Historically Police Officers looking for 100% financing have had to pay higher interest rates and have squeaky-clean credit histories. The first programs that rolled out required $500 down and we now have these no money down loans with $0 due at closing. It makes sense to provide these workers nationwide, whose pay scales normally rank in the low-to-moderate range, can get financial help buying a home, much like veterans do.
Benefits of Program
Higher Debt to income ratios
Seller can pay first 6 months mortgage payments
Reserves in bank not required
Interest only available
Interest rate can be bought down by buyer or seller
Allows for Seller or family member to contribute 6% of mortgage amount to closing costs or down payment.
If you are a police officer, police worker or police support staff and require advice or help from an experienced mortgage broker to assist with your police mortgage then please call or email for further advice.
Nick Porter
Community First Financial, LLC
480-305-8900 Ext: 308
541-231-3040 Cell
nick@cffinfo.com
www.communityfirstfinancial.com
Tuesday, February 5, 2008
Law Enforcement 1st Home Buying Tool Kit - Relationships
1. Build your TEAM
If there was one thing that will make a difference between a good experience/deal or a bad experience/deal...it is your team. Your team could consist of a Real Estate Agent, Mortgage Broker, Title/Escrow Agent, Insurance agent, Home Inspector, General Contractor, Real Estate Attorney, and the list can go on. We are going to start with the most important...and that is your Real Estate Agent and Mortgage Broker.
So how do you know the difference between a good team member and a bad one...we recommend the book Rich Dad's Real Estate Advantages (Buy Book)...in chapter 5 it covers some of the questions to ask and what to look out for.
2. Your Exit STRATEGY (& Credit) = Loan Options
Most mortgage brokers focus on your credit as the key factor in placing you into a certain type of loan. While your credit is important...It is your intended exit of your property that will define your loan options. If you are looking to hold this property for the long term then you may be looking for a 30 year fixed loan that is paid off within the 30 years or sooner. If you intend to only keep this home a few years, then an interest only loan may make the most sense. Why, because it will keep your monthly payment low.
No matter what your exit is, there is a loan program for everyone. The problem, most people look for the 'best deal' instead of the loan program that is the 'best fit'.
Tools - Mortgage Calculators , Online Mortgage Application
3. FIND a Home
So here comes the step of going out and finding a home. One of the most important parts of this process is managing your emotions. Yes, the purchase of a home is an emotional decision...lets just be aware of that. To give you a different perspective though, it is important to understand the difference between a consumer and investor. Consumers make decisions based on emotions while an investor makes decisions solely by the numbers.
My recommendation is be both a consumer and an investor, get what you want (emotions) yet make sure it makes financial sense.
Real Estate Agent Tools - Real Estate Listings
Nick Porter
7575 E Redfield Rd, Suite 235
Scottsdale, AZ 85260
480-305-8900 Ext: 308
541-231-3040 Cell
480-718-8802 Fax
WWW.LAWENFORCEMENT1ST.COM
Law Enforcement 1st Home Buying Tool Kit - Education
4. CONTRACT
When in doubt, tie up the property by getting the property 'under contract' and just ensure that your escape clauses are in place. Earnest money...it is important to know 'how much' earnest you need to put down. Truth is, all that you need to put down is $1 to $100, whatever amount is required by your title/escrow company to open an escrow account. Real Estate Agents will tell you they like 1% or some other amount because it show that you are a 'serious' buyer. Point is...earnest money is negotiable. Everything is negotiable.
Quick Contract tips..if you want something, be specific. If you want an 'escape' be broad. Two examples, I want the Viking Refrigerator so in my contract I am going to add the serial number and photograph..or; This deal is subject to my partners approval. You may not want that Viking to be replaced by a GE (no offense GE) and for the other example I never said that my partner was my dog and the property didn't pass the sniff test.
Real Estate Agent...getting into serious contracts, use a Real Estate Attorney.
Tools - Your real estate agent will have a standard purchase agreement. In case of you are looking for other legal forms click here.
5. ANALYSIS of the Property
There are 2 areas of property analysis to consider: Property condition and property value.
Property Condition- Do you know if you are buying a dog? Do you want to buy a dog? (Believe it or not some people do as they love the concept of fixing a property up.) The point is do you know what needs to be 'fixed' or 'updated' on the home prior to purchasing. A good home inspector will identify issues or problem areas throughout the entire home. If your home inspector does identify issues, then you will want to bring in specialists to quote the work and evaluate what it will take to handle the work.
Property Value - When buying a home there is one primary number that you want to be aware of...The Appraised Value of the property. You will get this from an appraiser, but one tip...ask for (and review) a copy of the appraisal before you close.
Real Estate Agent, Appraiser, Home Inspector, any other specialists required.
Tools - Sample Appraisal
6. LOAN Analysis
Below is a quick checklist of items that you will want to know concerning your loan. You will want to compare this information to your current financial situation and your exit strategy to ensure that this loan fits your needs. It is always recommended that you talk to at least 3 mortgage brokers about your deal, as every mortgage broker may have access to a different loan program.
Here is the hit list of what should be included in a Good Faith Estimate:
-Interest Rate
-Monthly Payments
-Taxes and Insurance
-Loan Amount
-Pre-payment Penalties
-Fixed or Variable Rate
-Term (Length)
-Amount of money needed to close (your check to bring to closing)
Tools - Possible Loan Options
Nick Porter
www.LawEnforcement1st.com
7575 E Redfield Rd, Suite 235
Scottsdale, AZ 85260
480-305-8900 Ext: 308
541-231-3040 Cell
480-718-8802 Fax
Law Enforcement 1st Home Buying Tool Kit - Opportunity
7. CLOSE on the property
Closing takes place at a title/escrow company. As we discussed in step 6 - Loan Analysis, you will need to know how much money to bring to the closing table.
There are a lot of documents, take the time to make sure you know what you are signing. If you don't know what a document is for, ask the title agent for clarity. While all of the documents are important, the HUD 1 is very important to review. This outlines who (seller, buyer) pays what and who (mortgage broker, Real Estate Agent, Title, etc.) gets paid what.
Take a friend, spouse, therapist, family member to closing with you. Remember this can be a very emotional experience, so if you need to have some 'support' with you, take it.
Team Members Needed - Title/Escrow Officer
Tools - Sample HUD 1
8. Execute your EXIT
Now that you have closed and own the property it is time to execute your exit. Is your plan to hold the house for a few years and then sell it? If so, you will want to talk to your CPA to discuss when to sell. Owning the property for 1 year and a day could be the difference between paying 30ish% tax (taxed as ordinary income) or using a 1031 exchange to roll the profit into another property, tax defered. If you own and have lived (occupied) in the property for 2 out of the last five years, you could take the profits with no tax hit. 1 day could be the difference between thousands of dollars that you may need to pay in tax.
Maybe your plan is to accelerate your loan pay down? Your mortgage broker should have tools to help you take what is normally a 30 year payoff to a 10 or 11 year payoff by using a combination of increased monthly payments and utilizing a HELOC (home Equity line of Credit).
Team Members Needed - CPA
9. EXPAND - What's Next
No matter where you are starting from, there are tremendous opportunities in real estate to create and make money...even in an up and down market. It often starts with your first home, and then you build from there.
So what resources are available to you get the education and find the right team members...
1. Join a real Estate Investors Club National REIA Website
2. Attend seminars in your area - you can find these in your local newspaper.
3. Attend the Community First Financial monthly book study Click here for details
Nick Porter
Community First Financial, LLC
7575 E Redfield Rd, Suite 235
Scottsdale, AZ 85260
480-305-8900 Ext: 308
541-231-3040 Cell
480-718-8802 Fax
www.lawenforcement1st.com
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