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    Make the leap, it's time to BUY!

 

HOW TO AVOID FINANCIAL SCAMS AND TRAPS

Buying a home can be a scary venture, especially if you’ve never owned a home before. But here’s the thing: It doesn’t have to be scary! Consumers have the upper hand in today’s world, since everything you would ever need to know is at your fingertips and just a click away. Still, we want to help save you some of that additional stress, so we’ve done the research and the hard work for you to give you a comprehensive list of some of the things to watch out for, how to determine if buying is the right option for you and the best ways to prepare for buying your new home.

FreddieMac.com recommends the following to guard yourself against financial traps and scams:

· Say NO to "easy money". Beware if someone claims that your “credit problems won’t affect your interest rate.” If an offer is really appealing, get it in writing and then seek a second opinion.

· Shop around. Always talk to several lenders to find the best mortgage loan you qualify for. A mortgage loan product or lending practice may seem reasonable until compared with a similar mortgage loan product offered by other lenders.

· Find out about prepayment penalties. Know if the mortgage loan offered to you includes a fee if you pay off your loan early. If it is a requirement of the mortgage loan, you should ask about other products that do not contain a penalty for comparison.

· Make sure documents are correct. Beware of anyone offering to falsify your income or other information to qualify you for a mortgage loan. You are certifying under federal law to the accuracy of your application information. Never falsify information or sign documents that you know to be false.

· Make sure documents are complete. Do not sign documents that have incorrect dates or blank fields. Be wary of promises that a professional will “fix it later” or “fill it in later” after you’ve signed.

· Ask about additional fees. Make sure you understand all of the fees that are part of your mortgage process. Question any items you didn’t request or know about prior to the time you are asked to sign the mortgage loan documents.

· Understand the total package. Ask for written estimates that include all the points and fees. Compare the annual percentage rate (APR), which combines the fees charged by the lender with the loan’s interest rate over the life of the loan.

· Work with legitimate, HUD-approved credit counselors. Beware of scam credit counseling and credit consolidation agencies. Get all the facts before deciding to combine credit card or other debts into a mortgage loan.

· If you’re not sure, don’t sign. Get advice first from a reputable consumer credit counseling agency or housing counselor.

 
 
 

HOW MUCH “HOME” CAN YOU AFFORD?

A home is generally one of the biggest purchases a person will ever make, so it’s natural to have some fears. One of the biggest fears that potential home owners face is the ability to afford their mortgage. There are several easy ways to make sure you buy a home that fits your budget comfortably. In addition to the tips below from FreddieMac.com, make sure that you create a budget as a guideline for your current expenses so you can easily see where your money is being invested. Also, you can ask one of our agents about a credit repair specialists who can help you get your credit on track if it needs a boost.

Determining how much “home you can afford” depends on several important factors including:

· Your annual gross income. You can get a very rough estimate of your affordable home price range by multiplying your annual gross income by 2.5. For example, if your annual gross income is $50,000, you may be able to afford a home worth $125,000 (this varies depending on current interest rates, your debt and credit history).

· Your credit history and score. Your credit can affect your ability to qualify for a mortgage and your mortgage rate. Before you shop for a house or a mortgage, find out what your credit score is by visiting www.annualcreditreport.com or calling (877) 322-8228. Be sure to do this only once a year because your score can be negatively affected if pulled too often.

· Current mortgage rates. Mortgage rates change constantly based on the economic factors that affect the demand for mortgages among investors like Freddie Mac. You can track mortgage rate trends by following Freddie Mac's Primary Mortgage Market Survey.

· The amount of your down payment. You will have to make a downpayment of at least 3 percentof the home purchase price to qualify for a mortgage that meets Freddie Mac’s requirements. If you are able to put down 20 percent or more, you can avoid having to pay private mortgage insurance (PMI), reducing your monthly mortgage payment.

· The type of home you are purchasing. If you are looking to buy a condominium, keep in mind that rates are typically higher for these loans and you’ll have to budget for the cost of your monthly condominium fee.

· Your current lifestyle and future plans. You should consider your current living standards, as well as any future major expenses such as a wedding or college tuition. And, remember – buy what you can comfortably afford today, not five years from now.

· Fees and closing costs. Remember to factor in the expenses and fees you will incur for a home appraisal, a home inspection and other professional services required to buy a home.

Use this handy calculator to help you determine how much you can afford: Mortgage Calculator

 
 
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