First-time Homebuyer Pathfinder Penny Bates

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1 Penny Bates First-time homebuyers, and homebuyers in general, sometimes can be confused by the mortgage and home buying process. The recent mortgage crisis underlined the need for additional consumer financial education. Because unscrupulous mortgage lenders and other participants in the real estate market exist, it is important to provide consumers with information from organizations that are authorities on the subject. The Internet can provide information, but the information consumers locate may not be correct or tell the whole story. This pathfinder is intended to provide authoritative and verified sources of information necessary for home buyers to succeed in their efforts to purchase homes, understand mortgages and what it takes to own a home in the long run. It includes resources from nationwide and local Colorado sources and covers all aspects of the process, including assessing readiness, financial counseling, understanding financing and the homebuyer process, inspections and escrow. Links to glossaries and simple calculators allow consumers to better understand the information and to explore their own situations independently. Sources include local, state and federal governments, non-profits and commercial entities. The pathfinder also includes information about the federal government's recently extended first-time homebuyer tax credit and the new tax credit for repeat buyers. First-time Homebuyer Custom Google Search Engine This custom search engine searches only web sites included in this Pathfinder and may help searchers narrow their searches to authoritative sources. Federal Homebuyer Tax Credits Internal Revenue Service This news item on the IRS website provides information about the first-time homebuyer tax credit, including income limits and other requirements, links to the appropriate filing forms and other news updates and helpful questions and scenarios for assessing whether the credit is appropriate in various situations. National Association of Homebuilders The National Association of Homebuilders provides this site, which contains frequently asked questions about both the extended $8,000 first-time homebuyer tax credit and the new repeat buyer $6,500 tax credit. It also provides a brief "Tax Credits at a Glance" document, and links to

2 homebuyer resources provided mostly by federal government agencies. General Information Federal Government or Federal Government Related Sources Fannie Mae Homebuyers Tools Fannie Mae is a government sponsored enterprise charged with making home ownership more affordable. It is required to provide resources for consumer homebuyer education, specifically information about buying a home and understanding the mortgage and escrow processes. This website offers information about the home buying process, counseling, glossaries of real estate and mortgage terms and links to other relevant web sites. HomePath.com Homepath.com is Fannie Mae s searchable database of bank real estate owned properties. It allows searching by location, price, REO or multiple listing identification number and available financing. Consumers can also search by state for HomePath Mortgage Lenders and review updated special homebuying offers and programs. Freddie Mac's Online Guide to the Homebuying Process Freddie Mac is a government sponsored enterprise tasked with making home ownership more affordable. The About Homeownership page provides information on the homebuyer and mortgage lending processes, a homeownership readiness quiz, and resources designed to help consumers better understand and choose mortgage products. There is an extensive selection of tools and calculators. Materials also are available in Spanish. Ginnie Mae Your Path to Homeownership Ginnie Mae is government sponsored enterprise charged with connecting world-wide capital markets to the U.S. Housing market. Its website provides several on-line calculators, including Buy vs. Rent, Affordability and Loan Estimator Calculators. The Homeownership Information Center link provides information on Homeownership 101, Credit Counseling, Finding a Home, Applying for a Loan and Making the Purchase. It also provides a key word searching function to search for Ginnie Mae Homeownership resources. A site map is helpful in locating specific information. Department of Housing and Urban Development HUD is an executive branch government agency with a mission to increase homeownership and increase access to affordable housing. The I Want to Buy a Home page provides a detailed nine-step home buying process that includes determining a price range, understanding rights, mortgage information, homebuyer education and information on the buying, inspection and Page 2

3 escrow processes. Information on special homebuyer programs also is offered. 100 Questions & Answers About Buying A New Home This HUD publication provides concise answers to 100 common questions about the home buying process. It is organized into ten sections: Getting Started, Finding Your Home, You've Found It, General Financing, First Steps, Finding The Right Loan For You, Closing, How Can HUD And The FHA Help Me Become a Homeowner, Mortgage Insurance and FHA Products; and resources are available in English and Spanish. HUD Guide to Homebuyer Assistance: Colorado This web page provides links to contact information and web sites for homebuyer assistance programs in Colorado, sorted by local, county and statewide sponsors. It also provides links to mortgage information, to Freddie Mac and Ginnie Mae s pages and to other HUD programs such at the Good Neighbor Next Door Program for teachers, police officers, firemen and emergency medical technicians. A searchable database of FHA lenders is available. General Information Non-profit Sources Neighborworks America My Home My Community Neighborworks is a network of affordable housing and community development organizations. Its consumer pages offer information about managing money, using credit wisely, predatory lending, home maintenance and buying a first home. This page provides information and outside links specifically for first-time homebuyers, including videos about when to buy and homeownership education, tax credit information, a directory of homeownership education providers in every state, and links to federal government and other homebuyer resources. Keys to My Home This site, sponsored by Neighborworks and E-Trade Financial, provides tools and information to assess home buying readiness. It walks potential homebuyers through five steps, including determining readiness, understanding credit, mortgage finance, finding a home and maintaining the home after purchase. The site offers several calculators to determine affordability, tax savings and to compare loan products. General Information Special Interest Sources National Association of Realtors Preparing for Homeownership Page 3

4 NAR is the trade association for real estate agents. Its homeownership page offers links to other resources, including several guides developed by Neighborworks and the Fannie Mae Foundation. It provides its own ten-step home buying process, links to calculators, information on tax benefits, mortgages, credit, the home buyer process, working with a real estate agent and negotiating. Other features include an index of its Best and Worst article series and an index of recent news articles sorted by topic. Mortgage Information Federal Government Sources Federal Deposit Insurance Corporation Looking for the Best Mortgage The FDIC provides insurance on bank deposits and also analyzes and addresses risks in the U.S. Banking system. Its web site provides a variety of consumer information, including information about mortgages and how to choose the best one, credit reports, financial literacy and education and links to special loan programs. The Looking for the Best Mortgage page provides a description of how to compare mortgages from several providers. Federal Reserve Board Understanding the Mortgage Process The FRB is the U.S. Central bank. As its role in the United States banking system has expanded, it has focused more attention on consumers. This web site explains to consumers how the mortgage system operates and how to work with a mortgage lender. It reviews how to look for a lender and what to expect during the application and underwriting process. It explains fair lending laws and provides links to government fair lending enforcement agencies. Links to online brochures on many lending topics are available in both English and Spanish. Mortgage Information Special Interest Sources Mortgage Bankers Association Home Loan Learning Center MBA is the trade association for mortgage bankers in the United States. Its mission is to create an environment that allows its members to make loans in their communities. The Home Loan Learning Center is designed to help consumers increase their financial literacy and prepare to buy their first homes. It includes a searchable mortgage term lookup database and several calculators that help consumers determine how much they can afford and compare loan products Understanding Inspections Federal Government Sources HUD Ten Questions to Ask Your Home Inspector As part of its Home Loan Learning Center, HUD provides a page for both consumers and Page 4

5 inspectors. One of the primary resources is Ten Questions to Ask a Home Inspector. It provides a database of FHA inspectors that can be searched by location, ID number or name. Links to HUD policies and forms and the FHA resource center are provided. Understanding Inspections Special Interest Sources American Society of Home Inspectors ASHI is the association for home inspectors. Its consumer page provides ASHI s customer bill of rights, Inspection FAQs, a virtual home inspection tour and standards of practice. Materials also are available in Spanish. A database of member inspectors can be searched by zip code or metro area. Links to state regulations and news alerts are available. Working with a Real Estate Agent Government Source Colorado Division of Real Estate Consumer Corner The Division of Real Estate regulates real estate brokers, appraisers and mortgage loan originators in the State of Colorado, and its mission is to inform consumers and protect their rights. This website s Consumer Corner explains brokerage relationships, including buyers agents, the buying and selling process, and how to choose a broker. It offers interactive online training, The Puzzle of Homeownership, for potential homebuyers in both English and Spanish. A searchable database contains information on licensed Colorado brokers, including disciplinary actions. It also provides information on the rights of Colorado real estate consumers and links to industry news. Explanations of real estate contracts in Colorado as well as standard approved real estate contract forms are provided. Working with a Real Estate Agent Special Interest Sources National Buyer s Agent Association NBAA is a group of real estate agents who work exclusively with home buyers. They do not list houses for sale. The site provides advice on selecting a real estate agent and reasons why working with an exclusive buyer agent may be beneficial. It also offers several NBAA-produced reports, publications and calculators relating to home buying, a special first time buyers page and information on insurance, inspections and mortgages. Colorado Exclusive Buyers Agents Association CEBAA is Colorado s association of buyer agents. Its web site provides free access to the local multiple listing services along with tips for using them. Access to its buyer services requires completing an on-line form with information on the potential buyer s situation. Page 5

6 Non-profit Homebuyer Programs Habitat for Humanity Habitat for Humanity is a non-profit organization that uses volunteer labor and homeowner sweat equity to construct quality affordable homes around the world. Low-income homeowners receive below market interest rates on their mortgages. Potential homeowners can use the online search tool to locate a nearby affiliate. Homeowner and volunteer stories are told on the web site in words, pictures and videos. Local, State and Regional Programs Government Sponsored Colorado Housing Counseling Coalition A list of local government first-time homebuyer programs is available on this website. More information on some of those web sites is described below. Potential homebuyers should consult the CHCC web site for information about other programs. City of Aurora Aurora s Home Ownership Assistance Program provides first-time homebuyer education, counseling, financial assistance and foreclosure prevention services. The website provides summaries of several loan programs and a schedule of training sessions conducted by the city. Boulder County Department of Health and Human Services Boulder HHS provides individual and group housing education in Boulder and Broomfield Counties. The web site also provides information on local affordable housing developments. City of Boulder, Division of Housing The City of Boulder lists affordably priced homes for sale and provides down payment grants and special loan programs and homebuyer training. The website provides a schedule of general orientation sessions and a database of recently listed qualifying homes. Noteworthy information is summarized in a Frequently Asked Questions section. Links to forms required to participate in the program are available on-line. Colorado Housing and Finance Agency CHFA offers down payment and closing cost assistance to first time home buyers. Its website offers information on its special programs, including income and purchase price limitations, Page 6

7 affordability and mortgage calculators, links to online and in person homebuyer education classes, links to participating CHFA lenders sorted by geographical area, and a list of Frequently Asked Questions and useful links. It also offers the Colorado Housing Search, a database listing affordable homes throughout the state that can be searched by location. Most materials are available in Spanish and English. Colorado Rural Housing Development Corporation CRHDC helps potential first time homebuyers meet their goals, and its mortgage affiliate provides special loan products, including down payment assistance and flexible terms to those buyers. Information is available for its Self Help Housing, Lease to Own Housing and Contractor Built Housing programs. The Homeownership Center links to NeighborWorks consumer links. CRHDC also offers homebuyer, mortgage and credit education and counseling. Training schedules are available on the web site. Douglas County Housing Partners Douglas County offers homebuyer education and down payment assistance and shared equity programs for residents of Lone Tree, Castle Rock, Parker and Douglas County. Income limitations apply and are published online. An online chart compares the benefits of each program. The website describes topics covered during free homebuyer education classes and provides an updated training schedule. Federal Home Loan Bank of Topeka The FHLBank of Topeka is part of the Federal Home Loan Bank system and serves Colorado and several other Midwestern states. Clicking on the Community Programs link accesses a list of FHLBank affordable housing resources, including information on the Affordable Housing Program. This program was mandated by Congress in 1989 and provides housing grants and subsidies to develop affordable housing units. Browsing the list of AHP Projects and Profiles can help consumers locate AHP sponsors in their area. A list of non-profit housing organizations in Colorado also is available. City of Longmont Affordable Housing The City of Longmont requires housing developers to dedicate at least ten percent of the units each new development to affordable housing. These homes must be maintained as affordable for at least ten years. The website maintains an inventory of current homes for sale, an application packet, Frequently Asked Questions and program guidelines and requirements. The city also offers a down payment assistance program, and guidelines and requirements for this program are available on-line. Page 7

8 Local and State Programs Non-profit The Hero Alliance This organization provides education and resources for future Colorado homeowners with disabilities. It provides scheduled homeownership training, links to special loan programs, general homebuyer resources and a Frequently Asked Questions section that answers questions specific to people who may be receiving government assistance. Neighbor to Neighbor Neighbor to Neighbor is a non-profit organization that aims to assist people in maintaining stable homes, including assisting households in moving toward homeownership. The web site contains written and video success stories. Its homeownership program includes education, pre-purchase counseling and foreclosure prevention and the web site provides information on each facet of the program. A link promotes its upcoming homeownership fair in Larimer County and its regularly scheduled orientation sessions. Resources are available in Spanish and English. Northeast Denver Housing Center NDHC s mission is to help provide safe and decent housing to those who need it. It provides housing first time homebuyer and pre-purchase counseling sessions and has completed several small scale affordable housing condominiums and townhouses. Program descriptions, current projects and lists of scheduled workshops are available online. Colorado Community Land Trust CCLT is a nonprofit that helps provide homeownership opportunities for moderate income households. Affordable homes are created by CCLT retaining land ownership while home owners own their homes. Resale prices are capped. CCLT works with local developers to create affordable homes and recent projects and lists of resale homes are displayed on the web site. CCLT offers homebuyer education and orientation sessions which are listed on the web site. Potential buyers can use the web site to assess whether or not they qualify for the program. Education and Counseling Programs Partners in Housing -- Colorado Springs Partners in Housing offers free monthly Homebuyer's Workshops developed in conjunction with the Colorado Housing Finance Agency and the U.S. Department of Housing and Urban Development. Workshop schedules are available on-line. The organization also offers individualized pre-purchase home buyer counseling. Potential participates can assess their eligibility and apply on-line. Page 8

9 Colorado Housing Coalition CHCC is a non-profit organization that provides financial counseling services to first time homebuyers so they are better prepared to understand home financing, buy their first homes and avoid predatory lenders. The website provides information on the organization s Homebuyer Preparation, Homebuyer Workshops, Mortgage Default Counseling and Debt Management programs. Consumers may search for assistance on a variety of topics, including Pre-Purchase Counseling, Foreclosure Prevention Counseling, Housing Consumer Education, Debt Management and CHCC members, review information and contact providers in their geographic areas. Lists of providers for each topic are available. National Foundation for Credit Counseling This non-profit organization helps consumers develop good financial habits. It administers a nationwide network of certified counselors and offers credit, housing and bankruptcy counseling and financial education. Consumers can locate counselors through a searchable database or by telephone. Publications are available for purchase. The housing counseling page provides information on the advantages and challenges of homeownership. The consumer tools page offers budget worksheets, affordability and pay-off calculators, lengthy list of consumer tips and a video with financial facts. Glossaries Real Estate ABC Glossary of Terms This website provides a lengthy list of definitions of terms that apply to the home buying process. HUD Glossary HUD provides an extensive list of terms and acronyms that apply to the home buying process. Calculators MortgageCalculator.org This simple calculator provides monthly mortgage payments, including estimated property tax payments and accompanying charts and graphs. It compares monthly versus bi-weekly payments schedules and totals payments with breakdowns by principle and interest. Mortgage-net Calculators This site provides calculators that compare several loan offers, generate monthly payments, Page 9

10 calculate total payments over the term of the loan, display necessary income to qualify, compare APRs, compare rent vs. buy scenarios, and other financial information. FRB Mortgage Comparison Calculator This calculator, provided by the Federal Reserve Board, compares different mortgage options such as fixed vs. adjustable rates, different terms, and hybrid mortgage options, to help consumers determine which option is best for them. Page 10