Tag Archives: mortgage

HOMEteam Success!!!

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Homeownership was a goal for Jackie and Mike Thompson while renting an apartment in Concord.  However, they were not certain about how prepared they were and were still just thinking about the possibility.  In August 2017, they participated in HOMEteam’s Financial Literacy workshop series, followed by an eight-hour First-Time Home Buyer seminar in October the same year. Over the following months, they met one-on-one with Homeownership Counselor, Richard Patterson.  Richard helped them develop a personal action plan, based on their specific needs and financial capacity, to identify and address any concerns and/or obstacles in realizing their goal of homeownership. 

 In May 2018, only seven months after taking HOMEteam’s First-Time Home Buyer seminar, Jackie and Mike purchased their first home in Boscawen.

At a recent event, they provided a great example to the crowd of the importance and value of participating in HOMEteam’s homebuyer educational programs and counseling services.

 As it turns out, we were much more ready to be able to buy a house than we thought we would be, but our lack of knowledge combined with the fear of making a bad decision had been holding us back. When we were finally ready to put all of our preparations and plans into action and look for a house, we both felt confident that we knew what we were doing now, and that the HOMEteam staff would be available to help us if we needed it.

 On May 5th of this year, we closed on our house in Boscawen, NH. Two days later when we showed up to move in, we learned firsthand why your insurance policy starts the moment you buy the house (something we learned about in class!). The night before, the area had some extreme weather and a 70ft pine tree fell overnight, missing our new house by mere feet. Because we felt so prepared to handle the ups and downs (literally) that come with owning a house, this unforeseen event on day 1 didn’t feel like a crisis – just something we had to deal with as part of being homeowners.

 

They recently celebrated their fourth wedding anniversary. Mike is currently a full-time student, studying wildlife and conservation biology while working a part-time job on campus. Jackie works full-time as the Housing Coordinator at a NH college, and plays the piano at her church.

 

 

 

A Four-Point Strategy to Revive Homeownership

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It’s not looking good for homeownership these days. According to the U.S. Census Bureau, 63.7 percent of households owned their homes at the end of 2016, down from a peak of 69.2 percent in 2004. While there have been small increases in recent quarters, the homeownership trend since the financial crisis continues to trend downward. We need to reverse this pattern, and these four strategies will help.

First, we have to demystify the process. More than two-thirds of adults in an Oct. 2016 national household opinion survey from NeighborWorks America described the homebuying process as complicated. Our network’s counselors report that a common refrain from customers they help to achieve homeownership is, “I never thought I could do this.” Because the purchase process is so complex, many potential homeowners don’t even try, essentially self-selecting out of their piece of the “American Dream.”
Increasing the homeownership rate in New Hampshire will energize the local economy and create jobs from construction to retail.

Second, we have to return to rational credit standards. We return to the loose underwriting of the early 2000s. However, right now, credit standards are too tight and thus reduce the prospects for homeownership for many. A recent article by the Urban Institute noted that innovations in credit scoring practices could help up to 3 million first-time homebuyers across the country. Some of them certainly live here in New Hampshire. The lending industry must seriously pursue such modifications.

Third, we need to do a better job in reaching out to low- and moderate-income consumers. These are the first-time buyers of the future and they are unsure about the path to homeownership. Nonprofits housing organizations have had a “field of dreams” mindset: if we’re here, homebuyers will find us. That’s not working. The NeighborWorks survey mentioned above also found that less than 10 percent of consumers think of nonprofit’s like HOMEteam first when considering how to achieve homeownership. Our organization and others working to increase homeownership, especially among first-time buyers, need to behave more like businesses and seek out these types of customers. Word of mouth isn’t enough.

Fourth, we must overcome financial obstacles. Home prices are increasing in nearly all markets. Here in Southern New Hampshire, the median price for a three bedroom home is approximately $235,000.00 and the stereotypical 20 percent down payment is out of reach for most first-time buyers. However, the truth is, consumers don’t need a 20 percent down payment to purchase a home these days. In some cases, just a 3 percent down payment is required. However, not every lender offers flexible mortgages.
By working with HOMEteam and other housing nonprofits, consumers will learn about the programs that offer 3 percent down-payment mortgages. In addition, they also will be made aware of the down-payment assistance funds available in this community and others. The NeighborWorks survey showed that only one-third of consumers are aware of down- payment programs for middle-income buyers.

While there isn’t an unlimited supply of down-payment assistance, if more consumers knew to seek it and sought information from nonprofit organizations, the homeownership rate would increase. That’s good for individuals, families and New Hampshire.

Thinking homeownership is out of reach? Think again.

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Saving for a down payment and escalating home prices are two reasons that make it difficult for low income homebuyers to purchase a home.  Did you know that the USDA 502-Direct loan program solves these issues and more for homebuyers?  Designed for low income families purchasing homes in rural areas, this loan offers a 0% down payment, 33 or 38 year terms, and a possible subsidy reducing the interest.   In addition, USDA 502 Direct does not charge for mortgage insurance further increasing the monthly savings! This allows buyers to borrow considerably more than with other loan programs, so they can purchase a safe and quality home.  These amazing terms result in successful homeownership.

In 2016 NeighborWorks Southern New Hampshire began accepting applications for this loan as a USDA Loan Packager.  Interested buyers are required to complete Home Buyer Education and Counseling through HOMEteam or a comparable entity. If you or someone you know could benefit from this program please contact Debbie Wheeler or Ryan Tufts at NeighborWorks Southern New Hampshire at (603) 626-4663.

Hard work brings New Hampshire family home

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When Jeremy Charron lost his construction job in the wake of the 2008 housing crisis, he and his wife Siobhan had no choice but to file for bankruptcy.  They thought their credit would never recover, even after they got back on their feet, and that their dream of owning a home would remain a fantasy.  With three small daughters and Siobhan’s father and grandmother living with them, renting was not ideal, as it wasn’t always easy to find a house to rent that fit their specific needs.  That all changed when she saw a HOMEteam IDA program brochure.

The young couple met with a HOMEteam housing counselor only one year after their bankruptcy, and they found getting into a home of their own may not be as impossible as they had previously suspected.  Jeremy and Siobhan had to learn to budget strictly, something they had never done before.

“We couldn’t have done it without the help of the [IDA] program and the HOMEteam counselors.” Siobhan said.

The Individual Development Account [IDA] helps families like the Charrons commit to saving for major purchases, such as buying a home, or attaining higher education.  It matches the savings of an individual as they work towards their goal, and fosters good savings habits. In the Charron’s case, they each had an account, and saved enough to put towards their down payment, closing cost and other expenses associated with buying a home.

“Going through the IDA program and then doing the Home Buyer and Financial Capabilities Seminars, it really taught us a lot – how to use your credit, how to make it better, and how to prepare for the future and the unexpected… we really are grateful,” Siobhan said.

The paperwork involved in the application process was substantial; however the Charron family was able to complete what was necessary and not miss a class.  “We maximized the payments [into the IDA accounts], and we struggled. We were tight on things like groceries, but we knew we had to do it to meet our goal” Jeremy commented.

They saved and put money towards their IDA for a year before they started the home buying process, at times saving $200 a month, no small feat with two small girls and parents to feed.  They attended classes with HOMEteam, received counseling, and eventually found a home they were interested in.  It seemed nearly perfect for their situation.  It had enough bedrooms to accommodate their two children and Siobhan’s father and grandmother, and even had two bedrooms and a bath on the first floor, providing accessibility to her aging parents.  It was a little out of their price range, but the seller eventually agreed to meet them at a more affordable price point.

It was at this moment the lender suddenly rescinded their pre-approval, and it nearly cost them a chance at owning a home. “We were devastated,” Siobhan recalls.

Crestfallen and ready to fold, they called Ryan Tufts, their Home Ownership Coach at HOMEteam, for help.  Jeremy’s new employer had referred him to his lender, and without a secondary recommendation they were weary to try just any lender.  Ryan recommended several lenders who often work with HOMEteam’s clients.  Siobhan and Jeremy found a lender who was able to work with them and their unique situation to get the approval they needed to get into their new home.

Now owners living and working in their new home, Siobhan and Jeremy are proud of what they accomplished, “Now we are here, and we feel like we are through the hardest parts. We are truly grateful to be here.  There are always new challenges, but at least we are home.”

How does my credit score affect buying a home?

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Tips to build the score you need for the mortgage you want.

Your credit score is an important factor in buying your new home. It helps determine the type of loan you qualify for, the interest rate you pay, how much you can spend on a home, and in some cases if you can buy a home at all.

What is a credit score?

A credit score summarizes the payment and balance information credit reporting agencies collect and intends to reflect your reliability as a borrower.  Credit scores generally range from 300-850.  35% of your credit score is determined by whether or not you pay your bills on time, and another 30% on how you manage balances on credit cards and other debts.  So, if you have a history of late payments or use more than 25% of your available credit, you may have a lower score.  You may also have a low score if you don’t have a long history of borrowing, or have recently opened many new credit accounts.

What credit score do I need to buy a home?

Many New Hampshire Housing lenders will accept applicants with a credit score of 620 or higher on an FHA loan. If you can increase your credit score to 660 or above your lender will have a wider variety of mortgage types to match you up with. This could result in better interest rates, lower mortgage insurance premiums, and lower monthly payments. Keep in mind that your credit score is only one factor in a loan application and the higher your score, the stronger your application. Aim for a score of 720 or higher to build a strong case for an approval.

How can I improve my credit or keep it high?

The best way is to make sure you are current on all your bills, including past debts, and to continue to pay your bills on time.  One $50 collection could have a dramatic impact on your score, so make sure to pay attention to all your debts, even the small ones.  Make an effort to keep credit card balances low.  A high credit card balance in relation to your limit will have a negative impact on your score even if you make your payments on time.

Before applying for a mortgage, request your credit report from the three credit reporting agencies: Equifax, Experian and TransUnion. You can request free reports from all three agencies at AnnualCreditReport.com, though you will have to pay extra for your scores. Check your reports for inaccuracies and file disputes if necessary.  Also, take advantage of the free credit score estimator and tracker at Credit Karma.  You want to make sure you know what’s on your credit report before visiting a lender to avoid any surprises.

HOMEteam’s Common Cents in Uncommon Times goes even deeper into understanding credit and its impact on obtaining a loan. Sign up for April’s series in Nashua!

Any other ways you keep your credit score up? Leave tips in the comments section below!

What can I be preapproved for vs. what I can afford.

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Everyone answers a simple question at the onset of each Home Buyer Seminar: “How much are you prepared to spend on your monthly mortgage compared to your rent?” The question is simple enough, and answers typically range from $150 less, to about the same, all the way up to whatever it takes. While the whatever it takes responses scare me a bit, most say they are prepared to spend about $200 more on their future mortgage than they are currently paying for rent. $200 seems reasonable enough, right? Let’s take a look.

While ultimately you need a lender’s approval to obtain a mortgage, knowing what you can afford to spend monthly and how that payment fits into your spending plan (or budget) is the best place to start. If you are currently spending $1,000 on rent and you feel you can afford to pay $1,200 on you future mortgage, where is the $200 increase in payment coming from? If you plan on “buckling down” when you move into your new home, why not start now?

Start making those practice payments by saving the difference between your projected mortgage payment and your current rent. If this comes easily, then you know your future payment is truly affordable. If it’s a struggle, consider scaling back your payment limit to something more comfortable. You also have to take into account possible increased utility costs, increased transportation costs if you are increasing your daily commute, and home maintenance and repairs. The last thing you want is to bite off more than you can chew and commit to too large of a monthly payment. The key is to be honest with yourself and the payment you are comfortable with. You don’t want to be “house poor!”

Making practice payments also help you save towards your down payment and closing costs. Not to mention, the habits you’re developing in the meantime will serve you well as a home owner. How are you going to pay for that untimely roof leak? You guessed it, through a rainy day saving account.

Remember to ask the right question, and that you set your own limit. Buying the nicest house on the block has its benefits, but can you truly afford it? Don’t ask your lender “how much will you lend me to buy a home?” First find the answer to “how much can I truly afford?” then go for that preapproval. Having trouble finding where to start? Attend a First Time Home Buyer Seminar, and we will help you get theere!