DST H.O.M.E.
Home Ownership Maintenance and Education
Home Ownership:
Your First Step In Building Wealth
Agenda
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The Wealth Divide / What is Wealth?
Building Wealth
Closing The Wealth Gap
Myths and Challenges
Mortgage Insurance
Down Payment Assistance
Types of Mortgages
Are You Credit Ready?
10 Step Countdown to Home Ownership
What if I Already Own a Home?
Questions / Comments
DST H.O.M.E.
The Wealth Divide
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Did You Know?
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Over time, the
homeownership gap
becomes an equity gap
Closing the gap by 10%
means 1.2 million new
African American home
owners
We Must Close The
Gap One Community,
One Family At A Time
80
70
60
50
40
30
20
10
0
2003
2004
2005
2006
White
Asian
Hispanic
African American
DST H.O.M.E.
What is Wealth?
“… having enough money to
cool for a generation.”
-Earl G. Graves,Jr.
Chairman/CEO
Black Enterprise
DST H.O.M.E.
Building Wealth
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Wealth is Accumulated by:
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Inheritance
Real estate ownership
Business ownership
Winning the lottery
(1 in 10 million)
Other?
DST H.O.M.E.
Closing the Gap
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Make Real Estate Ownership Part Of Your Wealth
Accumulation Strategy. Advantages Include…
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Income tax benefits
 Interest, taxes are deductible
 Property improvements are deductible
Alternate source of funds
 Property builds equity
 Personal equity lines of credit available to fund other
interests / needs
Income generation
 Investment properties
 Access to money to help make personal entrepreneur
interests come true…Become Your Own Boss
DST H.O.M.E.
Myths and Challenges
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“I’m not ready to buy a home because I don’t have the
required 20% down payment.”
Myth
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“I heard that Mortgage Insurance is a Government program
for low-income / low wealth individuals.”
Myth
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“Wealth accumulation is too far away…Start with small
steps today.”
Challenge
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“I heard that Mortgage Insurance is required for the
duration of the mortgage loan.”
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Myth
DST H.O.M.E.
What Is Mortgage Insurance?
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There are three types of Mortgage Insurance
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FHA and VA are both government sponsored
PMI = Private mortgage insurance
Mortgage Insurance is Used In Lieu Of A 20% Down
Payment
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A product that allows you to put as little as 3% down and in
some cases nothing down
People who use mortgage insurance get into a home 10 years
sooner than those who do not
10 year earlier start on wealth accumulation with real estate
No geographic or income restrictions
DST H.O.M.E.
Down Payment Assistance Programs
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Down payment assistance and community
redevelopment programs offer affordable housing
opportunities to first-time homebuyers, low-income and
moderate-income individuals and families who wish to
achieve homeownership.
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In some cases individuals as eligible to receive up to
20% in down payment assistance
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To locate an approved down payment assistance
provider in your state go to http://www.ncsha.org
DST H.O.M.E.
Types of Mortgages
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Major Types of Home Loans (Mortgages)
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Fixed-rate your interest rate will never change, regardless of
what the economy does.
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Adjustable-Rate Mortgages (ARMs) have interest rates that
adjust periodically during the life of the loan. Terminology note:
Adjustable-rate mortgage are also referred to as having a
"variable rate."
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Balloon Loan (also referred to as a "reset mortgage") starts with
a fixed interest rate for a certain number of years.) The problem
with balloon loans is the term. The initial fixed-rate period of a
balloon is usually 7 to 10 years. After that, you have to pay off
the loan's remaining balance in full.
DST H.O.M.E.
The 4 C’s Of Credit
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Do You Have Sufficient Capital?
 Capital is the amount of money you have available to make a down
payment, pay closing costs and unexpected related expenses.
What Is Your Capacity?
 Capacity refers to your ability to make monthly mortgage payments
as well as all other bills.
What Is Your Credit History?
 How often you use credit, how much money you owe creditors and
if you pay your bills on time is important to lenders. This information
is contained in a credit report, which your lender uses it to make a
decision on your mortgage loan.
What Is Collateral?
 In a home loan, the property is the collateral, or security pledged for
repayment of the loan. You risk losing that collateral (your home) if
don’t repay the loan according to the terms of the mortgage.
DST H.O.M.E.
What’s On A Credit Report?
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Personal Identification
Information (name, address,
SSN, birth date, employment,
etc.)
Credit Account Information
(date opened, credit limit,
company, acct. number, activity,
balance, etc.)
Public Record Information
(bankruptcy, liens, foreclosures,
judgments, unpaid taxes,child
support, monetary judgments,
etc.)
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Collection Agency Account
Information
Additional Information
(checking acct. closings, etc.)
Inquiries: requests for your
credit file, number of times you
have applied for credit in the
past 24 months
“Pre-approved”offers appear
only on consumer reports.
DST H.O.M.E.
What’s NOT On A Credit Report?
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Race
Religion
Medical History
Personal Lifestyle
Marital Status
Nationality
Political Preferences
Criminal Record
Gender
DST H.O.M.E.
How do creditors determine
credit value or worthiness?
CREDIT SCORE
What Is A Credit Score?
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A numerical tool used to quickly access
creditworthiness
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Snapshot of your credit risk at a particular
point
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Helps lenders predict future credit
performance of a borrower
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Changes as new information is added to your
file
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Calculated by a computer
DST H.O.M.E.
Credit Scoring
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Ranges from 300 – 900 (average score 720)
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A “Good Score” Depends On The Scoring Model
and Lender… the higher the better
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Categories of Credit:
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Payment history - 35% of score
Outstanding debt - 30% of score
Length of credit history - 15% of score
Inquiries - 10% of score
Types of credit - 10% of score
DST H.O.M.E.
Important Factors Affecting Credit
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Past Payment Performance - whether you’ve
made payments on time…fewer late payments,
better the score
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Credit Use - over-extended or conservative?
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How Long You Have Been Using Credit…the
longer the better
DST H.O.M.E.
Know What’s On Your Credit Report
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Before You Apply For A Loan…Be Proactive!
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Conduct your own credit report check-up
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Equifax
Experian
TransUnion
FICO
1-800-695-1111
www.equifax.com
1-888-Experian
www.experian.com
1-800-916-8800
www.transunion.com
1-800-319-4433
www.myfico.com
Annual Credit report
www.annualcreditreport.com
Consolidate Debt – Based On Interest Rates
Develop A Debt Repayment Plan…Who, What, When
Be Methodical…Track Progress…Stay Focused!
DST H.O.M.E.
Action Plan
Your 10 Step Countdown To Homeownership
10. Complete a personal homeownership plan and familiarize yourself
with the mortgage lending language. Attend a homebuyer
education workshop in your community to locate one got to
www.hud.gov
9. Get a copy of your credit report. This will enable you to address
and clear up any reported errors.
8. Get pre-Approved for a mortgage before you find a house. This
will enable you to determine your affordability and what loan
program is best for you.
7. Find a house (Often a Realtor is your best resource).
6. Make an offer on the home.
DST H.O.M.E.
Action Plan
5. Agree on the offer with the Seller (Your realtor can help).
Document your agreement; sign and date ALL pages.
4. Do home inspections, appraisal, title search and other preclosing requirements. Seek professional support as needed.
3. Resolve or negotiate any issues identified during inspections,
searches or appraisals. Concessions may be considered in
some cases.
2. Hire a Real Estate Attorney or Title company. Complete legal
paperwork (usually on closing day). Make sure you
understand what you are signing, and pay particular attention
to the disclosures. Ask questions when necessary.
1. Prepare to move and Celebrate!.
DST H.O.M.E.
Current Homeowners
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What If I Already Own A Home…What Else
Can I Consider?
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Investment properties for income generation
A personal home equity line of credit to self-fund
interest or needs
A “Kiddie Condo” instead of dormitory living for your
college-aged children
An investment in stocks or bonds
Renovating or making additions to your current home
DST H.O.M.E.
Questions or
Comments
DST H.O.M.E.