Purchasing your 1 st Home…
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Transcript of Purchasing your 1 st Home…
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Purchasing your 1st Home…
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What are your Expectations?
?
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What we are Covering Today...
Understanding Today’s Market & Trends Should I buy or wait? Is There a Loan For Me? Salesperson vs. Consultant The Process of Purchasing a Home Conclusion
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Understanding Today’s
Market & Trends
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How is the Market?
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Santa Clara County Current Inventory as of February 2011
2,404 - Single Family Homes1,125 - Townhome/Condo’s
Bank Owned (REO) 192 - Single Family Homes (8%)
184 - Townhome/Condo Units (16%)
Short-Sales667 - Single Family Homes (28%)
468 - Townhome/Condo Units (42%)
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Santa Clara County Current Inventory as of 2/14/2013
745 - Single Family Homes204 - Townhome/Condo’s
Bank Owned (REO)28 - Single Family Homes (4%)
17 - Townhome/Condo Units (8%)
Short-Sales33 - Single Family Homes (4%)
13 - Townhome/Condo Units (6%)
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Santa Clara CountyInventory – 10 Year Overview
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Santa Clara County
0-3 Months – Sellers Market3-6 Months – Balanced Market6+ Months – Buyers Market
Criteria: 1. All Price Ranges 2. Single Family Homes3. Undefined Square Footage
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Blossom Valley
0-3 Months – Sellers Market3-6 Months – Balanced Market6+ Months – Buyers Market
Criteria: 1. All Price Ranges 2. Single Family Homes3. Undefined Square Footage
Median Sale Price in January 2013: $515,000
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Cambrian
0-3 Months – Sellers Market3-6 Months – Balanced Market6+ Months – Buyers Market
Criteria: 1. All Price Ranges 2. Single Family Homes3. Undefined Square Footage
Median Sale Price in January 2013: $700,000
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Willow Glen
0-3 Months – Sellers Market3-6 Months – Balanced Market6+ Months – Buyers Market
Criteria: 1. All Price Ranges 2. Single Family Homes3. Undefined Square Footage
Median Sale Price in January 2013: $828,000
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Almaden Valley
0-3 Months – Sellers Market3-6 Months – Balanced Market6+ Months – Buyers Market
Criteria: 1. All Price Ranges 2. Single Family Homes3. Undefined Square Footage
Median Sale Price in January 2013: $910,000
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Campbell
0-3 Months – Sellers Market3-6 Months – Balanced Market6+ Months – Buyers Market
Criteria: 1. All Price Ranges 2. Single Family Homes3. Undefined Square Footage
Median Sale Price in January 2013: $705,000
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Los Gatos/Monte Sereno
0-3 Months – Sellers Market3-6 Months – Balanced Market6+ Months – Buyers Market
Criteria: 1. All Price Ranges 2. Single Family Homes3. Undefined Square Footage
Median Sale Price in January 2013: $1,565,000
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Should I buy or wait?
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RentalsRising in Price
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Interest Rate ComparisonYou live in the payment, not the
price
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Warren Buffett
“It will be the best
opportunity in your
lifetime”
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Interest Rates Historic Data
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-120%
1%
2%
3%
4%
5%
6%
7%
8%
FRM
ARM
Federal Funds
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Multiple Offers in California
Equity Sales REO Sales Short Sales
Share of Total Sales 64.7% 12.3% 21.7%
Median Home Price $448,000 $185,000 $235,000
Square Footage 1,750 1,500 1,600
Price / SF $243 $116 $154
Sales-to-List Price Ratio 97.3% 100.0% 99.9%
% of Sales With Multiple Offers 50.9% 70.8% 66.1%
Avg. Number of Offers 4.0 4.2 4.3
% of All Cash Sales 27.3 43.1% 26.7%
Days on MLS 32 30 90
Days in Escrow 35 45 50
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1. Credit2. Ability to re-pay3. Debt-ratio4. Loan-to-value
(LTV/CLTV)5. Assets/Reserves
Five Points of Loan Qualification
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Credit 2-Year History 4-6 Trade Lines (At least 24 months) Rental History (12-24 months) No Unresolved Derogatory Credit Mid-FICO Score of 640 or Better
(Ideal is 700-760) Consider Credit Repair/Build Services
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Ability to re-pay 2-year history in the same type of
work Self-employed is acceptable with
further documentation such as business license and business tax returns
Gross Income is what your qualification is based on
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Debt-ratio % of your income used to pay debt;
including: Proposed house payment
Taxes, Insurance Homeowner Association Dues (If
applicable) Mortgage Insurance (If applicable)
Monthly installment payments (Auto, student loans, etc.)
Monthly revolving payments (Credit cards) Does not include utilities, phone, food, living
expenses
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Debt-ratioMonthly Debt
Payments ÷ Monthly GrossIncome = Debt Ratio
$3,500÷ $9,800= 36%
Lender’s Ideal Debt Ratio33% - 45%
or less
What’s YOUR Ideal Debt Ratio?
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Loan-to-Value (LTV)
% of the home value being loaned against Down payment 20% down (80% LTV) or more is ideal Less than 20% requires
Private Mortgage Insurance (PMI) Must have a mid-FICO credit score of at
least 740 Appraisal determines value and condition
of property
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Assets/Reserves Down Payment and Closing costs Reserve savings (equal to at least 3-6 mos.
of proposed house payments; P.I.T.I.) It must have at least 2-months of
“seasoning” 401-k/retirement accounts can be used for
reserve You must have the down payment and
closing costs in a liquid account Gift funds can be up to 3% of purchase
price; which requires the giver to write a “gift letter” stating it is a gift; not a loan
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Salesperson vs.
Consultant
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Salesperson Consultant
Deals/Recognition Relationships/Growth
Obsession24/7/365
Commitment to Boundaries
Personal and Professional
Sales-Focused Service-Focused
Salesperson“super star”
ConsultantSuper Servant
PersonaCompetition-Driven
Likeability
CharacterValue-CenteredTrustworthiness
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Salesperson Consultant
Deals/Recognition RESULTS Relationships/Growth
Obsession24/7/365 ACTIONS
Commitment to Boundaries
Personal and Professional
Sales-Focused SKILLS Service-Focused
Salesperson“super star” IDENTITY
ConsultantSuper Servant
PersonaCompetition-Driven
Likeability
VALUES& BELIEFS
CharacterValue-CenteredTrustworthiness
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A Consultant Does Three Things:1. Consult and Advise:
Asks profound, insightful questions, because the typical agent or lender might not ever take the risk of asking you those types of questions. A consultant will probe and inquire and discover what is really important to you!
Will appropriately define the problems and differentiate the essential objectives from less relevant concerns.
Anticipates likely obstacles to achieving your objectives and identify sensible means to circumvent them
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A Consultant Does Three Things:2. Negotiate: A consultant:
Treats your money like it’s their own, because when it is time to save or make you money, they need to be like a "pit bull". Money is an emotional issue, representing yourself while purchasing a home can be compared to performing surgery on yourself – it’s not a great idea…
When dealing with your money, will critically examine the accuracy of the underlying assumptions. While negotiating for you, the consultant will skillfully articulate the strengths and weaknesses of each situation that may arise.
Recognizes the likely underlying agendas and motivations of individuals that are involved in the situations. Consultants also anticipate the likely emotional reactions of individuals and understand how to communicate and troubleshoot issues.
Will appropriately articulate the essential flaws in the arguments of others and reiterate the strengths of your position.
Recognizes when it's appropriate to resist the objection of others and remain committed to a sound course of action
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A Consultant Does Three Things:3. Overseer:
Every transaction has 100 to 150 phone calls alone. Each one of them loaded with critical details. Every "i" must be dotted and every "t" must be crossed. There are 41 different people from 14 different industries that are involved during the each stage of your transaction.
Buying a home can be compared to flying an airplane across the country. The consultant is the pilot of your plane and you are the passenger – you can expect turbulence along the way. As your pilot, the consultant’s role is to oversee all of the small (but important) details. A good consultant will be able to see things from multiple perspectives and identify any likely unintended consequences of your decisions.
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The Process ofPurchasing a Home
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Where should I visit online to view & research
properties?
• MLSListings.com• Apr.com• Realtor.com• QualityService.org
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open.apr.com
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APR Mobile
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www.apr.com
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Banker & Realtor Selection Pre-Approval with a lender
a. Establish a pre-approval price range based on your payment comfort level
Setup a meeting with your Realtor to establish your home purchase requirements
Start viewing homes Upon selecting a home, you will make an offer Upon acceptance of a purchase contract, the
escrow period will begin and you will make a deposit to secure the home. The contract will have a timeline defined to conduct the necessary inspections, appraisal and finalize your loan and interest rate.
The Process ofPurchasing a Home
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Upon the completion of your inspections, appraisal, full bank approval and your review of each report, you will decide if you are comfortable with the current contract terms. If something new was discovered, you can re-negotiate the contract until you feel completely comfortable with the agreement.
Once you are ready to proceed forward (with or without another negotiation), you will fully commit to the seller for the purchase of the property or elect to exit from the agreement.
Once you fully commit to the purchase, if you withdraw from the sale (for any reason) your deposit will be at risk and subject to negotiation between you and the seller based on your reason for contract termination.
The Process ofPurchasing a Home
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Next, you will sign the loan documents at the title company and provide your down-payment.
Next, your sale will complete after a total time period of approximately 30-60 days depending on the loan type.
You receive the keys to your new home!
The Process ofPurchasing a Home
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You will gather your required loan documentation Setup a meeting with a mortgage consultant to review
the various loan options The mortgage consultant will run your credit report A loan application is then completed and some
disclosures are signed Analysis will be run based on your financial profile A Good Faith Estimate and Truth-in-lending statement
will be provided to you outlining the estimated projected costs
We will conduct an appraisal to verify your purchase price against market conditions/comparable properties
Your loan is then submitted for final processing/review The lender approval will arrive with their conditions to
issue the loan; then your contingencies are removed Final documents are signed at the title company Your loan is wired/funded to the title/escrow office This process takes approximately 30-60 days
The MortgageProcess
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Dance steps for Fred Astaire by Hermes Pan, ChoreographerT he art is making it effortless...