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Homeownership 1-2

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					                             LINN-BENTON HOUSING AUTHORITY


                             Volume 1, Issue 2                July 2007




                              Homeownership News

                                          1st Time Homebuyers                  Resources You May Not Be Aware Of
   Inside this issue:
                                       I know when I was                  cific programs that
Resources You May Not Be      1        younger, a long, long, long        they work with.
Aware Of
                                       time ago there really were-        You can also work
Keep an Eye Out for Preda-    1&2      n’t many resources for a           with     “non-profit”
tors                                   young family to buy a              agencies, such as
                                       home, unless you had a             W i l l a m e t t e
Homebuyers Guide - Part 1     2&4
                                       rich uncle who really liked        Neighborhood
                                       you! Ahhh, but in this day         Housing     Services,
10 Biggest Home-Buying        3&4      and age there are pro-             which we highly
Mistakes                               grams for families to buy a        recommend, to find
                                                                                                 Connecting with and building relations with
                                       home. There are down               out about a whole
Wishlist for Our Real Life    3                                                                  those who can provide or lead you to resources
                                       payment programs, match            range of programs for buying a home are essential.
New Home
                                       savings programs and spe-          available     through
                                       cial interest rate programs.       various agencies to help           Time Homebuyer program
                                       Some are limited to the            you buy a home. Just to list       doesn’t mean that you are
         Resources                     funds in a grant, others are       a few of the programs…             buying your 1st home! Usu-
                                       open for an undetermined           HomeStart; Oregon Bank-            ally the eligibility depends
• Willamette Neighborhood              amount of time, so it is im-       ers Association (HPAP);            on a time period, for an ex-
  Housing Services                     portant to connect with and        Family Self Sufficiency            ample: You owned a home 3
  257 SW Madison Ave
                                       build relationships with           (FSS); Individual Develop-         years ago but sold it, you
  Corvallis, OR 97333
  (541) 752-7220                       organizations that can pro-        ment Account (IDA), these          may be eligible for a 1st
  http://w-nhs.org                     vide or lead you to re-            along with a number of             time homeowner program.
                                       sources for buying a home.         other programs are avail-          So check it out and see what
• Oregon Homeownership Part-           Here, in the Heart of the          able to folks who are ready        you can find, I’m betting that
  ners                                 Valley there are several           or nearly ready to buy a           you will be surprised!
  http://www.orhp.org
                                       bankers and credit unions          home.     And on another
• NeighborWorks America                that can help you with spe-        note, in most cases a First
  http://www.nw.org

• Regional Housing Center                Be Aware of Predators, They’re Everywhere!
  for Linn, Benton and Lincoln
  Counties                             Lots of dishonest, aggres-         repairs. Instead of offer-         into taking out loans that
  http://www.csc.gen.or.us/            sive, lenders advertise            ing a fair loan, these lend-       you cannot afford to repay.
  lblrhc.htm                           their loans to homeown-            ers use smooth-talking             Some people even lose
                                       ers in financial need –            salespersons whose loans           their homes to foreclosure.
                                       people who have fallen             carry high interest rates,         That’s a high price to pay
                                       behind on property taxes,          outrageous fees, and un-           for choosing the wrong
                                       need money for medical             affordable repayment               lender. -continued on page 2 -
                                       bills or need costly home          terms. They can trick you
Page 2                                                                                                          Homeownership News




Predators                 continued
Spotting a Dishonest Lender                    just show up on your doorstep.
Be suspicious of anyone who offers
                                               Avoid lenders who call you and
you “bargain loans,” whether they
                                               promise guaranteed, low-interest
mail or email you an offer, call you
                                               loans, who take applications over
on the phone, or come to your
                                               the phone, or who offer next-day
door. Avoid salespeople who
                                               approval if you pay them some
promise “No Credit? No Prob-
                                               money today. Say “No” to lenders
lem.” A bad loan is a costly mis-
                                               who ask for up-front fees “to cover
take. Beware of offers that are only
                                               the first payment and other ex-
“good for a very short time.” Be
                                               penses.” Why?       Because they          If the deal sounds to good to be true, it proba-
suspicious of anyone who contacts
                                               never intend to give you the actual       bly is! Predators like to work on your weak-
you first – most good mortgage
                                               loan – they just take the up-front        nesses, desires and fear!
lenders or credit companies don’t
                                               money and run.
solicit business over the phone or



Homebuyers Guide -               Part 1

Getting Started                                 example only and may vary from
                                                                                                                         etc… to de-
                                                lender to lender and by type of loan.
Lenders can often give you an initial                                                                                    termine your
                                                Contact your lender or real estate
“ballpark” estimate of whether or not                                                                                    debt amount
                                                agent for this figure.
you qualify for the loan you want. They                                                                                  “B”
do this by looking at your income and           How Much Home Can I Afford                                         Now subtract
your outstanding debts.
                                                Mortgage Calculators                                               your     debt
Now you can do the same, using the two                                                          “B” amount from your base “A”
                                                Income Ratio Method (29%)                amount to find out what your Total
methods we provide. The Income Ratio
Method multiplies your total monthly            Gross Monthly Income $ ____________      D e b t R a ti o am ou n t w i l l b e .
income by approximately 29%* to esti-           (self and any co-borrowers)              Example: Using the same figures as
mate the maximum house payment you                                                       we did in the Income Ratio Method, a
can afford.                                     Multiply the Gross Monthly Income by     Gross Monthly Income of $3,000 multi-
                                                the Income Ratio .29 to find out what    plied by .41 to get our Base “A”
The Total Debt Ratio Method takes ap-           your maximum monthly payment             amount equals $1230, then subtract
proximately 41%* of your total monthly          a m o u n t      w o u l d      b e .    our Debt Amount “B” (I used $325 for
income, then subtracts your fixed               Example: If you had a gross monthly      my fixed debt and $175 for credit card
monthly debts to estimate how much              income of $3,000 you would multiply      payments equaling a total of $500)
you have remaining for making your              that amount by .29 and come up with      from the Base “A” amount and came
new house payment. MHC's online                 $870 as your maximum payment             up with $730 for my Total Debt Ratio.
Mortgage Calculator will assist you with        amount
these calculations.                                                                      Special Note: The lender may use the
                                                Total Debt Ratio Method (41%)            lower (amount) of the two methods for
In addition to these ratios, other criteria,                                             safety or use their own calculations or
such as your credit history, total pro-         Multiply your Gross Monthly Income
                                                (self and any co-buyer) by .41 to find   similar calculations with different per-
jected income, and property appraisal,                                                   centages to get their answer on how
etc., will be taken into consideration          out your base amount “A”
                                                                                         much you can afford but using these
before the lender makes a final deci-           Add all of your outgoing monthly pay-    methods will give you a good esti-
sion.                                           ments, fixed monthly, car payments,      mate.
*Formulas and percentages used are for          credit cards, alimony, child support,
                                                                                         - continued on page 4 -
                                                                                                                                              Page 3




Ten Biggest Home-Buying Mistakes
David Weekley, CEO of Houston-                    Trying to make a shrewd invest-                     home.
based David Weekley Homes, is one                 ment. People need to buy based on                   Overlooking how the house will
of the country's largest home builders            what fits their family. Don't try to guess          function for your family. How do you
and also the author of a new book,                what will happen to the market.                     really live? Do you really need a for-
"How to Buy a Home Without Getting                Choosing a poor location. Even                      mal dining room and living room?
Hammered." Based on 30 years of                   within a neighborhood, location mat-                Would you be happier with an eat-in
home-building experience for 40,000               ters. Is it on the busiest street? Is there         kitchen and a great room and a den to
people, Weekley offers these 10 big-              a shopping center out the back win-                 use as a home office? The house only
gest mistakes in home buying:                     dow?                                                needs to fit one family -- yours.
Not doing your homework. Knowl-                   Overlooking an inferior floor plan                  Not having the home properly in-
edge is power. Tremendous informa-                for an attractive exterior. It may have             spected in a resale. This is not the
tion is available on the Internet. There          gorgeous curb appeal, but you don't                 time for surprises. Get an inspection
is no excuse for entering the market              live on the lawn. No matter how attrac-             from a qualified, respected profes-
unprepared.                                       tive the exterior, you need a livable               sional. - continued on page 4 -


A Wish-List for Our Real Life New Home
Well here we are, my wife and I are                     my truck, which doesn’t. The truck is         mind we created a Wish-List of all the
looking to buy a home, and this is the                  brand new and I would hate to get rid         things we needed and wanted in our
biggest expense we’ve ever been                         of it right now, although the way gas         new home. We currently live in Al-
                  challenged     with.                  prices are going? No, we both decide          bany and our kids are 6 and 3 so
                                                                     that we would loose too          changing schools isn’t a big issue for
 Start off with your needs, like where will you need to live,        much selling the truck           the kids, just for mom & dad. So our
                                                                     right now, anyway, what          biggest choice is pretty much made,
 how many bedrooms will you need, how many bathrooms,
                                                                     would we use to haul fire-       we’ll look in Albany for our new
 storage, garage, yard, fenced yard, schools, playgrounds,           wood with? As you al-            home. Below is our Checklist, maybe
 health care. Once you’ve made a list of the needs, then start       ready probably know,             you can use it too… we categorized
                                                                     there are a lot of deci-         our wish list into two columns “Needs”
 a list of wants. A sprinkler system for the yard would make a
                                                                     sions to make when buy-          and “Wants”.
 great want but it probably isn’t something you “need.”              ing home. With that in


                                                                     Needs                                            Wants
Dog-gone-it, I want this to be right!
We both work hard for our wages and              •    Enough square footage for comfortable       •     Carpet in the living room that will match
                                                      living                                            our furniture
we don’t want our money being
                                                 •    Enough bedrooms to accommodate the          •     Wood Floors in all other room, with the
wasted. As my wife and I talk about                   family                                            exception of the bathrooms.
our needs and wants for the new home
                                                 •    2 bathrooms minimum                         •     An office and a family room
we both realize at the same time we
                                                 •    Dining area in the kitchen                  •     A large garage or shop separate from the
had better make a list. Logistics is a
                                                                                                        house
big one for us, I work in Albany and             •    A fenced back yard for the kids

                                                 •                                                •     Sky lights
she works in Corvallis and we have                    Near schools

one car that gets OK gas mileage and
                                                            Home-Buying Mistakes -                                  continued from page 3

   Linn-Benton Housing Authority
                                                            Not checking out the builder's reputation on a new home. Talk to three or four
   1250 Queen Ave SE                                        people who live in the builder's homes and see what they have to say. If one
   Albany, OR 97322
                                                            builder did all the houses in a neighborhood, talk to the residents and get their
   Phone: 541-926-4497
                                                            input. It's also a great way to see what your neighbors would be like.
   Fax: 541-926-3589                                        Not getting what you want because you're impatient. This is a big decision. You
   Email: paul@L-bha.org                                    need time. Impatient decisions can lead to mistakes.
  Improving the quality of life in Linn & Benton Counties   Waiting for a better market and interest rates. Warren Buffett says the rear view
     through affordable housing                             mirror is always clearer than the windshield.
                                                            Not buying at all. If you can afford a home and you don't make that purchase,
                                                            you'll lose the benefit of tax deductions, building home equity and the apprecia-
               We’re on the Web!                            tion in value.
          Visit us at www.L-bha.org
                                                            to offer you a lower interest rate if you   •   Property access information for
                                                            agree to a larger down payment or               appraisers
                                                            higher loan fees. Be sure to ask.
        Improving the quality of life in
                                                            How long should it take before my loan      •   Names and addresses of current,
           Linn & Benton Counties                           is approved? Turnaround time on your            recent employers
         through affordable housing                         loan can be critical - more important       •   Recent pay stubs from each
                                                            than interest rates or fees - if you’ve         employer
                                                            located a "good deal" requiring that you
                                                            move quickly. Time will also be critical,   •   Recent Federal tax returns, in-
                                                            if you’re buying one home and selling           cluding all schedules (up to 3
                                                            another. Your ability to get all informa-       years)

Homebuyers Guide                          - continued -     tion required to the lender in a timely
                                                            manner can impact the length of time it
                                                                                                        •   Names and account numbers for
                                                                                                            financial institutions where you
                                                            takes. A loan on an existing house              have deposits
Choosing A Lender - It pays to com-                         should be processed within 30-60 days.
pare. How should you choose a lender?                       A loan on new construction could take       •   Recent financial statements (if
A good place to start is with your local                    up to 120 days. Processing time can             you are self-employed)
                                                            affect the actual interest rate you end
real estate broker. These professionals
                                                            up paying. Some lenders today won’t
                                                                                                        •   Rental agreements to verify
have a good grasp of the lending pic-                                                                       rental property income
ture in your area. They also maintain                       offer a rate guarantee during the time
valuable contacts with selected lenders.                    your loan is being processed. Or, if they   •   Copies of court decrees stipulat-
In addition, you’ll want to do some                         do, they may only guarantee a rate for a        ing child support, alimony in-
shopping on your own. When you do,                          limited period of time. (Note: Some             come, and property settlement
these are the kinds of questions you                        lenders may be willing to give you a
should ask.                                                 preliminary approval on your loan,
                                                                                                        •   Verification of your own down
                                                                                                            payment source (e.g., gift, sale of
What type of loans are available? Fixed                     pending appraisal.)                             property)
rate or adjustable? 15-year term? 30-                       Is there a loan application fee? Many
                                                            lenders charge a fee to cover the costs
                                                                                                        •   Copy of existing note on a 2nd mortgage
year term? Bi-weekly payments? Mort-                                                                        loan (if applies)
gage Revenue Bond Loan? If you’ve                           of processing your documents. If so, be
decided on a particular type of loan,                       sure to ask whether this fee is refund-     •   Name and address of Homeowner’s As-
your first question should be:                              able if your loan is not approved, or you       sociation (for condominium).
What’s the APR? The annual percent-                         withdraw your application.                  More to Come!
age rate (APR) is a good gauge for                          Speed Up the Approval Process               We will complete the Homebuyers Guide
comparing lenders - better than interest                    If you’re anxious to have your loan ap-     in our next addition of Homeownership
rate alone. This is because federal                         proved - to lock in a rate, take advan-     News.
regulations require that lenders give an                    tage of a special opportunity, or for       We will follow up on these topics:
annual percentage rate for every inter-                     whatever reason - you can help, speed
est rate they advertise, and that the                       the approval process by knowing the         •   What Happens At Closing?
APR reflects additional costs such as                       documents you need, and having them         •   How do I Estimate my Mortgage Loan
points and fees...all of which directly                     ready and neatly organized. Remember            Payment?
affect the total cost of financing to you.                  people process loans, not machines.         •   What Type of Insurance Should I Con-
Are the rates quoted negotiable? Some                                Document Checklist                     sider?
lenders are willing to offer relationship
discounts - reduced fees or points, or a                    •   Exact name(s) in which the title        •   Do I Need An Escrow Account?
slightly lower interest rate - to the cus-                      is to be held                           •   Should I Consider Homebuyer Educa-
tomers. This includes customers who                         •   List of who you owe money to                tion?
are refinancing. Others may be willing                          and the amounts                         •   Terms You’ll Need To Know

				
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