secondary Financing allowed to 95% CLTV
• FICO 700 • HOME POSSIBLE ADVANTAGE - 97% LTV / 97% CLTV – 2 to 4 units Not Eligible – No Secondary Financing allowed 119
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3% DOWN PAYMENT • •
Non – Occupied Co borrower not eligible First Home Buyer Class Required for at least one borrower. – You do not have to be a FHTB to participate in the program.
• HOME READY - 97% LTV / 105% CLTV FICO 640 – 2 Units allowed 85% LTV /105% CLTV – Secondary Financing allowed to 105% CLTV
• HOME READY PAY ADVANTAGE - 97% LTV / 97% CLTV – FICO 700 – 2 Units allowed 85% LTV/105 CLTV – Secondary Financing allowed – No Manufacture homes 121
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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