Sponsored by the Washington State Housing Finance Commission

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3/27/2012

•
Steps to Homeownership
• Owning vs renting
•
How Much Can You Afford?
• Selecting a Loan Program
•
Down payment and Closing Costs
• How to Shop for a Lender & Real Estate Professional –
• Selecting a Home
•
The Importance of a Home Inspection
• Home Advantage Program
•
Loan Closing
• Foreclosure Prevention and Early Delinquency Intervention
•
Home Maintenance
• Consumer Protection Resources
• Community Resources for Further Counseling or Other Assistance.
•
Fair Housing
• Predatory Lending
•
How Going Green Saves You Money
4/10/2020
23 benchmarks set by WSHFC

• The Home Buying Process
• Lender Curriculum
• Assistance Programs
• Real Estate Curriculum
• Q & A’s and Resources
4/10/2020

– Steps to Homeownership
– Owning vs renting
– The Players in the Home buying Process
– The Benefits of Getting Loan Pre-Qualified &
Pre-Approved Before Searching for a Home
– Shopping for a Lender
4/10/2020

The Steps to Homeownership
Education
Credit History
Budget
Research
Loan Pre-Approval
Your Priorities
The Search
You’re Home!
4/10/2020
The eight steps recommended by the Washington Homeownership Center

4/10/2020
Benefits of Renting Your Home…
• Low maintenance costs
• Freedom to move
• Lower monthly payments
• No risk of losing investment
Benefits of Owning Your Home…
• Pets
• Yard
• Décor
• Tax savings
• Building equity

4/10/2020
Things to keep in mind about owning….
• Yard work
• Home improvements/maintenance
• Larger monthly payments
- Property Taxes
- Homeowners Insurance

4/10/2020
The Players in the
Homebuying Process
• Who are they?
• What role do they play?

4/10/2020
• What is the difference between preapproval and pre-qualified?
• Why is it important to get pre-approved before you shop for a home?
• Loan Estimate (new disclosure effective
Oct 3, 2015 – combines Good Faith
Estimate & Truth in Lending)

4/10/2020
– As of October 3 rd 2015
• The Loan Estimate (GFE & TIL combined)
• Clients must indicate their intent to proceed
• Lenders only have to honor a Loan
Estimate for 10 days
• Payment information can be obtained only after the lender provides the Loan Estimate and the client has expressed intent to proceed.

4/10/2020
• Get referrals and interview different lenders
• Questions to ask
• Difference between broker and loan officer

– How Much Can You Afford?
– Credit
– Budgeting
– Selecting a Loan Program
– Down payment & Closing Costs
4/10/2020

4/10/2020
Your score and history will:
• Affect the interest rate you will be offered.
• Determine what loan program will be offered.

4/10/2020
• Read your credit report
• Correct errors on your report
• How to build your credit
• Maintain good credit history
• Check credit at least annually
• What is a credit score
• How to increase your credit score

Credit Repair & Counseling
The Homeownership Hotline sponsored by
WSHFC
1 – 877- 894- HOME (4663)
Or for a list of counselors statewide: http://www.wshfc.org/buyers/counseling.htm
4/10/2020

4/10/2020
Set Financial Goals
• Eliminate debt
• Six months of expenses saved
• Set investment goals
Treat Your Savings Like An Expense
• 10% of all income saved or invested
• Automatic withdrawals

4/10/2020
• Eliminate credit card debt
• Put your money to work
• Educate yourself
• Plan for future expenses
• Pay yourself first

4/10/2020
ABC Your Budget – track what you spend for 30 days…
A: Expenses you need and can do nothing about today (mortgage, car payment)
B: Expenses you need, but CAN do something about today (groceries, clothing)
C: Things you want (cable TV, lattes, movies, eating at restaurants)

4/10/2020
• How much do you CURRENTLY spend on housing?
• How much CAN you spend and how much do you WANT to spend on housing?

4/10/2020
• 2-3 years tax returns
• 2 years of W-2s
• 2 most recent pay stub
• Last 3 months of bank statements
• Credit card information
• Information on any other loans
• Landlord information

4/10/2020
• Conventional (or Conforming)
• FHA
• VA
• USDA
• Sub Prime & Non-Conforming
• Portfolio
• Jumbo

4/10/2020
• Fixed Rate
• Adjustable Rate
• Interest Only
• 15 / 20 / 30 / 40 years
• Balloon

4/10/2020
How Much Can You Afford?

4/10/2020
depends on your income and current debt
Calculating how much house payment you can afford depends on your income and current debt
Gross monthly income
Gross monthly income
$_3,000__ x .41 =
$1,350
$1,230
Minus total monthly minimum debt payments - $300
Minus total monthly minimum debt payments
-
$ 400
Total housing payment you can afford
$ 950
= $930

4/10/2020
How Much Can You Afford
How Much Can You Afford?
Principle and Interest:
Principle and Interest:
Hazard Insurance:
Real Estate Taxes:
$ 690
$ 710.00
$ 73.00*
$ 117.00*
Mortgage Insurance: $ 73
Homeowner’s Association: $ 0
$ 0.00
$ 0.00
___________
Subordinate Financing: $ 0 $ 950.00
_______
$ 930.00

4/10/2020
How Much Can You Afford?
To calculate total payment/income
To calculate “total payment to income” ratio:
• Take your monthly housing debt
Take your monthly housing debt ($950) and divide by and divide by your monthly income
Example:
•
$950 / $3,000
$930 divided by $3,000 = .31 which is the same as 31%

How Much Can You Afford
How Much Can You Afford?
Total Expense-to-Income Ratio:
Total Expense-to-Income Ratio =
• total house payment
• plus total monthly minimum debt payments
• plus total monthly minimum debt
4/10/2020
Example: $930 + $300 = $1200 divided by
$3,000 = .41 or 41%

4/10/2020
• Down payment: Percentage of the value of the house
• Private mortgage insurance (PMI)
• Closing costs
• Items to be paid before closing (prepaids):
– Appraisal (also considered Closing cost)
– Inspection (also considered Closing cost)
– Homeowners insurance
– Taxes

• WSHFC Home Advantage Program
• WSHFC Down Payment Assistance
Programs
• USDA, HUD
• Community Land Trusts
• Other DPA Programs statewide
4/10/2020

Washington State Housing
Finance Commission
Home Advantage First Mortgage
Competitive interest rate
• DO NOT need to be 1 st time homebuyer
• $97,000 statewide income limit
• No acquisition limit, no recapture tax
• Automatically eligible for up to 4% of loan amount in DPA -0% interest 2 nd mortgage
4/10/2020

4/10/2020
Washington State Housing
Finance Commission
Down Payment Assistance Programs:
• Home Advantage 2 nd mortgage (up to 4% of loan amount)**
• Home Advantage 2 nd mortgage (Needs Based
Option)
• HomeChoice
• Seattle DPA (Subject to funding)
• ARCH DPA (Subject to funding)
• Tacoma DPA (Subject to funding)
• Bremerton DPA (Subject to funding)
• Pierce County DPA (Subject to funding)
Downpayment assistance programs must be used in conjunction with
Home Advantage 1 st mortgage.
These are All Second Mortgages – These are not grants
Only one WSHFC DPA program can be used .

Washington State Housing
Finance Commission
Home Advantage
Second Mortgage Loan
• 0% interest –deferred, NO Payment
• Up to 4% of first mortgage loan amount
Statewide
• Statewide Income Limit $97,000 (based on household income determined by lender)
• Balloon loan – comes due in full 30 years, or if sell, refinance
4/10/2020

Washington State Housing
Finance Commission
Home Advantage 2 nd Mortgage Loan
Needs Based Option
• 1% interest –deferred, NO Payment
• Up to $10,000
• Statewide Income Limits:
• King & Snohomish Counties: $89,600
• Kitsap County: $74,600
• Clark County: $73,900
• Island County $74,200
• All Other Counties: $73,600
• Balloon loan – comes due in full 30 years, or if sell, refinance
4/10/2020

Washington State Housing
Finance Commission
HomeChoice
Person with a disability or a family member with a disability (ADA)
• Up to $15,000
• 1% simple interest, Deferred, No payments
• One on One Counseling required
4/10/2020
Income Limits:
•
King & Snohomish Counties: $89,600
• Kitsap County: $74,600
• Clark County: $73,900
• Island County $74,200
• All Other Counties: $73,600

4/10/2020
Washington State Housing
Finance Commission
Seattle Downpayment Assistance
Up to $45,000
• 3% interest rate - Deferred, No Payments
• Borrower must contribute 1% or $2500 whichever is greater
• City limits of Seattle
• 80% Area Median Income & below
(lower than House Key first mortgage income limits)
• Shared Appreciation
• Extra Inspection and Forms

Washington State Housing
Finance Commission
ARCH Downpayment Assistance
• Up to $30,000
• 4% simple interest – Deferred, No Payments,
• Borrower must contribute 2% of own funds
• One on One Counseling required
• 80% Area Median Income & below
(same as HK + Seattle)
•
Extra Inspection and Forms
•
Available in 15 Eastside Cities
4/10/2020

Washington State Housing
Finance Commission
Tacoma Downpayment Assistance
• Up to $20,000
• 4% simple interest – Deferred, No Payments,
• Borrower must contribute $500 of own funds
• One on One Counseling required
• 80% Area Median Income & below
•
Extra Inspection and Forms
•
Available in designated census tracts of Tacoma
4/10/2020

Washington State Housing
Finance Commission
Bremerton Downpayment Assistance
• Up to $20,000
• 3% simple interest – Deferred, No Payments,
• Borrower must contribute .5% of own funds
• One on One Counseling required
• 80% Area Median Income & below
•
Extra Inspection and Forms
•
Available in City of Bremerton limits
4/10/2020

Washington State Housing
Finance Commission
Pierce County Downpayment
Assistance
• Up to $20,000
• 4% simple interest – Deferred, No Payments,
• Borrower must contribute $1000
• One on One Counseling required
• 80% Area Median Income & below
•
Extra Inspection and Forms
•
Available in designated census tracts of Tacoma
4/10/2020

4/10/2020
Washington State Housing
Finance Commission
ENERGYSPARK
Home buyers using the Commission’s Home Advantage program can save an additional .250 % off the
Commission’s 30 year daily-posted rates by buying energy efficient new construction or
Making modest improvements at the time of closing that improve the home’s energy efficiency by at least 10%
Please visit www.wshfc.org/EnergySpark

MCCs are not mortgages ... It is a tax credit which means fewer tax dollars can be withheld from your regular paycheck, increasing your take-home pay. The lender can use the credit to help increase your buying power.
It is strongly recommended that you contact a tax professional before applying for an MCC in order to determine the potential benefits an MCC may provide for your specific tax situation.
http://www.wshfc.org/buyers/MCCprogram.htm
4/10/2020

MCC eligibility requirements include:
• The MCC is available with new purchase loans
• Must be a first time homebuyer, unless purchasing in a targeted area.
• Recapture Tax Applies
• Income and Acquisition Limits
• Owner Occupied
• Home Buyer Education is required
• Must work with a WSHFC MCC participating

4/10/2020
** Applies to the WSHFC Mortgage Credit
Certificate program only
Recapture only applies if all 3 of the following occur:
• Your home is sold or disposed of within
9 years of being purchased, for reasons other than your death;
• There is a capital gain on the sale of your home, AND
• Your household income for the year in which you sell your home exceeds federal recapture tax limits. See your lender for current limits.

4/10/2020
502 Direct Loan (work directly to USDA)
Income limits: up to 80% of area median income
Location: rural community with less than 10,000 population
Loan amount: may be up to 100% of appraised market value
Down Payment: not required
(Please Note: WSHFC DPA Programs CAN NOT be used with USDA direct) www.rurdev.usda.gov/wa/
502 Guarantee (work with a lender that offers USDA)
Income limits: up the 115% of area median income
Location: rural community with less than 10,000 population
Down payment: not required
(ALL WSHFC DPA Programs CAN be used with USDA 502 Guaranteed)

4/10/2020
HUD 184 Indian Home Loan Guarantee Program
• Funds can be used to purchase and/or rehabilitate an existing home, or construct a home
• Must be an Alaskan Native or Native American, to participate in program
• Down payment as low as 1.25%
• Long term fixed rate financing with loan to value ratios as high as 150%
• Nontraditional methods may be used to demonstrate borrower’s credit and income
• No income limits

4/10/2020
HUD 203k Streamline Rehab Program
• Include funds for eligible repairs to the base loan amount.
• No minimum repair cost – maximum amount up to $35,000
• Can be used to purchase and rehabilitate an existing home.
• Same credit and down payment requirements as an FHA loan.
• Visit Hud.gov for a list of eligible repairs and verify with your lender.
• CANNOT Be used with WSHFC Programs or downpayment assistance

4/10/2020
 Be aware that specialty financing options have limited funding so you will want to ensure your program is available when you are in the home buying process.
 Organizations make every attempt to maintain continuous funding but they occasionally exhaust their assistance programs.
 All Housing Assistance programs are subject to funding availability

4/10/2020

4/10/2020

Aberdeen Neighborhood Housing Services
– Up to 20% of appraised value
– Grays Harbor County
– Housing Education (HUD Approved)
– Housing Rehab loans
City of Bremerton
– Housing Rehab Loans
Community Frameworks- Bremerton
– Built in Bremerton DPA
Housing Kitsap (Kitsap County Consolidated Housing
Authority)
– Up to $20,000
– Must purchase in Kitsap County outside Bremerton City limits
4/10/2020 Region 1

4/10/2020

City of Seattle Down Payment Assistance
– Up to $45,000
– HomeStead CLT, HomeStreet Bank,
– HomeSight & Parkview (see below)
– Home Repair Program
City of Seattle Teacher Homebuyer Program
– Up to $45,000
HomeSight
– City of Seattle
– South King County
– Snohomish County
– Up to 35,000 - $75,000
– Housing Education
4/10/2020 Region 2

Parkview Services
– People / families with Developmental Disabilities
– Down Payment Assistance
– Housing Counseling & Hotline
Habitat for Humanity Seattle / South King County
– Serves City of Seattle, -South King County,
– Finance the mortgage at 0% interest for the buyer
– Shared equity and shared appreciation apply
– Some projects are land trust model in partnership with
Homestead Community Land Trust
– Buyer participates in construction of home
4/10/2020 Region 2

4/10/2020

Pierce County Community Services
– Up to 3.5% of the sales price
– Purchasing in Pierce County outside of Tacoma and Lakewood city limits
City of Lakewood
– Up to $7000
– Lakewood City Limits
Homeownership Center of Tacoma
– Up to 22% of purchase price
– Below market price homes
– Hilltop area
– Housing Education
4/10/2020 Region 3

4/10/2020

City of Yakima
– Rehab for Seniors
– New Construction for low –moderate income
Yakima County HOME Consortium
– Home Rehab
City of Richland
– Up to $5000
City of Kennewick
– Up to $5000
– Purchasing in City of Kennewick targeted area
City of Pasco
– Up to $5000
– Priority given to property within the Museum and Longfellow districts
Columbia Valley Housing Association (Housing
Authority of Chelan & City of Wenatchee)
– DPA/ Self help
– Housing Counseling & education
4/10/2020 Region 4

4/10/2020

Community Action Center of Whitman County
Homeowner Resource Center of Whitman County:
– Self Help
– Rehab
– Weatherization
– Housing Education and Counseling
Spokane Neighborhood Action Program
– City of Spokane & Spokane County
– Rehab, Weatherization & Energy Efficiency
– Minor Home Repairs
– Housing Education and Counseling (HUD Approved)
The ARC of Spokane
– Down Payment Assistance
– People with Disabilities
– Housing Education and Counseling
4/10/2020 Region 5

4/10/2020

Community Housing & Resource Center Vancouver
– Housing Education & Counseling
– Credit Repair/Debt Management/ Budget Counseling
– Mortgage Default Counseling
– Reverse Mortgage Counseling
– Pre-Purchase Services
– Tax Preparation Assistance
– City of Vancouver Rehab program
Lower Columbia Family Finance Resource Center
(Longview)
– Housing Education & Counseling
– Credit Repair/Debt Management/ Budget Counseling
– Mortgage Default Counseling
– Self Help Housing
4/10/2020 Region 6

Community Land Trusts
• City of Seattle
– Homestead Community Land Trust
• San Juan Islands
– Opal Community Land Trust
– Lopez Island Community Land Trust
• Whatcom
– Kulshan Community Land Trust
• Clallam
– Homeward Bound Community Land Trust
• Kitsap /Bainbridge Island
– Housing Resource Board
• Kittitas County (Yakima Valley) <<new>>
– Kittitas Yakima Valley Community Land Trust
4/10/2020

4/10/2020
Self-Help Housing
Opportunities
Self Help
Clients participate in the construction of their home
Low interest mortgage loan
Sweat Equity
Low Income (up to 80% AMI)
• Habitat for Humanity
Clients participate in the construction of their home
Zero interest loans
Very Low- Low Income (30-60% AMI)
To find an affiliate near you http://www.habitat.org/

4/10/2020
Additional Self Help Housing
Opportunities
Self-Help Programs Statewide
Vashon Household Self Help,
Northwest Housing Development,
Housing Hope,
Homes for Islanders,
Whatcom Skagit Housing,
Northwest Housing Development,
Port Gamble S'Klallam Housing Authority/ Southern
Puget Sound Intertribal Housing Authority,
Kitsap County Consolidated Housing Authority,
Clallam County Housing Authority,
Community Frameworks Spokane,
Longview CAP

4/10/2020
• HomeStart
Clients are provided up to $5,000 (through a FHLB member bank)
Must be first-time homebuyer
• Individual Development Accounts (IDA’s)
Clients are matched $2 for every $1 of their own up to
$8,000
Money can be used for: buying a home, education or starting a small business
United Way of King County (YMCA) offers IDA program

4/10/2020
• Section 8 for Homeownership
• Family Self Sufficiency
• Classes and Counseling

– How to Shop for a Real Estate Professional –
Understanding Agency Representation
– Selecting a Home and Negotiating a
Purchase Price
– The Importance of a Home Inspection
– The Loan Closing – What to Expect, Review
Sample Loan Documents
4/10/2020

4/10/2020
• Size of home
• Number of bedrooms
• Number of bathrooms
• Neighborhood
• State of home (new vs fixer)
• Garage

4/10/2020
How to Shop for a
Real Estate Professional
• Why use a Real Estate Agent?
• Interview several people
• Questions to ask
• Buyers agent vs. sellers agent

4/10/2020
• Dream Home vs. Starter home
• Where do you want to live?
• What is important to you?
• Do research – explore neighborhoods

4/10/2020
Negotiating a Purchase Price
• Know the market
• What are you willing to pay
• Be prepared for a counter offer
• Keep your priorities in mind
• Be prepared to put up earnest money

4/10/2020
• Purchase and sale agreement
• Sellers disclosure
• Neighborhood review
• Financial contingency
• Inspection contingency

4/10/2020
• Why you should have one
• How to find an inspector
• Questions to ask
• How much will it cost
• How long will it take
• What should I receive from the inspector

The Loan Closing –
What to Expect
Signing papers
• Deed-of-trust
• Promissory note
• Closing Disclosure
Don’t be in a hurry… you now have
3 business days to review the documents
4/10/2020
When do you get the keys?

• Foreclosure Prevention and Early Delinquency Intervention
• Home Maintenance
• Consumer Protection Resources
• Community Resources for Further Counseling or Other Assistance.
• Fair Housing
• Predatory Lending
4/10/2020

• Don’t be late
• Contact your lender as soon as possible
• Contact a local housing counseling agency
• Visit Washington Homeowners &
Homebuyers Web Site: http://www.wshfc.org/buyers/counseling.htm
4/10/2020

Protect your investment
• Test smoke detectors
• Clean out gutters
• Have regular service on heating system
• Change furnace filters
• Yard upkeep
• Budget for home repairs
Visit http://www.wshfc.org/buyers/guide.htm
Download:
Post Homeownership Guide & Seasonal Newsletter
4/10/2020

4/10/2020
Predatory lending can be one or more abusive lending practice:
• Excessive interest rates and/or high fees
• Failing to disclose the true terms of the loan
• Approving a loan with payments higher than the borrower can afford to pay
• Pressuring a borrower to sign documents without understanding the terms of the loan
• “Flipping” or frequent refinancing of a loan

4/10/2020
Predatory lending vs. sub-prime lending
• Sub-prime loans help borrowers with:
- less than perfect credit
- inconsistent employment history
- incomplete application documents
• Sub-prime loan has a higher interest rate because the lender is taking a bigger risk in making the loan.

4/10/2020
• Who is protected
• What is prohibited in the sale & loan
• How to file a complaint

Going Green
To get you thinking “green”, here are some tips that will not only help conserve resources but may also save you money :
• If you haven’t already, convert to the compact florescent light bulbs
(a bulb at a time…)
• Use biodegradable cleaning products.
• If you are not already recycling paper, glass and plastic, call your disposal company and ask for recycling bins.
• Recycle your yard waste, contact your disposal company or purchase a bin.
• Use less water - flush less often, use your dishwasher, wash full loads.
4/10/2020

Going Green
• Use less energy – unplug small appliances, turn off computers, use timers on outdoor lights.
• Unfortunately, traditional wood burning fireplaces tend to lose more energy than they produce, pulling heated air out of the house and sending it up the chimney (and burning wood adds to air pollution). If you have natural gas or propane heating, consider gas logs.
• Replace shower heads. Choose a low-flow unit and you'll get virtually the same sensation of water flow while saving money and water.
• Purchase cloth re-useable grocery bags.
• Organize closets and donate unused clothing and household items to charity instead of throwing away.
4/10/2020

4/10/2020
Going Green
• As you upgrade:
– Purchase Energy Star appliances, there may even be additional rebates and tax incentives
– Purchase a higher output rated furnace or consider converting that oil tank to gas heating
– Check out Solar Panel options in your area
• Here are some handy links to track Utility Rebate Programs and
Energy Usage:
• http://www.dsireusa.org/incentives/
• http://hes.lbl.gov/consumer
Continue to visit the Commission’s Seasonal Newsletter for additional tips http://www.wshfc.org/buyers/newsletter.htm

Housing Counseling
Agencies
The Homeownership Hotline sponsored by
The Department of Financial Institutions
& WSHFC:
1 – 877- 894- HOME (4663)
Or for a list of counselors statewide: http://www.wshfc.org/buyers/counseling.htm
4/10/2020

4/10/2020
Housing Counseling Agencies
• One on one counseling
• Loan document review
• Budgeting and financial literacy
• Mortgage default counseling
• Predatory lending counseling
• Reverse mortgage counseling
• Run /Check credit report

• Housing counseling agencies
• Down payment assistance programs
• Low-interest loan programs
• Affordable homeownership opportunities
Washington State Housing Finance Commission www.wshfc.org
US Housing & Urban Development www.hud.gov
(look for HUD’s Settlement Cost Booklet)
4/10/2020
Or Call the Homeownership Hotline:
1 – 877- 894- HOME (4663)

4/10/2020
Are you pre-approved for a mortgage loan:
If not, meet with a lender
If you know how much you can afford, then you are ready to go house shopping:
Meet with a real estate professional
Want to know more about the home buying process?
Meet with a Housing Counselor