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Mortgage Calculator

This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.

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Guides

Home Buying

Know what to expect when you buy a house. Our Home Buying guide explains each step, to help you make informed decisions.

Decide To Buy

Are you ready to buy a home? Ask yourself these questions:

What are your personal reasons?

Do you need more room for a growing family, or want to move closer to work or schools? Make a list and think it through; it's a good way to balance out the financial factors in your decision.

How long do you plan to own this home?

You may be better off renting if you expect to move or get transferred within two years. Calculate if you should rent or buy?

Do you have enough cash for a down payment, closing and moving costs?

For a $100,000 home with a 20 percent down payment, you may need less than $25,000. Calculate how much you can afford.

Can you afford to carry a monthly mortgage and still pay your bills?

A mortgage should take no more than one third of your net income. Budget to buy and determine how much your payments will be. If you're carrying extra debt, take steps to reduce it.

Do you need the tax break?

Many homeowners rely on tax deductions as a budget necessity--and one way to accumulate savings.

Get Organized

It pays to get organized. Put your finances in order, get pre-approved for a loan, and you'll know what you can afford to buy. Start a file for papers, sales brochures and other information you'll accumulate, including:

Credit data

Check your credit and correct any credit problems you may have before the lender gets your credit report.

Loan documents

Gather financial information the lender will request.

Area maps

Urban Living offers printable map reports of your listings.

Insurance information

Choose insurance wisely and cut your insurance costs.

Shop For A Home

Start by using www.urbanliving.com

You've already made the first step in shopping for a home by using Urban Living. With this website you can search our listings or the entire MLS database. We are your one-solution environment.

Take a checklist of Questions to Ask When You See the House

Get all the information you need to compare and contrast later. A beautiful Victorian may be a favorite until you revisit your notes and discover it needs new plumbing and wiring.

When you find a home that interests you, research the neighborhood

Go on your own at different times of the day, and talk to neighbors and local businesses to get a feel for what it's like to live there. If everything checks out, you're ready to prepare your offer.

Make An Offer

Always make an offer within your ability to pay. To strengthen your offer, include a letter of pre-approval from a lender. Attach standard contingencies, or conditions, to your offer.

You usually have to include a deposit with your offer, to be applied to the down payment if the deal goes through.

The seller may accept, reject or counter within hours or days, depending on the quality of your offer and the seller's desire to sell. You can then accept the counteroffer or "counter the counter." Once the seller accepts, a third party (a lawyer or an escrow or title company) completes the transaction with your lender. Also find out:

  • Current market conditions
  • Prices of comparable homes sold in the area recently
  • Current value of the home.
  • The seller's motivation

Get A Loan

The first step in the loan process is to get pre-approved. You can get preapproved here at Urban Living within around 24 hours.

Submit your records

The lender will ask for your financial records. You may also have to answer tough questions about your financial history. Be prepared: gather your financial documents ahead of time.

Check interest rates

Interest rates tend to fluctuate. If interest rates are low, you may ask your lender to lock-in, or commit to that rate, that day. Just make sure the lock-in period includes the day you close on the house and doesn't incur extra charges.

Choose a loan

You may think you want a 30-year, fixed-rate mortgage, but an adjustable-rate mortgage may be more appropriate for your circumstances. Some special loan programs are geared to first-time buyers or veterans.

Close The Deal

On closing day, the seller officially signs the house over to you. To avoid last-minute surprises:

Set a closing date that works for you

If you're renting, set a closing date near the end of your lease to avoid paying unnecessary rent. The date of closing can also affect your closing costs.

Estimate your closing costs

Lenders are required to give good-faith estimates of closing costs within three days of a loan application. They can also give you an itemized list of closing costs, so be sure to ask for one.

Schedule a final walk-through

Make certain the seller has completed any repairs specified in the purchase contract and has satisfied any other contingencies involving the home's condition.

House Hunting

Know the market, know what you want and know what to look for. Our House Hunting guide prepares you for each step and helps you carry out a successful search.

If you understand current market conditions, you'll position yourself better as a buyer. It helps to know if you're in a seller's market or a buyer's market. In a seller's market, you may have to make a full-price offer or higher just to beat the competition. In a buyer's market, you have more room to negotiate. You can get a sense of the market from certain indicators such as:

Median home price

The median home price gives you the midpoint in the range of sales prices for a specific period. Compare over the past several years to see whether prices are rising or falling in the overall market and specific areas.

Number of home sales

The number of home sales indicates the number of homes sold in a specific period. Compare over the past several years to see whether this number is rising or falling. Generally, the more active the market, the higher the number of homes sold.

Compare and Contrast

Market conditions

Which homes on your list are in buyer's markets, seller's markets or stable markets? Home prices always reflect market dynamics; for example, a high-demand seller's market usually commands higher prices.

Comparable properties

How do the homes that interest you stack up against other homes in the area?

Priorities

Which homes best match the qualities you want? Rank your priorities in order of importance so you can weigh the tradeoffs when you make your decision.

Listing notes

Reread the notes you took while visiting each home and look for qualities that match your priorities. Think hard about inconsistencies that matter. Some tradeoffs will be unavoidable.

Make a Choice

No matter what your situation, take the time to really think about which home is best for you. Use the information you've collected to compare your first choice with other close candidates.

Weigh the trade-offs

House No. 1 may have all the features you want but the price is high and the seller is unmotivated. House No. 2 may need significant cosmetic work, but has all the other features you want, including the right price. Expect to go back and forth while you're debating your choice.

Resale, resale, resale

There's an old real estate adage: "Buy to live and to sell." You may think you're going to be in your new home for the duration of the mortgage, but chances are you're not. Give sufficient weight to the home's potential resale value, and make sure you have all the facts.

Selling

The more you understand the selling process, the more potential buyers you will attract—which can boost your selling price and facilitate a quick sale.

Decide to Sell

Timing

Consider the timing of your sale relative to the market and to your home equity. A slow market may negatively affect your sale. And if your equity is low, you could end up bringing cash to the closing to pay off your lender. The more equity you have in your home, the better equipped you are to cover your sales costs.

Tax consequences

Though capital gains tax laws have relaxed to the point where most Americans don't have to pay tax on real estate profits, you will likely have to pay if you've lived in your home only a short time. Make sure you know where you stand.

Financial impact

It can costs thousands of dollars to sell a property. The less equity you have in the house, the greater the financial hit. It pays to run the numbers before you sell.

Prepare to Sell

Deal with disclosures.

Most states now require sellers and their agents to disclose any issues that may affect a buyer's decision to purchase your home. Make sure you understand what you need to disclose and decide whether to make any repairs or adjust your asking price.

Make appropriate repairs.

This is not the time to undertake major improvements. It is generally wiser to make only necessary repairs (such as replacing cracked windows or rickety front steps) and cosmetic improvements (such as painting the exterior and planting flower beds) that will enhance your home's salability.

Neutralize your decor.

Eccentricities that you find charming may not charm a buyer. Consider replacing out-of-date carpeting, painting odd-colored rooms, and otherwise polishing your home's appearance. Pare down visible personal possessions. You may also want hire extra cleaning help while your house is on the market.

Set a Price

Your home's value is ultimately what a buyer is willing to pay at any given time. Your final list price may depend on many factors: If you want to sell quickly or you are in a buyer's market, you may decide to set your price lower than market value. On the other hand, if you're in a seller's market where multiple offers are common, you may want to set your price higher than market value.

Know how to read a comparative market analysis

A comparative market analysis should take into account repairs, improvements, and annual costs (such as property taxes) of your home, in addition to its size, features, and amenities. Expect to get an analysis of recently sold, comparable homes in the neighborhood, and a list of comparable homes currently for sale.

Get an appraisal

If you want confirmation of the list price you have in mind, get a pre-sale appraisal. Appraisers use comparable sales in addition to other information to make their determinations.

Accept an Offer

You may not have to wait long for your first offer. If the market is active, you may get one the day you list. In most cases, however, you will wait a few weeks for an offer. This can be an emotional process, especially if offers come in far below your list price. Remember:

Don't rush negotiations

Take the time to receive offers in person, not over the phone. Consider all offers carefully, and make sure that the terms are as favorable to you as they are to the buyer.

Don't get personal

You want to know as much as possible about the buyer's motivation—and the buyer wants to know about yours, as well. If possible, avoid discussing your situation in terms of any need to sell. Don't overreact if you are presented with an offer you find insulting.

Don't hesitate to counter

Even in a buyer's market where numerous listings make selling difficult, it never hurts to counter an offer (particularly a low offer).

Close the Sale

At this point, the buyer is busy with financing; until the sale closes, you are responsible for keeping your property in the same condition it was when the buyer saw it last. The closing date should be clearly specified in your sales contract, which should include deadlines for the buyer to sign off on contingencies. Make sure the buyer meets any deadlines you've set. Be ready to deal with any issues that may crop up such as:

Unsatisfactory home inspection
  • Low appraisal
  • Cloud on the title
  • Buyer's remorse

If you know of issues that could arise ahead of time, and how to deal with them, selling your home will go smoothly.

Lending

Understand the paperwork, improve your eligibility, and choose a loan. The Lending guide tells you what you need to accomplish each step and walks you through important decisions.

Organize Your Files

  • Order a copy of your credit report.
  • Order and analyze a copy of your credit report. Your lender will also order a copy, but you should see it first. That way, you can clear up any credit problems before you submit your loan application.
  • Organize your recent tax returns and financial documents.
  • The lender will need your financial information to determine how much you can borrow. If you don't have all the paperwork, you can get copies by contacting your tax-preparer and other people who deal with your personal finances.
  • Get contact information from your human resources department.
  • Find out who is authorized to release information about your employment status. Provide the correct contact name and telephone number to the lender to avoid lengthy loan-processing delays.

Get Pre-Approved

  • Get pre-approved for a loan before you start shopping for a home. The process only takes around 24 hours, and you'll get a head start on finding a loan. If you take the time to get pre-approved:
  • You know how much you can borrow, so you don't waste time looking at properties you can't afford.
  • You have an edge when you make an offer, because the seller knows you're likely to get a loan and close the deal.
  • You save time on closing your loan, because you've already assembled your paperwork.

Shop for a Loan

  • Don't focus solely on the interest rate
  • Getting a low rate is important, but you may not benefit from it if you have to pay too many up-front points and other fees. With our 50+ lenders, we help you find the best rate.
  • Understand the relationship between points and rates
  • A point is prepaid interest, and each point you pay equals one percent of your loan amount. If you get a $100,000 loan and pay two points, that's $2,000 in points. The more points you pay, the lower the rate you'll get.
  • Think about how long you'll keep the loan
  • If you're going to move in a few years, consider an adjustable-rate mortgage since you may be able to sell the house before the rate gets too high. If you plan to stay longer, a fixed-rate mortgage may be an attractive option because your rate stays fixed for the term of the loan.

Apply for a Loan

To improve your chances of loan approval:

  • Fill out the loan application completely
  • The lender needs all this information to determine your creditworthiness. Make sure you have the documents you need ahead of time.
  • Don't go on a spending spree
  • Before the sale is scheduled to close, the lender may check your credit report for high credit card balances and your bank accounts to make sure you haven't drained them.
  • Make sure the appraisal is done properly
  • For a home purchase loan, the lender will order an appraisal to ensure that you don't pay too much for the home you want to buy. If the appraisal is too low, you can fight the report to prevent the transaction from falling through.

Close the Loan

  • When closing the loan, be prepared to:
  • Bring a certified check or money order for your down payment and closing costs
  • The seller won't exchange the house keys for a personal check. The escrow officer or closing attorney will have a check from the lender for the amount you have agreed to borrow.
  • Sign the note and trust deed
  • After reviewing and signing the final documents, you'll endorse the bank's check and give it to the seller in exchange for the deed or mortgage to the property.
  • Celebrate!
  • Enjoy the feeling of owning your own home, and try to remember that sensation each time you write your monthly mortgage check.

Offer to Closing

Negotiate price and terms, spot potential problems and complete your purchase. The Offer to Closing guide explains key points and pitfalls of each step, so you can be your own best advocate.

Make an Offer

When you make an offer, you commit to one home. You sign a contract to purchase, which is legally binding if the seller accepts. You also write out your first big check for a good-faith deposit, which you can apply to the down payment at closing. The more carefully you research the market, the neighborhood, comparable homes, and current property values, the more quickly and confidently you can decide what price to offer.

Focus on the facts:

  • Are you making an offer that you can afford?
  • Have there been, or are there, any other offers?
  • What is the apparent condition of the property?
  • What contingencies, or conditions, do you need?
  • If seller comes back with a counteroffer, what's negotiable?

Negotiate the Terms

It's important to keep your perspective during negotiations. Negotiations should be friendly and progressive. Other basics to keep in mind:

  • Start with your best offer
  • That means a realistic price based on market conditions and comparable listings. The closer you are to reality, the closer you'll get to closing.
  • Save room to maneuver
  • Don't put everything on the table right away. For example, you may be willing to pay a higher price to close sooner, but that's a negotiating point to save for the counteroffer.
  • Avoid obsessing about a small price difference
  • It may seem like a lot to you now, but over the life of your mortgage, that extra $1,000 is negligible for a house you really want.

Inspect the Home

Include an inspection contingency in your purchase contract. Many lenders now require at least a termite inspection as a condition for making a loan. You may also want to have the house inspected for property defects, lead, radon or other environmental hazards. Think of these evaluations as quality control. A trained professional may take several hours and charge several hundred dollars to do a detailed home inspection, but it will save you grief and money down the road. Some sellers have their homes inspected before putting them on the market, and make the report available to you.

Close the Deal

Once your offer is accepted, it can take days to finalize your purchase, or close on the property. During that time:

  • A third party takes over the paperwork.
  • Your lender approves your loan.
  • You and the seller satisfy contingencies in the contract, such as inspections and clear title.
  • You arrange for title and homeowners' insurance (a condition of the mortgage).
  • You decide how to hold the title (as a sole owner, as a joint tenant or as a partner).
  • You review closing costs with lender.
  • You and the seller schedule closing day.
  • You hire an attorney if you need or want one to represent you on closing day.
  • You arrange for final walk-through inspection.
  • You organize and schedule your move.

Turn the Key

Now the real work and the real joy of home ownership begins. If you organized your move to coincide with closing day, be sure you allow enough time (several hours) between the closing and the movers' arrival. If you have several days between closing and moving in, this is the time to paint, re-carpet, and make any minor repairs not covered in your transaction. Then start getting settling in your new home and planning for the future. The most important thing you can do is to start rebuilding your finances:

  • Try not to accumulate new credit debt.
  • You've just taken on a mortgage. If you need to refinance, the lender will scrutinize your credit record again.
  • Enjoy building equity and tax savings.
  • These are not the only reasons you bought a house, but they're darn good ones.

100 Q & A

How do I know if I'm ready to buy a home?

You can find out by asking yourself some questions:

  • Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
  • Do I have a good record of paying my bills?
  • Do I have few outstanding long-term debts, like car payments?
  • Do I have money saved for a down payment?
  • Do I have the ability to pay a mortgage every month, plus additional costs?
  • If you can answer "yes" to these questions, you are probably ready to buy your own home.

How do I begin the process of buying a home?

Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment (see Question 4 for help)? How much space do you need? What areas of town do you like? After you answer these questions, make a "To Do" list and start doing casual research. Talk to friends and family, drive through neighborhoods, and look in the "Homes" section of the newspaper.

How does purchasing a home compare with renting?

The two don't really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.

Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that's an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.

How does the lender decide the maximum loan amount that can afford?

The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. According to the FHA,monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, 4 should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.

How do I select the right real estate agent?

Start by asking family and friends if they can recommend an agent. Compile a list of several agents and talk to each before choosing one. Look for an agent who listens well and understands your needs, and whose judgment you trust. The ideal agent knows the local area well and has resources and contacts to help you in your search. Overall, you want to choose an agent that makes you feel comfortable and can provide all the knowledge and services you need.

How can I determine my housing before I begin the search?

Your home should fit way you live, with spaces and features that appeal to the whole family. Before you begin looking at homes, make a list of your priorities - things like location and size. Should the house be close to certain schools? your job? to public transportation? How large should the house be? What type of lot do you prefer? What kinds of amenities are you looking for? Establish a set of minimum requirements and a 'wish list." Minimum requirements are things that a house must have for you to consider it, while a "wish list" covers things that you'd like to have but aren't essential.

What should I look for when deciding on a community?

Select a community that will allow you to best live your daily life. Many people choose communities based on schools. Do you want access to shopping and public transportation? Is access to local facilities like libraries and museums important to you? Or do you prefer the peace and quiet of a rural community? When you find places that you like, talk to people that live there. They know the most about the area and will be your future neighbors. More than anything, you want a neighborhood where you feel comfortable in.

What should I do if I'm feeling excluded from certain neighborhoods?

Immediately contact the U.S. Department of Housing and Urban Development (HUD) if you ever feel excluded from a neighborhood or particular house. Also, contact HUD if you believe you are being discriminated against on the basis of race, color, religion, sex, nationality, familial status, or disability. HUD's Office of Fair Housing has a hotline for reporting incidents of discrimination: 1-800-669-9777 (and 1-800-927-9275 for the hearing impaired).

How can I find out about local schools?

You can get information about school systems by contacting the city or county school board or the local schools. Your real estate agent may also be knowledgeable about schools in the area.

How can I find out about community resources?

Contact the local chamber of commerce for promotional literature or talk to your real estate agent about welcome kits, maps, and other information. You may also want to visit the local library. it can be an excellent source for information on local events and resources, and the librarians will probably be able to answer many of the questions you have.

How can I find out how much homes are selling for in certain communities and neighborhoods?

Your real estate agent can give you a ballpark figure by showing you comparable listings. If you are working with a REALTOR, they may have access to comparable sales maintained on a database.

How can I find information on the property tax liability?

The total amount of the previous year's property taxes is usually included in the listing information. If it's not, ask the seller for a tax receipt or contact the local assessor's off ice. Tax rates can change from year to year, so these figures may-be approximate.

What other tax issues should I take into consideration?

Keep in mind that your mortgage interest and real estate taxes will be deductible. A qualified real estate professional can give you more details on other tax benefits and liabilities.

Is an older home a better value than a new one?

There isn't a definitive answer to this question. You should look at each home for its individual characteristics. Generally, older homes may be in more established neighborhoods, offer more ambiance, and have lower property tax rates. People who buy older homes, however, shouldn't mind maintaining their home and making some repairs. Newer homes tend to use more modern architecture and systems, are usually easier to maintain, and may be more energy-efficient. People who buy new homes often don't want to worry initially about upkeep and repairs.

What should I look for when walking through a home?

In addition to comparing the home to your minimum requirement and wish lists, use the HUD Home Scorecard and consider the following:

  • Is there enough room for both the present and the future?
  • Are there enough bedrooms and bathrooms?
  • Is the house structurally sound?
  • Do the mechanical systems and appliances work?
  • Is the yard big enough?
  • Do you like the floor plan?
  • Will your furniture fit in the space? Is there enough storage space? (Bring a tape measure to better answer these questions.)
  • Does anything need to repaired or replaced? Will the seller repair or replace the items?
  • Imagine the house in good weather and bad, and in each season. Will you be happy with it year'round?

Take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint. Using the HUD Home Scorecard to keep track of the homes you see is a great way to keep organized. (Refer to the HUD Home Scorecard).

What questions should I ask when looking at homes?

Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller's or real estate agent's answers are clear and complete. Ask questions until you understand all of the information they've given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive. The HUD Home Scorecard can help you develop your question list.

How can I keep track of all the homes I see?

If possible, take photographs of each house: the outside, the major rooms, the yard, and extra features that you like or ones you see as potential problems. And don't hesitate to return for a second look. Use the HUD Home Scorecard to organize your photos and notes for each house.

How many homes should I consider before choosing one?

There isn't a set number of houses you should see before you decide. Visit as many as it takes to find the one you want. On average, homebuyers see 15 houses before choosing one. Just be sure to communicate often with your real estate agent about everything you're looking for. It will help avoid wasting your time.

What does a home inspector do, and how does an inspector figure in the purchase of a home?

An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs,that are needed.

The Inspector does not evaluate whether or not you're getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.

It's a good idea to have an inspection before you sign a written offer since, once the deal is closed, you've bought the house as is." Or, you may want to include an inspection clause in the offer when negotiating for a home. An inspection t clause gives you an 'out" on buying the house if serious problems are found,or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house.

Do I need to be there for the inspection?

It's not required, but it's a good idea. following the inspection, the home inspector will be able to answer questions about the report and any problem areas. This is also an opportunity to hear an objective opinion on the home you'd I like to purchase and it is a good time to ask general, maintenance questions.

Are other types of inspections required?

If your home inspector discovers a serious problem a more specific Inspection may be recommended. It's a good idea to consider having your home inspected for the presence of a variety of health-related risks like radon gas asbestos, or possible problems with the water or waste disposal system.

How can I protect my family from lead in the home?

If the house you're considering was built before 1978 and you have children under the age of seven, you will want to have an inspection for lead-based point. It's important to know that lead flakes from paint can be present in both the home and in the soil surrounding the house. The problem can be fixed temporarily by repairing damaged paint surfaces or planting grass over effected soil. Hiring a lead abatement contractor to remove paint chips and seal damaged areas will fix the problem permanently.

Are power lines a health hazord?

There are no definitive research findings that indicate exposure to power lines results in greater instances of disease or illness.

Do I need a lawyer to buy a home?

Laws vary by state. Some states require a lawyer to assist in several aspects of the home buying process while other states do not, as long as a qualified real estate professional is involved. Even if your state doesn't require one, you may want to hire a lawyer to help with the complex paperwork and legal contracts. A lawyer can review contracts, make you aware of special considerations, and assist you with the closing process. Your real estate agent may be able to recommend a lawyer. If not, shop around. Find out what services are provided for what fee, and whether the attorney is experienced at representing homebuyers.

Do I really need homeowner's insurance?

Yes. A paid homeowner's insurance policy (or a paid receipt for one) is required at closing, so arrangements will have to be made prior to that day. Plus, involving the insurance agent early in the home buying process can save you money. Insurance agents are a great resource for information on home safety and they can give tips on how to keep insurance premiums low.

What steps could I take to lower my homeowner's insurance costs?

LBe sure to shop around among several insurance companies. Also, consider the cost of insurance when you look at homes. Newer homes and homes constructed with materials like brick tend to have lower premiums. Think about avoiding areas prone to natural disasters, like flooding. Choose a home with a fire hydrant or a fire department nearby.

Is the home located in a flood plain?

Your real estate agent or lender can help you answer this question. If you live in a flood plain, the lender will require that you have flood insurance before lending any money to you. But if you live near a flood plain, you may choose whether or not to get flood insurance coverage for your home. Work with an insurance agent to construct a policy that fits your needs.

What other issues should I consider before I buy my home?

Always check to see if the house is in a low-lying area, in a high-risk area for natural disasters (like earthquakes, hurricanes, tornadoes, etc.), or in a hazardous materials area. Be sure the house meets building codes. Also consider local zoning laws, which could affect remodeling or making an addition in the future. Your real estate agent should be able to help you with these questions.

How do I make an offer?

Your real estate agent will assist you in making an offer, which will include the following information:

  • Complete legal description of the property
  • Amount of earnest money
  • Down payment and financing details
  • Proposed move-in date
  • Price you are offering
  • Proposed closing date
  • Length of time the offer is valid
  • Details of the deal

Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just Making an offer. Other ways to lower ins-insurance costs include insuring your home and car(s) with the same company, increasing home security, and seeking group coverage through alumni or business associations. Insurance costs are always lowered by raising your deductibles, but this exposes you to a higher out-of-pocket cost if you have to file a claim.

How do I determine the initial offer?

Unless you have a buyer's agent, remember that the agent works for the seller. Make a point of asking him or her to keep your discussions and information confidential. Listen to your real estate agent's advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors: what homes sell for in the area, the home's condition, how long it's been on the market, financing terms, and the seller's situation. By the time you're ready to make an offer, you should have a good idea of what the home is worth and what you can afford. And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.

What is earnest money? How much should I set aside?

Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with local customs and conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount.

What are "home warranties", and should I consider them?

Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner's insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped.

What is a mortgage?

Generally speaking, a mortgage is a loan obtained to purchase real estate. The "mortgage" itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest.

What is a loan to value (LTV)? How does it determine the size of my loan?

The loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 95% LTV loan on a home priced at $50,000, you could borrow u to $47,500 (95% of $50,000), and would have to pay,$2,500 as a down payment.

The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to payout of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policy.

What types of loans are available and what are the advantages of each?

Fixed Rate Mortgages: Payments remain the same for the the life of the loan

Types

  • 15-year
  • 30-year

Advantages

  • Predictable
  • Housing cost remains unaffected by interest rate changes and inflation.

Adjustable Rate Mortgages (ARMS): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits

Types

  • Balloon Mortgage- Offers very low rates for an Initial period of time (usually 5, 7, or 10 years); when time has elapsed, the balance is clue or refinanced (though not automatically)
  • Two-Step Mortgage- Interest rate adjusts only once and remains the same for the life of the loan
  • ARMS linked to a specific index or margin

Advantages

  • Generally offer lower initial interest rates
  • Monthly payments can be lower
  • May allow borrower to qualify for a larger loan amount

When do ARMs make sense?

An ARM may make sense If you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren't concerned about potential increases in interest rates.

What are the advantages of 15 and 30 year loan terms?

30-Year:

  • In the first 23 years of the loan, more interest is paid off than principal, meaning larger tax deductions.
  • As inflation and costs of living increase, mortgage payments become a smaller part of overall expenses.
  • 15-year:

    • Loan is usually made at a lower interest rate.
    • Equity is built faster because early payments pay more principal.

Can I pay off my loan ahead of schedule?

Yes. By sending in extra money each month or making an extra payment at the end of the year, you can accelerate the process of paying off the loan. When you send extra money, be sure to indicate that the excess payment is to be applied to the principal. Most lenders allow loan prepayment, though you may have to pay a prepayment penalty to do so. Ask your lender for details.

Are there special mortgages for first-time homebuyers?

Yes. Lenders now offer several affordable mortgage options which can help first-time homebuyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don't have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities.

How large of a down payment do I need?

There are mortgage options now available that only require a down payment of 5% or less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you'll also need money for closing costs, moving expenses, and - possibly -repairs and decorating.

What is included in a monthly mortgage payment?

The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes, homeowner's insurance, and mortgage insurance (if applicable).molestie, risus lorem malesuada ligula, at sodales mauris ante id enim. Proin pretium aliquet quam vitae pretium. Cras eget metus nisi.

What factors affect mortgage payments?

The amount of the down payment, the size of the mortgage loan, the interest rate, the length of the repayment term and payment schedule will all affect the size of your mortgage payment.

How does the interest rate factor in securing a mortgage loan?

A lower interest rate allows you to borrow more money than a high rate with the some monthly payment. Interest rates can fluctuate as you shop for a loan, so ask-lenders if they offer a rate "lock-in"which guarantees a specific interest rate for a certain period of time. Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the interest rate because it also includes the cost of points, mortgage insurance, and other fees included in the loan.

What happens if interest rates decrease and I have a fixed rate loan?

If interest rates drop significantly, you may want to investigate refinancing. Most experts agree that if you plan to be in your house for at least 18 months and you can get a rate 2% less than your current one, refinancing is smart. Refinancing may, however, involve paying many of the same fees paid at the original closing, plus origination and application fees.

What are discount points?

Discount points allow you to lower your interest rate. They are essentially prepaid interest, With each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage, the interest rate is reduced by 1/8 (or.125) of a percentage point. When shopping for loans, ask lenders for an interest rate with 0 points and then see how much the rate decreases With each point paid. Discount points are smart if you plan to stay in a home for some time since they can lower the monthly loan payment. Points are tax deductible when you purchase a home and you may be able to negotiate for the seller to pay for some of them.

What is an escrow account? Do I need one?

Established by your lender, an escrow account is a place to set aside a portion of your monthly mortgage payment to cover annual charges for homeowner's insurance, mortgage insurance (if applicable), and property taxes. Escrow accounts are a good idea because they assure money will always be available for these payments. If you use an escrow account to pay property tax or homeowner's insurance, make sure you are not penalized for late payments since it is the lender's responsibility to make those payments.

What steps need to be taken to secure a loan?

The first step in securing a loan is to complete a loan application. To do so, you'll need the following information.

  • Pay stubs for the past 2-3 months
  • W-2 forms for the past 2 years
  • Information on long-term debts
  • Recent bank statements
  • tax returns for the past 2 years
  • Proof of any other income
  • Address and description of the property you wish to buy
  • Sales contract

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

How do I choose the right lender for me?

Choose your lender carefully. Look for financial stability and a reputation for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable. A lender that has the authority to approve and process your loan locally is preferable, since it will be easier for you to monitor the status of your application and ask questions. Plus, it's beneficial when the lender knows home values and conditions in the local area. Do research and ask family, friends, and your real estate agent for recommendations.

How are pre-qualifying and pre-approval different?

Pre-qualification is an informal way to see how much you maybe able to borrow. You can be 'pre-qualified' over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval is a lender's actual commitment to lend to you. It involves assembling the financial records mentioned in Question 47 (Without the property description and sales contract) and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

How can I find out information about my credit history?

There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it's important to verify its accuracy. Double check the "high credit limit,"'total loan," and 'past due" columns. It's a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports but some states permit citizens to acquire a free one. Contact the reporting companies at the numbers listed for more information.

Experian 1-800-682-7954
Equifax 1-800-685-1111
Trans Union 1-800-916-8800

Simple mistakes are easily corrected by writing to the reporting company, pointing out the error, and providing proof of the mistake. You can also request to have your own comments added to explain problems. For example, if you made a payment late due to illness, explain that for the record. Lenders are usually understanding about legitimate problems.

A credit bureau score is a number, based upon your credit history, that represents the possibility that you will be unable to repay a loan. Lenders use it to determine your ability to qualify for a mortgage loan. The better the score, the better your chances are of getting a loan. Ask your lender for details.

There are no easy ways to improve your credit score, but you can work to keep it acceptable by maintaining a good credit history. This means paying your bills on time and not overextending yourself by buying more than you can afford.

Your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best.

  • Do you expect your finances to changeover the next few years?

  • Are you planning to live in this home for a long period of time?

  • Are you comfortable with the idea of a changing mortgage payment amount?

  • Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?

Your lender can help you use your answers to questions such as these to decide which loan best fits your needs.

First, devise a checklist for the information from each lending institution. You should include the company's name and basic information, the type of mortgage, minimum down payment required, interest rate and points, closing costs, loan processing time, and whether prepayment is allowed.

Speak with companies by phone or in person. Be sure to call every lender on the list the same day, as interest rates can fluctuate daily. In addition to doing your own research, your real estate agent may have access to a database of lender and mortgage options. Though your agent may primarily be affiliated with a particular lending institution, he or she may also be able to suggest a variety of different lender options to you.

Yes. When you turn in your application, you'll be required to pay a loan application fee to cover the costs of underwriting the loan. This fee pays for the home appraisal, a copy of your credit report, and any additional charges that may be necessary. The application fee is generally non-refundable.

RESPA stands for Real Estate Settlement Procedures Act. It requires lenders to disclose information to potential customers throughout the mortgage process, By doing so, it protects borrowers from abuses by lending institutions. RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account practices, and business relationships between closing service providers and other parties to the transaction.

For more information on RESPA, visit the web page at http://www.hud.gov/fha/sfh/res/respa_hm.html or call 1-800-217-6970 for a local counseling referral.

It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.

Lenders are not allowed to discriminate in any way against potential borrowers. If you believe a lender is refusing to provide his or her services to you on the basis of race, color, nationality, religion, sex, familial status, or disability, contact HUD's Off ice of Fair Housing at 1-800-669-9777 (or 1-800-927-9275 for the hearing impaired).

To ensure you won't fall victim to loan fraud, be sure to follow all of these steps as you apply for a loan:

  • Be sure to read and understand everything before you sign.

  • Refuse to sign any blank documents.

  • Do not buy property for someone else.

  • Do not overstate your income.

  • Do not overstate how long you have been employed.

  • Do not overstate your assets.

  • Accurately report your debts.

  • Do not change your income tax returns for any reason. Tell the whole truth about gifts. Do not list fake co-borrowers on your loan application.

  • Be truthful about your credit problems, past and present.

  • Be honest about your intention to occupy the house

  • Do not provide false supporting documents

It usually takes a lender between 1-6 weeks to complete the evaluation of your application. Its not unusual for the lender to ask for more information once the application has been submitted. The sooner you can provide the information, the faster your application will be processed. Once all the information has been verified the lender will call you to let you know the outcome of your application. If the loan is approved, a closing date is set up and the lender will review the closing with you. And after closing, you'll be able to move into your new home.

This will likely be the first opportunity to examine the house without furniture, giving you a clear view of everything. Check the walls and ceilings carefully, as well as any work the seller agreed to do in response to the inspection. Any problems discovered previously that you find uncorrected should be brought up prior to closing. It is the seller's responsibility to fix them.

There may be closing cost customary or unique to a certain locality, but closing cost are usually made up of the following:

  • Attorney's or escrow fees (Yours and your lender's if applicable)
  • Property taxes (to cover tax period to date)
  • Interest (paid from date of closing to 30 days before first monthly payment)
  • Loan Origination fee (covers lenders administrative cost)
  • Recording fees
  • Survey fee
  • First premium of mortgage Insurance (if applicable)
  • Title Insurance (yours and lenders's)
  • Loan discount points
  • First payment to escrow account for future real estate taxes and insurance
  • Paid receipt for homeowner's insurance policy (and fire and flood insurance if applicable)
  • Any documentation preparation fees

You'll present your paid homeowner's insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspection, warranties, etc.

Once you're sure you understand all the documentation, you'll sign the mortgage, agreeing that if you don't make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses. You'll also sign a mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed.

You'll pay the lender's agent all closing costs and, in turn,he or she will provide you with a settlement statement of all the items for which you have paid. The deed and mortgage will then be recorded in the state Registry of Deeds, and you will be a homeowner.

  • Settlement Statement, HUD-1 Form (itemizes services provided and the fees charged; it is filled out by the closing agent and must be given to you at or before closing)
  • Truth-in-Lending Statement
  • Mortgage Note
  • Mortgage or Deed of Trust
  • Binding Sales Contract (prepared by the seller; your lawyer should review it)
  • Keys to your new home

Also known as HUD, the U.S. Department of Housing and Urban Development was established in 1965 to develop national policies and programs to address housing needs in the U.S. One of HUD's primary missions is to create a suitable living environment for all Americans by developing and improving the country's communities and enforcing fair housing laws

HUD helps people by administering a variety of programs that develop and support affordable housing. Specifically, HUD plays a large role in homeownership by making loans available for lower- and moderate-income families through its FHA mortgage insurance program and its HUD Homes program. HUD owns homes in many communities throughout the U.S. and offers them for sale at attractive prices and economical terms. HUD also seeks to protect consumers through education, Fair Housing Laws, and housing rehabilitation initiatives.

Now an agency within HUD, the Federal Housing Administration was established in 1934 to advance opportunities for Americans to own homes. By providing private lenders with mortgage insurance, the FHA gives them the security they need to lend to first-time buyers who might not be able to qualify for conventional loans. The FHA has helped more than 26 million Americans buy a home.

The FHA works to make homeownership a possibility for more Americans. With the FHA, you don't need perfect credit or a high-paying job to qualify for a loan. The FHA also makes loans more accessible by requiring smaller down payments than conventional loans. In fact, an FHA down payment could be as little as a few months rent. And your monthly payments may not be much more than rent.

Lender claims paid by the FHA mortgage insurance program are drawn from the Mutual Mortgage Insurance fund. This fund is made up of premiums paid by FHA-insured loan borrowers. No tax dollars are used to fund the program.

anyone who meets the credit requirements, can afford the mortgage payments and cash investment, and who plans to use the mortgaged property as a primary residence may apply for an FHA-insured loan.

FHA loan limits vary throughout the country, from $115,200 in low-cost areas to $208,800 in high-cost areas. The loan maximums for multi-unit homes are higher than those for single units and also vary by area.

Because these maximums are linked to the conforming loan limit and average area home prices, FHA loan limits are periodically subject to change. Ask your lender for details and confirmation of current limits.

With the exception of a few additional forms, the FHA loan application process is similar to that of a conventional loan (see Question 47). With new automation measures, FHA loans may be originated more quickly than before. And, if you don't prefer a face-to-face meeting, you can apply for an FHA loan via mail, telephone, the Internet, or video conference.

There is no minimum income requirement. But you must prove steady income for at least three years, and demonstrate that you've consistently paid your bills on time.

Seasonal pay, child support, retirement pension payments, unemployment compensation, VA benefits, military pay, Social Security income, alimony, and rent paid by family all qualify as income sources. Part-time pay, overtime, and bonus pay also count as long as they are steady. Special savings plans-such as those set up by a church or community association - qualify, too. Income type is not as important as income steadiness with the FHA.

Yes. Short-term debt doesn't count as long as it can be paid off within 10 months. And some regular expenses, like child care costs, are not considered debt. Talk to your lender or real estate agent about meeting the FHA debt-to-income ratio.

The FHA allows you to use 29% of your income towards housing costs and 41% towards housing expenses and other long-term debt. With a conventional loan, this qualifying ratio allows only 28% toward housing and 36% towards housing and other debt.

You may qualify to exceed if you have:

  • a large down payment
  • a demonstrated ability to pay more toward your housing expenses
  • substantial cash reserves
  • net worth enough to repay the mortgage regardless of income
  • evidence of acceptable credit history or limited credit use
  • less-than-maximum mortgage terms
  • funds provided by an organization
  • a decrease in monthly housing expenses

You must have a down payment of at least 3% of the purchase price of the home. Most affordable loan programs offered by private lenders require between a 3%-5% down payment, with a minimum of 3% coming directly from the borrower's own funds.

Besides your own funds, you may use cash gifts or money from a private savings club. If you can do certain repairs and improvements yourself, your labor may be used as part of a down 8 payment (called -sweat equity"). If you are doing a lease purchase, paying extra rent to the seller may also be considered the same as accumulating cash.

The FHA is generally more flexible than conventional lenders in its qualifying guidelines. In fact, the FHA allows you to re-establish credit if:

  • two years have passed since a bankruptcy has been discharged
  • all judgments have been paid
  • any outstanding tax liens have been satisfied or appropriate arrangements have been made to establish a repayment plan with the IRS or state Department of Revenue
  • three years have passed since a foreclosure or a deed-in-lieu has been resolved

Yes. If you prefer to pay debts in cash or are too young to have established credit, there are other ways to prove your eligibility. Talk to your lender for details.

Except for the addition of an FHA mortgage insurance premium, FHA closing costs are similar to those of a conventional loan outlined in Question 63. The FHA requires a single, up-front mortgage insurance premium equal to 2.25% of the mortgage to be paid at closing (or 1.75% if you complete the HELP program- see Question 91). This initial premium may be partially refunded if the loan is paid in full during the first seven years of the loan term. After closing, you will then be responsible for an annual premium - paid monthly - if your mortgage is over 15 years or if you have a 15-year loan with an LTV greater than 90%.

No. Though you can't roll closing costs into your FHA loan, you may be able to use the amount you pay for them to help satisfy the down payment requirement. Ask your lender for details.

Yes. You can assume an existing FHA-insured loan, or, if you are the one deciding to sell, allow a buyer to assume yours. Assuming a loan can be very beneficial, since the process is stream- lined and less expensive compared to that for a new loan. Also, assuming a loan can often result in a lower interest rate. The application process consists basically of a credit check and no property appraisal is required. And you must demonstrate that you have enough income to support the mortgage loan. In this way, qualifying to assume a loan is similar to the qualification requirements for a new one.

Call or, Write to your lender as soon as possible.,Clearly explain the situation and be prepared to provide him or her with financial information.

Yes. Talk to your lender or a HUD-approved counseling agency for details. Listed below are a few options that may help you get back on track.

For FHA loans:

  • Keep living in your home to qualify for assistance.
  • Contact a HUD-approved housing counseling agency (1-800-569-4287 or TDD: 1-800-877-8339) and cooperate with the counselor/lender trying to help you.
  • HUD has a number of special loss mitigation programs available to help you:
  • Special Forbearance: Your lender will arrange for a revised repayment plan which may Include temporary reduction or suspension of payments; you can qualify by having an Involuntary reduction in your Income or Increase In living expenses.
  • Mortgage Modification: Allows refinance debt and/or extend the term of the your mortgage loan which may reduce your monthly payments; you can qualify if you have recovered from financial problems, but net Income Is less than before.
  • Partial Claim: Your lender maybe able to help you obtain an interest-free loan from HUD to bring your mortgage current.
  • Pre-foreclosure Sale: Allows you to sell your.property and pay off your mortgage loan ,to avoid foreclosure.
  • Deed-in lieu of Foreclosure: Lets you voluntarily "give back" your property to the lender; it won't save your house but will help you avoid the costs, time, and effort of the foreclosure process.
  • If you are having difficulty with an-uncooperative lender or feel your loan servicer is not providing you with the most effective loss mitigation options, call the FHA Loss Mitigation Center at 1-888-297-8685 for additional help.

For conventional loans:

Talk to your lender about specific loss mitigation options. Work directly with him or her to request a "workout packet." A secondary lender, like Fannie Mae or Freddie Mac, may have purchased your loan. Your lender can follow the appropriate guidelines set by Fannie or Freddie to determine the best option for your situation.

Fannie Mae does not deal directly with the borrower. They work with the lender to deter-mine the loss mitigation program that best fits your needs.

Freddie Mac, like Fannie Mae, will usually only work with the loan servicer. However, if you encounter problems with your lender during the loss mitigation process, you can coil customer service for help at 1-800-FREDDIE (1-800-373-3343).

In any loss mitigation situation, it is important to remember a few helpful hints:

  • Explore every reasonable alternative to avoid losing your home, but beware of scams. For example, watch out for: Equity skimming: a buyer offers to repay the mortgage or sell the property if you sign over the deed and move out. Phony counseling agencies: offer counseling for a fee when it is often given at no charge.
  • Don't sign anything you don't understand.

Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. it's required primarily for borrowers making a down payment of less than 20%.

Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency. If a borrower can't repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.

You need mortgage insurance only if you plan to make a down payment of less than 20% of the purchase price of the home. The FHA offers several loan programs that may meet your needs. Ask your lender for details.

Ask your real estate agent or lender for information on the HELP program from the FHA. HELP - Homebuyer Education Learning Program - is structured to help people like you begin the homebuying process. It covers such topics as budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of this program may entitle you to a reduction in the initial FHA mortgage insurance premium from 2.25% to 1.75% of the purchase price of your new home.

PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers. These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility. PMI's usually have stricter qualifying ratios and larger down payment requirements than the FHA, but their premiums are often lower and they insure loans that exceed the FHA limit.

This is the most commonly used FHA program. it offers a low down payment, flexible qualifying guidelines, limited lender's fees, and a maximum loan amount.

This is a loan that enables the homebuyer to finance both the purchase and rehabilitation of a home through a single mortgage. A portion of the loan is used to pay off the seller's existing mortgage and the remainder is placed in an escrow account and released as rehabilitation is completed. Basic guidelines for 203(k) loans are as follows:

  • The home must be at least one year old.
  • The cost of rehabilitation must be at least $5,000, but the total property value - including the cost of repairs - must fall within the FHA maximum mortgage limit.
  • The 203(k) loan must follow many of the 203(b) eligibility requirements.
  • Talk to your lender about specific improvement, energy efficiency, and structural guidelines.

The Energy Efficient Mortgage allows a homebuyer to save future money on utility bills. This is done by financing the cost of adding energy-efficiency features to a new or existing home as part of an FHA-insured home purchase. The EEM can be used with both 203(b) and 203(k) loans. Basic guidelines for EEMs are as follows:

  • The cost of improvements must be determined by a Home Energy Rating System or by an energy consultant. This cost must be less than the anticipated savings from the improvements.
  • One- and two-unit new or existing homes are eligible; condos are not.
  • The improvements financed may be 5% of property value or $4,000, whichever is greater. The total must fall within the FHA loan limit.

Just as you might register at a department store for wedding gifts, the Bridal Registry program allows couples to register with a lender and open up an interest-bearing account. Family and friends can deposit wedding gifts of cash into this account. These gifts can then be applied toward a down payment on a home. Ask your lender for details.

Given by a Lender and insured by the FHA, a Title I loan is used to make non-luxury renovations and repairs to a home. It offers a manageable interest rate and repayment schedule. Loans are limited to between $5,000 and 20,000. If the loan amount is under 7,500, no lien is required against your home. Ask your lender for details.

The FHA also insures loans for the purchase or rehabilitation of manufactured housing, condominiums, and cooperatives. It also has special programs for urban areas, disaster victims, and members of the armed forces. Insurance for ARMS is also available from the FHA.

Contact an FHA-approved lender such as a participating mortgage company, bank, savings and loan association, or thrift. For more information on the FHA and how you can obtain an FHA loan, visit the HUD web site at http://www.hud.gov or call a HUD-approved counseling agency at 1-800-569-4287 or TDD: 1-800-877-8339.

Visit the web site at http://www.hud.gov or look in the phone book "blue pages" for a listing of the HUD office near you.