In the first Post of this series “First Time Homebuyers Seminars…..Part #1.” I gave an introduction into the “First Time Homebuyer Seminars” that we at McCue Mortgage, started to promote in September of 2006. It is a different concept in how these Seminars have been done in the past, and so far they have been well received. In this Post I will start to describe what we present, and discuss with “First Time Homebuyers” at these Seminars.
The first thing that I do at these “First Time Homebuyer Seminars,” is to simply ask the “First Time Homebuyer” present, do they really want to own their own home? Just because they are at the Seminar does not mean that they have decided to purchase a home. They might just be trying to gather enough information to make that decision. So the first thing that I need to know is, why are they there. By asking this question it also helps to break the ice, and gets them to start to open up.
Once each one has answered this first question, we move on to the first topic, “The advantages of owning a home”. Again since it is usually a small number in attendance, I try to get them to participate by letting them answer this question themselves, before I state some reasons. Some of the answers that are usually given are:
- A place of their own: It is their own house and they can do what ever they want to it, and what they put into it is theirs.
- Stable housing costs: The mortgage payment will always stay the same (if it is a fixed rate loan), unlike renting which can change every year.
- Increase in value: As property values go up so does their equity in the property, and this can far exceed any money that they put in the bank over a period of time.
- Tax benefit: This quite often is the first response, because everyone knows that the interest payment on your mortgage is tax deductible, and that this can substantially reduce your tax liability each year.
There are others that sometimes come up but these four seem to be the ones that constantly come up the most, and if they don’t, I make it a point of adding them. I try to keep it simple, I am not there to overwhelm them, and provide them with information overload.
The next question that I ask is, can they afford to purchase a home? In other words, have they considered the costs of purchasing a home? Do they realize that they will need money for the following thing, or obtain assistance to pay for them?
- Downpayment: Most “First Time Homebuyers” seem to think that they only need to have a downpayment in order to purchase a home. Many are very surprised to find out that there are other costs involved.
- Up-Front Costs: Represent many of the costs that “First Time Homebuyers” have not considered, and are very surprised when they are told that they are going to need money for an Application Fee, Appraisal, Homeowners Insurance, maybe Points, Earnest Money (deposit on sales contract), and even though it is not part of the Loan Process a Home Inspection is always advisable. These are all cost that the Buyer will have to pay before they get to the closing table.
- Closing Costs: Some “First Time Homebuyers” realize that there are cost that they will incur at the closing such as Attorney Fees (CT is an Attorney State), but do not have any idea that there are other significant costs involved, like Title Insurance, Taxes & Insurance that many times have to be put into Escrow, and Recording Fees.
The last question that I will cover in this Post, that I ask them is, have they considered how much money they can afford for a monthly mortgage payment? This is very different from what they can qualify for a mortgage. Qualifying for a mortgage, and being comfortable with the payment, are two different things. In qualifying them for a mortgage I will look at all their revolving debt, which I will get from their Credit Report, but there are other expenses that are not taken into consideration in qualifying a Borrower for a mortgage. These expenses can include, but not limited to Food, Clothing, Gas, Entertainment, Child Care, General House Maintenance, and Church Contributions to just name a few. These expenses need to be considered when deciding on how much of a mortgage a “First Time Homebuyers” can handle. A “First Time Homebuyers” can quickly get in over their head, so the more that I can bring to their attention at these Seminars, the better equipped they will be to determine how much they feel they can afford to pay for a mortgage.
In my next Post I will cover the steps that I go over with “First Time Homebuyers” at these Seminars that they will need to do to obtaining a mortgage.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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