Things to know

1. Things to know Options for Educators In Today’s Housing Market Brought to you by

2. Disclaimers NMLS identifier 13909; HUD ID 18001100004.  Midwest Mortgage Capital is an independent mortgage lender and is not acting on behalf of HUD, the Federal Housing Administration, or the Federal government.  Illinois Residential Mortgage licensee, Missouri Residential Mortgage Loan Broker License 10-1664.  Equal housing lender.  This is not an offer to extend credit under Regulation Z. Interest rates and MI premium estimates are for illustrative purposes only and are subject to change without notice. We’re mortgage bankers, not realtors, tax preparers, nor insurance agents, so please consult the appropriate experts for advice on your particular situation. Additional terms and restrictions may apply. The potential for default includes not only mortgage nonpayment default, but also for nonpayment of real property taxes and insurance, failure to maintain the property, or as a result of not meeting other required obligations.

3. A BIT ABOUT MMC • Mortgage banker est. 2001, headquartered in St. Louis, Mo. • Loan types including Conventional, FHA and VA • Sensible, In-House Underwriting

4. Lenders Things to know about

5. Private Lender • Depository Bank • Mortgage Broker • Mortgage Banker

6. Credit Things to know about

7. WHAT IS A CREDIT SCORE? A computer-generated, 3-digit number intended to predict a person’s likelihood of and willingness to repay a debt. We like to think of it as your Financial GPA!

8. WHY IT’S SO IMPORTANT NOW • Loose Credit: 1998-2007 • The Meltdown: 2007-?? Lenders are looking more closely at borrower credit than ever before.

9. SCORE TALK • Above 740 = Excellent • 720 = Very Good • 680 = Good • 620 = Fair • Below 620 = Poor

10. WHY DO LENDERS WANT HIGH SCORES? It’s All About the Likelihood of Default

11. BAD CREDIT – WHAT’S THE COST? Assuming conventional loan for $360,000, 95% loan-to-value, 30 year fixed rate, SFR, primary residence, monthly borrower-paid MI* Bad credit costs you! * Interest rates, APR, MI rates, and program availability subject to change without notice.. This is not an offer to extend credit under Regulation Z. Additional terms and restrictions apply.

12. LOAN LEVEL PRICE ADJUSTMENTS

13. CREDIT SCORE BREAKDOWN Length of History Payment History Late Pays Collections Charge-Offs Repossessions Foreclosures Tax Liens Bankruptcies Judgments New Credit Soft Inquiries Hard Inquiries Amounts Owed Credit Cards Mortgage Loans Auto Loans HELOCs Installment Loans Balance v. Limit Types of Credit Used Mortgage Loan Auto Loan 2-3 Major Credit Cards Student Loans

14. PAYMENT HISTORY: 35% Common misconceptions: • “ I only paid my credit card bill late a few times.” • “I have a couple of little collection accounts from college – I’m going to go ahead and pay those off.” • “That was from when I was 18, and I paid it off years ago. There’s no way it’s still on my credit report.” • “My ex is supposed to be paying that, so I’m not worried about it.”

15. AMOUNTS OWED: 30% Common misconceptions: • “I don’t need the new fridge right now, but I want to take advantage of the ‘Zero Percent Financing’ special.” • “It has a $2000 limit, and I only have $1500 on the card – it’s not maxed out.” • “I’ve got too many credit cards – I’m going to transfer all the balances to the one with the 2% interest for 6 months promo.” • “I only went over the credit limit once, and it was only by $5. No big deal.” • “I’ll just pay those cards off with my HELOC.” • “I want to pay this debt off, so I’m going to call the bank and close the account so I don’t use the card.”

16. INQUIRIES: 10% Common misconceptions: • “I don’t want you to pull my credit report, Ms. Loan Officer, because it’ll hurt my credit.” • “OK, I’ll apply for the card to get 15% off.” • “It said the credit account was already ‘pre-approved,’ so I just went ahead and activated the card.”

17. LENGTH OF HISTORY: 15% MIX OF CREDIT: 10% Common misconceptions: • “I’ll just close that account – I never use that card anymore, anyway.” • “A friend of mine who bought a house said to have Mom add me as an ‘Authorized User,’ and my score will go up immediately!” • “I only have had one credit card, ever, so I just need to get another credit card to increase my credit score.”

18. Student Loans • Student Loans don’t have a big impact on scores unless you don’t pay them. • Be careful if you decide to defer your loans!

19. YOU NEED TO WORK ON OPTIMIZING YOUR CREDIT TODAY! • Order Credit Reports & Scores • Verify the Data Being Reported • Deal with Inaccurate Information • Your Credit Score is Your Financial GPA!

20. Loan Types Things to know about

21. FIXED RATE OR ARM? FOR HOW LONG? • Fixed rate means principal & interest payment will stay the same • Available in a 5, 10, 15, 20, 25, or 30 year mortgage • Adjustable rate mortgages are fixed for a set number of years and then adjust according to the market • Starting rates on ARMs are lower than fixed

22. CONVENTIONAL • Often backed by Fannie Mae or Freddie Mac • Require good-to-excellent credit • Require as little as 3% down payment • Fixed-rate or ARM available • Maximum loan amount is $417,000

23. FEDERAL HOUSING ADMINISTRATION (FHA) • FHA doesn’t make loans • Can borrow up to 96.5% of the sale price • Seller can pay closing costs for you, up to 6% • Common-sense underwriting standards • FHA requires mortgage insurance • FHA loans are assumable • FHA loans have a “streamline refinance” option

24. Veterans’ Administration Loans (VA) • 100% financing; no mortgage insurance • Waived Funding Fee for disabled vets • Downpayment Assistance acceptable • Flexible underwriting • Seller can pay off buyer debt to qualify • No geographic restrictions

25. Thank You for coming today. • If you have any further questions about credit or lending please feel free to contact me at anytime. • Bob Grone • Midwest Mortgage Capital • bgrone@midwestmortgagecapital.com • Of. 314-744-7804 • Cl. 314-809-1539