Subject 1: What is the reason to buy a home?

• Pride of Ownership
  Basically, you can do anything you like inside your home. It gives you and your family a sense of stability and security. It is an enjoyment.
• Appreciation in value
  Real estate has consistently appreciated during the past decade. Investors in Bay Area have made extremely huge profits in the past 5 years. It will appreciate steadily in the future. Investing in real estate can be a hedge against inflation?
  
• Mortgage Interest Deduction
  You can deduct all the mortgage interest you have paid out in a year when you file our tax return
  
• Property Tax Deductions
  Property tax is fully deductible from your income
  
• Capital Gain Exclusion
  If you have capital gain in stock market or some other investment, you need to pay tax. However, if you live in your property for over 2 years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains.
  
• Mortgage Reduction Builds Equity
  For each mortgage payment, part of them is applied to the principal balance of your loan. Your loan amount will be reduced and the home equity will be slightly built up each month
  
• Equity Loans
  Once your home equity builds up, you can borrow equity loan to do a home improvement or pay off your high interest debt payment. And the equity loan interest is fully deductible.

 Subject 2: Are you a first time home buyer

Find out what you need to know?

Ask yourself if you are ready to buy:

• Do I have a steady source of income, Have I been employed on a regular basis for the last 2 - 3 years. Is my current income reliable?
  
• Do I have a good record of paying my bills?
  
• Do I have a few outstanding long-term debts, like car payments?
  
• Do I have money saved for a down payment?
  
• Do I have the ability to pay a mortgage every month, plus additional costs?

 Subject 3: Process of buying a dream home

• Step 1: Choosing a Right Agent
  
  • Interview at least 3 agents, ask them questions, and compare.
    
  • Are them listen well and understand your need?
    
  • Do they know the local area well
    
  • Are they full time or part time? Prefer full time agent
    
• Are they fully knowledge in real estate transaction and are they have experiences with negotiation skills?
  
• Step 2: Find the Best Home
  
  • Discuss with your agent what particular area or communities you would like to look for. Do you prefer an area with easy access to shopping and public transportation, or local facilities like libraries and museums, or a peace and quiet area like rural community.
    
  • Is school an important factor which determines your home searching? If you have a family with kids, finding a home in good school district is important. You can discuss it with your agent
    
  • Determine the price, the size, the age, etc
    
• Step 3: Home Tour
  
  • After decide all the searching preferences, your agent should start showing you houses
    
  • What should you look for when walking through a home? Here are the tips:
    
    • First impression is very important: Do you like the house? Do you like the floor plan?
      
    • Is the home well maintained? Does everything work properly?
      
    • Does anything need to be repaired or replaced? Will the seller do it?
      
    • Bring a tape measurement to better understand the space of your future home
      
  • After touring the home, be sure to ask your agent who is the neighborhood. Are there any crimes happened in the past? Is this home located in the flood zone?
    
  • Touring at least 10 to 15 houses, compare them, before you make the final decision.
    
• Step 4: Making an Offer
  
  • Fill out the Purchase Contract with your agent
    
  • Determine the percentage of your initial deposit, usually it is 3% of the purchase price
    
  • Determine the total down payment and the loan amount you need to borrow
    
  • Determine the final price you would like to make an offer. Discuss with your agent the comparable sales in the neighborhood to decide the offer price. You would like to set the price you have the most possibility to get the home you want, but not paying too high for it
    
  • Proposed the move-in date and closing date, how many days you would like to close the deal and move in to the new home?
    
  • Determine the loan, appraisal, and inspection contingency date
    
  • Discuss with your agent if you want to add additional terms beside the items listed in the contract
    
  • If you already have a loan agent, work with him/her to get a pre-approved letter. This shows your financial confidentially
    
  • Present the offer
• Step 5: Negotiating the Contract (Your agent will play the major role here)
  
  • If seller doesn't accept the price you make, mostly they will counter back with a higher price, or other terms
    
  • At this point, your agent will discuss it with you, and give you professional opinion on how to deal with it. Should you accept the counter offer? Or should you counter back to the counter of the counter offer? Should you ask the seller to credit you for any repair work?
    
  • Negotiation stage between your agent and listing agent.
    
  • If the agreement is set between two parties, then we enter the contract at this point
• Step 6: In Escrow Process
  
  • Initial deposit check has to turn in to the title company within 3 business days after the contract is finalized. Your initial deposit will be protected by 5 contingencies if there is anything happened, which means you can get back all your deposit within the contingency period if you cancel the contract. The five major contingency is: Disclosure Contingency; Loan Contingency; Appraisal Contingency; Inspection Contingency;
    
  • Start the loan process, see Step 7 for details
    
  • Order Home Inspection. Please be there, so you can ask anything question you have
    
  • Your agent will go over all the disclosures and inspection report with you, ask any question you might have. You need to sign and acknowledge on all the disclosures and they will be returned back to the listing agent
    
  • Appraisal should be ordered at this time
    
  • If there is any repair should be taken care of, you or your agent can use the Addendum to state seller should fix, repair, or pay for the repair before the close of escrow
• Step 7: Loan Process
  • Meet with you loan agent to discuss which loan program works the best for you
  • Provide require document such as: W-2, 2 months bank statement, 1 month pay stub, 1040 tax return, ID card/Driver license, 401k statement, etc.
  • Fill out loan application
  • Order credit report, coordinate with the appraisal report from your selling agent
  • Submit all documents for underwriting
  • Lender should provide you the Good Faith Estimate. It is an estimate that lists all fee paid before closing, such as escrow fee, property tax, interest, loan origination fee, recording fee, survey fee, title insurance, etc.
  • Clear conditions if there is any from the lender, usually lender might require more supporting document for your income
  • Loan documents need to be in the title company before the sign off date
  • Funding - fund has transfer to the seller's account
• Step 8: Contract Follow Up
  • All items in the counter offer, or addendum should have been taken care of at this point
  • Appraisal Contingency should be removed if there is any
  • Loan Contingency should be removed if there is any
  • Inspection Contingency should be removed if there is any
• Step 9: Final stage to the close of escrow
  • Buyer should deposit the less of the down payment to the title company now
  • Lender draws loan document and order funding
  • Buyer sign off, be sure to bring your ID with you. Be sure to review the final closing statement very carefully.
  • Final walk through; key turn in
  • Recorded, CLOSED. CONGRATULATION! You are the owner now!

 Subject 4: How much house can you afford?

Find out the maximum monthly payment you can afford, create a fill out table here, include the following items:

Ratio Analysis:

• Housing Expense Ratio -calculate as monthly housing expense; include mortgage payment, property tax, and home insurance divide by your monthly income
  Note: The industrial standard usually can't over 28%; however, some other lenders can allow ratio above 30%.
  If the outcome is over 28%, make the outcome RED as a warning sigh
  • If the outcome is under 28%, shows the message as "Great! It seems that you can be qualified to a loan amount of up to "reference back to the loan amount visitor has entered in the above table" according to your Housing Expense Ratio of "reference back to the ratio which is calculated above" which is under the industrial standard requirement. Of course, there are some other factors, such as the percentage of your down payment & your credit score, lender would take into consideration for the maximum loan amount lender will lend to you.
  • If the outcome exceeds 28%, shows the message as "Oh, applying to your Housing Expense Ratio, lenders might not feel comfortable to lend such large amount of loan to you, for either the housing expense is too high, or you don't have sufficient income to support your housing expense. However, we do take some other factors into consideration, such as a higher down payment and a high credit score. Please talk to our loan specialist for which loan program works the best according your situation. "
• Total Expense Ratio - calculate as total expense (total mortgage payment plus other loan payment, credit card payment) divide by your gross monthly income
  
  Note: The industrial standard usually can't over 36%; however, some other lenders can allow ratios in the 40% - 45% range or even higher in today's competitive market.
  If the outcome is over 36%, make the outcome RED as a warning sigh
  • If the total expense ratio is under the standard, shows the message as "Excellent! You are qualified for this loan amount. Please contact one of our loan specialists for the best loan program. We offer the best rate, best service, and we cover some of the closing costs for you."
  • If the outcome exceeds the standard, shows the messages as"Oh, we are sorry to tell you that your monthly total expenses are too high in proportion to your monthly income. However, it doesn't mean you are not qualified for this loan amount. Please give us a call, we will work out a plan to help you qualify for it"

 Subject 5: Is it a good deal?

Find out the home value you are going to buy, use this site as the primary tool www.zillow.com

 Subject 6: Why do you need a home inspection?

• Buying a home might be the biggest investment in one's life. A careful and thorough termite inspection, property inspection, and roof inspection is necessary during the transaction. You want to make sure that your future home is free of termite contamination; its structure, construction, and foundation are in the good and safe condition; and the home inspection will tell you whether all mechanical system, such as refrigerator, dish washer, micro wave, water heater, A/C unit, garage door, etc, of the house work property, or need any repair works. The inspector also check the electrical system, plumbing, waste disposal, insulation and Ventilation, the HVAC system, the door, windows, ceiling, walls, and floor.
• If there is any problems of the home, you can renegotiate the purchase price with the seller, or have the seller fix it before close of escrow. If there is a very serious problem such as foundation cracking which will cause the safety problem, you can cancel the contract anytime as long as you are projected within the contingency period.?
• As you can see from above, having a complete home inspection is very important in that you not only live in a safe place, but also your investment can be protected in a good hand.