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IFA fgh mortgage loans refinance


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									What Every Woman Needs to Know
to Sustain Homeownership Security

           Presented by: Irene Hardisty
   Director of Single Family Housing Programs
             Iowa Finance Authority

Women and Money Conference
                  October 18, 2008
     How secure is your housing?
What is your housing?
If you are renting.
    Is this a good time to buy a home?
    Would home ownership provide more
    financial security?
    How can you improve opportunities
    for financing homeownership?
If you are a homeowner,
    Is your home a sound investment?
    What about the financing on your
    home – what features may jeopardize?
And more.
Renting versus Home Ownership
 Rents may go up    Fixed rate principal & interest
                      payment (P&I) unchanged

 Frequently         Frequently lower than rent
  higher than
  house payment
 No “equity”        Build “net worth”

 No tax             Interest and property taxes
  deduction           are tax deductible
                      Financial Melt-down
Is this a good        Toxic mortgages
time to buy a         Economic losses

home?                 Slow house sales
                      Decline new housing starts
                      Decline in market values
                  Yes, Yes, Yes, Yes
                      lower values = lower sale price
                      Buyer’s market = sellers willing
                       to contribute toward
                      Interest rates are still low
                    - below 1970’s rates
Does home ownership = more financial security?
  If you make your payment will that ensure
   your residence?
      Ownership = yes         Rental = no
  If you have a “safe” mortgage will that lead
   to building your net worth?
      As a “rule of thumb” = yes, yes, yes..
  Are there more potential “hassles”
   with homeownership?
      Yes, maintenance,
      Can’t just walk away…
    How can you improve opportunities
    for financing homeownership?
 Good credit is important but savings helps lower total cost to get
  into a home!!!
 Goal? 3 – 8% of the purchase price:
     $100,000 = $3,000 – 8,000
 Where can I get those funds?
     Tax refund
     Pay myself first
        • $10.00 X 7day = $3640 in one year
        • Take own lunch 3 times/week save $15/week
          and pay yourself
        • Take own drinks rather than machine
     Retirement funds
 Really good tips… take a free home buyer’s class
       www.ihoep.com
   What else can homebuyers do?
 Eliminate unnecessary charge cards
     Only need one major charge card/person:
       • Each debt counts against you – roll all charge cards into
       • Get charge card that provides for “cash” reimbursements
         versus “gift” or gift value purchases
 Do not pay off loans, using all your monthly
  funds appears that you are living to your monthly
  income or beyond your monthly income.
 Buy no major or unneeded items while seeking
         De-bunking Myths..
 Need 2 yrs. full time
 Property must be in
  “prime” condition
 In town property only
 Need 20% down payment
 Short term loans are
  better because interest is
  saved over the life of the
  Mortgage features which is best for “me”?
                         Predictability: 30 years allows
 Fixed rate term:        personal flexibility
  10 yrs to 30 yrs.

 Balloon: 5 - 10 yr. -  Lower rate
  balance due at term  In home for a short time
                         May have pre-payment penalty

                         Lower starting rate, but rates may
 Adjustable rate         not reduce and generally go up.
                         Payment recast at each
                         May have pre-payment penalty
How do I know if my loan costs are unreasonable?
 Loan costs without the lender or secondary market
  fees run about 2%.
 The lender’s fees are the “origination fee” which is
  typically 1% plus any fee that shows on the
  settlement statement as payable to the lender.
 Discount points and secondary market fees should
  result in a lower interest than a mortgage without
  these fees.
 Always get a Good Faith Estimate from another
  lender to compare.
 If in doubt, contact a home buyer educator:
    www.ihoep.com
What to do if the Good Faith
Estimate (at application) and the
settlement statement (at closing)
or the terms of the loan differ?
 Be prepared to “walk away” from the
 Don’t believe anyone who tells you that you
  can refinance “right away” for better terms.
 It is better to close with another lender in 2
  weeks, than it is to be stuck with an “icky”
  loan for years…..
   What mistakes do home owners make to
   keep their home financially secure

 4. Believe rolling
other loans in the             1. Don’t get a second
mortgage loan is               unsolicited mortgage
“good” business”               application opinion.

                                2. Believe the
3. Are not prepared to “walk    mortgage lender or
a way” when the loan terms      Realtor is their
change                          “friend”
What to do if I have an “Icky” Loan?

 Does the loan have a prepayment
  penalty??? Myths –
     Does not apply if I refinance with
      same lender (Yes, it does)
     Does not apply if I sell my home
       • (Yes, it may)
 FHA Secure mortgage refinance
 Get advise before signing any
  documents to refinance.
How Safe is a Reverse Mortgage

Lets Seniors take cash out of home equity
  and not have a monthly payment.
 How safe????
     Depends on the type of Reverse Mortgage
 Reverse Mortgage Counseling
 No pressure
FHA Reverse Mortgage is safe!
Where to go
 Iowa Home Ownership Education Project:
     www.ihoep.com
 Iowa Finance Authority
     www.IowaFinanceAuthority.gov
 Housing and Urban Development
     www.HUD.gov
 Rural Development
     www.USDA.gov

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