Have
you been thinking about that dream house, with no idea of how to actually
own it? Perhaps you should go back to school.
That's what 38-year-old Martha
Herrick did - she attended a home-buying class. It started years ago, when
she promised her mother that she would own her own home someday. Then her
husband left her with bad credit and four small children. She spent years
dreaming until a realtor referred her to the Neighborhood Housing Services
Pheonix, a branch of NeighborWorks, a nonprofit organization dedicated to
increasing home ownership.
At NHS Phoenix, she took an
eight-hour course that taught her everything from creating a household
budget to handling the closing process. A credit counselor showed her ways
to clean up her credit report and how to apply for a loan with a
competitive interest rate. Within five months, Herrick had a mortgage and
a three-bedroom home with a large yard for her children to
play.
Most first-time homebuyers find
themselves overwhelmed and intimidated by the process of purchasing a
home. Soaring home prices and mortgage rates have led many buyers to be
confused when, where and what they should purchase. The mortgage interest
adds to the confusion by continuing to offer new types of mortgages to
choose from. The stakes are high - a mortgage is a long term, large debt.
Seeking help from a profession is a good way to weed through all of the
options.
There are many home-counseling
programs geared towards low and moderate income families, even if you
aren't in this income range, you shouldn't dismiss their services. Given
the type of investment involved, almost everyone benefits from home-buying
education.
Studies actually show that consumers
who meet with housing counselors and seek education have higher success
rates as homeowners. One study looked at 40,000 mortgages under Freddie
Mac's Affordable Gold program. Those who received individual counseling
had a 34% lower delinquency rate than those who didn't.
Finding help
Where do you find a good housing counselor or
educational program? You can look
towards nonprofit
organizations, such as NeighborWorks, although many lenders and insurers
offer counseling services. You can go to the HUD Web site to find a list
of local home-buying programs in your area. You can also contact your
state or county housing finance agency. Many church groups, credit unions
and employers provide services with local counselors.
You should be able to find a free or
low cost eight to ten hour class that explains the entire home-buying
process. It will include how you application is viewed to the differences
in different types of loans, such as interest-only and fixed-rate
mortgages.
Don't forget, there is more to
buying a home than just the financing. The classes and counselors will
cover the importance of home inspections and other basic budgeting,
including how much to save for home maintenance.
An added benefit of meeting with a
housing counselor is that he or she can determine if you qualify for any
special down payment assistance programs. While many are limited to those
with low to moderate income, there are exceptions. There are some areas
that are trying to revitalize that might waive income limits entire. If
you don't have time for a full class, it can pay to simply make a phone
call to see what programs are available for
you.
