The document provides an overview of the steps to homeownership for first-time homebuyers. It discusses getting pre-qualified for a mortgage loan, the home buying process including applying for a loan, credit checks, appraisals, and closing. It also compares the costs and benefits of owning vs renting, and describes various affordable mortgage programs and products available through Harris to help make homeownership possible.

1. The Steps to Homeownership
A Guide for First-time Homebuyers
Harris Homebuyers Guide

2. The Steps to Homeownership
GETTING STARTED
• 9 Easy Steps to Your Home Loan
• Homeowner Advantages and Responsibilities
• Pre-qualification Example
• Rent vs. Own Comparison
• Affordable Mortgage Products and Programs
• Fixed Rate vs. ARM Comparison
• The Application Interview
Harris Homebuyers Guide

3. The Steps to Homeownership
GETTING STARTED
• Good Faith Estimate
• Appraisal and Insurance
• Loan Approval and Closing
• Consumer Advice
• Harris Advantages
• Pre-qualification and Pre-approval
Harris Homebuyers Guide

4. The Steps to Homeownership
9 Easy Steps to Your Home Loan
1. Pre-qualification
2. Choose Your Loan
3. The Application
4. Income and Employment Verification
5. Credit Check
6. Asset Review
7. Appraisal and Hazard Insurance
8. Loan Approval
9. Loan Closing
Harris Homebuyers Guide

5. The Steps to Homeownership
Homeowner Advantages and Responsibilities
Advantages of homeownership
• Tax Savings
• Financial Investment
Responsibilities of homeownership
• Utility Costs
• Maintenance
• Appliance repair/replacement
• Possible structural repairs
• Home improvements
• Recordkeeping for federal income taxes
Harris Homebuyers Guide

6. The Steps to Homeownership
Pre-qualification
Pre-qualification is the process of estimating
the amount of mortgage you can afford.
• How much do I earn?
• How much do I owe?
• How much do I have available for the
downpayment, closing costs and reserves?
• How much can I borrow to purchase a home?
Harris Homebuyers Guide

7. Pre-qualification
How much do I earn?
Monthly Income
Combined Gross Wages of All
Borrowers (before tax deductions) $5,625.00
Alimony/Child Support -0-
Harris Homebuyers Guide

8. Pre-qualification
How much do I owe?
Monthly Payments
Auto Loans $550
Student Loans -0-
Credit Card Payments $100
Alimony/Child Support -0-
Harris Homebuyers Guide

9. Pre-qualification
How much money do I have available for the
downpayment, closing costs and reserves?
Bank Accounts $5,000
Gift from Relative $5,000
Grant -0-
Affordable Second Mortgage -0-
Harris Homebuyers Guide

10. Pre-qualification
Pre-Qualification Example:
How much can I borrow to purchase a home?
Loan Terms
Product Harris Homebuyer AdvantageSM
Loan Type Fixed Rate
Interest Rate 6.625%
Term 30 years
Downpayment 5%
Qualification Guidelines
Monthly Housing Expense Ratio No Limit
Monthly Recurring Debt Ratio 42%
Maximum Purchase Price $195,000.00
Downpayment $9,750.00
Maximum Loan Amount $185,250.00
Monthly Mortgage Payment
Principal and Interest $1,186.18
Real Estate Taxes $325.00
Hazard Insurance $40.00
Private Mortgage Insurance $120.00
Total Payment $1,671.18
Harris Homebuyers Guide

11. Savings and Advantages
Rent vs. Own Comparison—Savings/Advantages
Mortgage Rent
Fixed Rate
6.625%
30 years
$185,250.00
Principal and Interest Rent
Monthly Payment
$1,186.18 $1,200.00
Tax Bracket 28% 28%
After the first year…
283.51 -0-
Tax Savings
$902.67 $1,200.00
Net Payment
Harris Homebuyers Guide

12. The Steps to Homeownership
Affordable Mortgage Products and Programs
• Fixed rate and adjustable rate mortgage options
• 1- to 4-unit owner-occupied properties
• Annual household income limits
• No downpayment or low downpayments
• Gifts from relatives for downpayment or closing
costs
• Grants and second mortgages for downpayment
and/or closing costs
Harris Homebuyers Guide

13. The Steps to Homeownership
Affordable Mortgage Products and Programs
• Housing expense payment reserves
• Minimum credit scores
• Alternative credit sources
• Expanded guidelines for qualification
• Private Mortgage Insurance (PMI)
• Borrower pre-purchase education
• Closing cost discounts
Harris Homebuyers Guide

14. The Steps to Homeownership
Harris Affordable Mortgage Products and Programs
Harris offers a variety of affordable mortgage
products and programs for first-time
homebuyers.
• Harris Homebuyer AdvantageSM
• Home PossibleSM
• Harris Community CommitmentSM
• Harris New Home RewardsSM
• Alternative Identification MortgageSM
Harris Homebuyers Guide

15. The Steps to Homeownership
Fixed Rate vs. ARM Comparison
Fixed Rate Mortgages
• Interest rate and payment remain the same for the
life of the loan.
• Even if market conditions change, your interest rate
and your payment will not be affected.
Harris Homebuyers Guide

16. The Steps to Homeownership
Fixed Rate vs. ARM Comparison
Adjustable Rate Mortgages
• Because the initial interest rate is lower than a fixed
rate mortgage, your initial payment will be lower
and you may qualify for a larger mortgage amount.
• Your interest rate and your payment may increase
or decrease during the life of the loan, depending
on market conditions.
• An ARM with a lower initial rate of interest and an
adjustment period after five or seven years can
save you money.
Harris Homebuyers Guide

17. The Steps to Homeownership
What to Bring for an Application
Income
Assets: Downpayment, Closing Costs and
Reserves
Debts and Obligations
Property
Harris Homebuyers Guide

18. The Application
My Income
Income: How much money do I earn?
Borrower Co-Borrower
Wages $ _______________ $ _______________
Overtime _______________ _______________
Bonus _______________ _______________
Commission _______________ _______________
Social Security _______________ _______________
Pension _______________ _______________
Disability _______________ _______________
Alimony _______________
Child Support _______________
Dividends/Interest _______________ _______________
Other _______________ _______________
Total $ _______________ $ _______________
Harris Homebuyers Guide

19. The Application
My Debts and Obligations
How much money do I owe?
Borrower Co-Borrower
Revolving Credit Card $ _______________ $ _______________
Revolving Credit Card _______________ _______________
Revolving Credit Card _______________ _______________
Revolving Credit Card _______________ _______________
Car Loan _______________ _______________
Student Loan _______________ _______________
Line of Credit _______________ _______________
Alimony _______________ _______________
Child Support _______________ _______________
Other _______________ _______________
Other _______________ _______________
Total $ _______________ $ _______________
Harris Homebuyers Guide

20. The Steps to Homeownership
Credit Check
How have I paid my bills over time?
What is my credit score?
How can I improve my credit score?
What if I don’t have any established
credit?
Harris Homebuyers Guide

21. The Application
My Assets
How much money do I have available for the
downpayment, closing costs and reserves?
Borrower Co-Borrower
Checking $ _______________ $ _______________
Savings _______________ _______________
Money Market _______________ _______________
Certificates of Deposit _______________ _______________
Stocks/Bonds _______________ _______________
Gift Funds _______________ _______________
Grant Funds _______________ _______________
Affordable Second Mortgage _______________ _______________
IRAs _______________ _______________
401(k) _______________ _______________
Other _______________ _______________
Total $ _______________ $ _______________
Harris Homebuyers Guide

22. Savings and Advantages
Good Faith Estimate Example
Loan Type Fixed Rate
Loan Term 30 years
Loan Amount
$185,250.00
Interest Rate
Discount Points 6.625%
-0-
Appraisal
$250.00
Credit Report $ 15.00
Discount Points -0 –
Flood Certification $ 9.00
Tax Service Fee $ 55.00
$350.00
Underwriting Fee $400.00
Hazard Insurance Premium $475.00
Settlement/Closing Fee $905.00
Title Charges $100.00
Recording Fee
Total $2,559.00
Harris Homebuyers Guide

23. The Steps to Homeownership
Appraisal and Insurance
What is the value and condition of the property
that I want to purchase?
• An appraisal is a written report that describes the
property and estimates its value and marketability.
• Most homebuyers purchase homeowner’s
insurance which is a combination of coverage
(hazard insurance and personal liability)
Harris Homebuyers Guide

24. The Steps to Homeownership
Loan Approval and Closing
After your mortgage loan has been approved,
the final step to homeownership is the loan
closing.
• All mortgage and legal documents are signed, all
financial sums are paid, and ownership of the
property is formally transferred.
Harris Homebuyers Guide

25. The Steps to Homeownership
Consumer Advice
What is predatory lending?
Typical predatory loan features include:
• High interest rates
• Broker fees
• Unnecessary closing costs such as pre-paid life insurance
• Unaffordable repayment terms
Harris Homebuyers Guide

26. The Steps to Homeownership
Consumer Advice
How can I protect myself from a predatory lender?
• Comparison shop
• Choose a reputable lender
• Don’t borrow more money than necessary
• Choose a mortgage that meets your needs
• Don’t buy services that you don’t need
• Get the best terms that you qualify for
• If you don’t understand something, ask questions until
you are satisfied
• Get financial counseling if you need it
Harris Homebuyers Guide

27. The Harris Advantage
Harris Advantages
 Friendly and knowledgeable Mortgage Specialists
 A variety of products and programs for first-time homebuyers
 Free pre-qualifications
 Free pre-approvals
 Pre-approvals with 120-day Mortgage Interest Rate Price Protection Option
 Local processing, underwriting, closing and servicing
 Low closing costs
 The Harris No Surprises Mortgage® guarantee
 Over 225 convenient locations in Chicagoland and Indiana
Harris Homebuyers Guide

28. The Steps to Homeownership
Pre-qualification and Pre-approval
Pre-qualification
• Your Mortgage Specialist estimates how much
money you can borrow to purchase a home and
what your monthly mortgage payment will be.
Pre-approval
• A pre-approval is a formal application for a home
loan.
• Realtors and builders prefer to work with buyers
who have been pre-approved for a mortgage
before they begin shopping for home
Harris Homebuyers Guide

29. The Harris Advantage
Homeownership….We Make It Possible!
Over the past century,
Harris has helped thousands of
families and individuals
finance their first home.
We can make homeownership
possible for you, too!
Thank you.
Harris Homebuyers Guide