If you’re in the market for a car, you’ll likely spend time researching and visiting dealerships to make sure you find the car and the deal that is perfect for you. While you can’t test drive a mortgage, for a purchase of that size you should absolutely shop around! Different lending institutions can offer different rates, accept individuals with different credit scores and can approve you for different loan amounts.

We know what you’re thinking – that sounds intimidating. And it absolutely can be! But like shopping for a car, you can come into the process feeling confident with a little research and preparation. Before you start shopping for a mortgage, here are a few things you should do first:

Know your current financial situation.

To qualify for a mortgage, you often have to provide a number of financial documents. Start gathering paperwork related to your financial situation – including pay stubs, investment statements and credit card statements. Have a clear understanding of what you have in savings, how much of a “rainy day” fund you have available, and all sources of revenue your family has available. Potential lenders will likely need to see this information to make sure you can afford to pay your monthly mortgage payments. 

Understand what your credit score means. 

In addition to financial information, your lending institution will evaluate your credit worthiness using your credit score. Your credit score uses a number of factors – outstanding debt, regular payments on outstanding loans, the amount of time you’ve had credit – to help financial institutions judge your ability to make prompt and full payments. If you don’t know your credit score, or worry your credit score is too low, United Housing offers credit counseling to help! We can help you understand what your score means and work to raise it. 

Learn about mortgage options.

There isn’t a one-size-fits-all mortgage. There are different products that financial institutions offer depending upon your life stage and financial situation. It’s important that you understand the different mortgage types and which products are (and are not) a good fit for your family. We want you to avoid getting your hopes up about a loan product (and then a future home) that is out of your financial reach. This is what we teach in United Housing’s Homebuyer Education course! We break down available mortgage options in the current market and which options are available based on your circumstance. 

Research financial partners. 

Your mortgage lender will be part of your life for the next 15 to 20 years, so you want the relationship to be a good one. Do research and look to partner only with stable, trustworthy institutions. And, these institutions aren’t always banks! Community Development Financial Institutions, like United Housing, sometimes have loan options that you can consider when shopping for a mortgage! 

“Too little. Too late.” This will be an accurate statement if inclement weather strikes and you haven’t prepared. Every year, houses all over the country fall victim to the devastation that comes with severe weather. While some of the damage is unavoidable, there are certain precautions that you can take to avoid preventable damage.

Below are a few tips you can use to prepare your home for the next time severe weather rolls in!

Minimizing tree damage

When the weather is nice, trees are majestic and provide the perfect amount of shade. During a storm, this all changes and that once majestic tree can turn into a hazard within the blink of an eye. The combination of severe weather with loose and brittle tree limbs can be a recipe for disaster. It is very important that you cut off any branches that look brittle, dead or that are crossed and rubbing against each other. High winds and lightning strikes are all it takes for those limbs to become a projectile that could penetrate your roof or windows.

Some of this work can be done yourself! If the tree is low to the ground and the limbs aren’t too thick, you may be able to get a saw from your local hardware store and take care of the trimming yourself. But be cautious! Large trees with heavy limbs should be trimmed by experts. Do research and seek references from friends and family before choosing a tree trimming service to make sure you get quality service for your money!

Essential Supplies

Lightning does not only take a toll on the outside, but it can also wreak havoc inside your home as well. Surge protectors are a key low-cost asset to have in your home. They can save you tons of money because the right strike can destroy your electronics if they are plugged into the wall. A surge protector acts as a forcefield to guard your tv, lamp, speakers and other pricey electronics from direct impact! In the case that lightning does indeed strike heavily and your power is compromised, then it is pertinent to have certain essential supplies on hand. A few of these essential supplies are a flashlight, battery-powered radio, batteries, reserve cellular battery pack or mobile charger and candles. Each of these serves a vital purpose when faced with a power outage.

Having a plan

Unfortunately, everyone won’t have all of these supplies in the closet or their trees miraculously trimmed to perfection. It takes a plan to reach this level of preparedness. The first step in the planning process is making sure you have a homeowners insurance policy. Having homeowners insurance before a storm hits can cover the cost of any repairs caused by the storm. You and your family may not have all of the bases covered, but having some is better than none. Having a plan in place makes an already stressful situation less of a headache. Take it one step further and give everyone in your family a storm assignment. One person might gather all of the lighting supplies, while another prepares the safest room in your house for the family to tough out the storm. If everyone in your family is knowledgeable of the proper steps to take, then you’re already ahead of the game.

Severe weather comes and goes, but how your home fairs throughout this can fall into your hands. Think ahead. Aim to be proactive instead of reactive. This can save a lot of trouble in the long run!

Homeownership is a large part of the American dream. While homes serve as your dwelling and shelter, the place you call home could metaphorically become a financial safety net for your family. Whether you’re single and just starting out, looking to start a family or already have a family of your own, homeownership is a credible way that you can pass down wealth to future generations.

Why is homeownership an investment in future generations while renting isn’t?  Renting is a good option for small periods of time, like when you’ve recently moved or when you’re job placement is temporary. But your rent payments are like daily transactions and don’t go toward an investment in your future – they go into someone else’s pocket. When you make a mortgage payment, you’re repaying a debt that eventually benefits you and your family. Paying a mortgage feels no different than paying rent, but the result is vastly different!

As you continue to make payments toward your mortgage, you’re building equity, or increasing the portion of the home you own. If you sell your house in the future for $70,000, and you owe the bank $15,000 because of equity you’ve earned by making mortgage payments, you’ll pocket $55,000 that you can then invest in your family’s future. You’re reaping the benefits of paying on your mortgage for years.

Ultimately, homeownership is a way to save money by investing in a home that meets your current needs in a way that renting does not. So, what steps should you take to buy a house and officially become a homeowner?

The first step is to understand your options. It’s important to know which factors, like income, credit rating, current monthly expenses, down payment and interest rates, affect the affordability of a home. These terms may seem intimidating, but THDA offers several resources like pre- and post-purchase homebuyer education and homebuyer education counselors to help define these terms and explain how they fit in the process.

Using these resources not only can help you learn what you can afford but it’s also a way to know your rights as a homeowner. By educating yourself, you lower your chance of overcommitting financially or becoming a victim to risks like predatory lending. Don’t worry, we understand that the process of buying a house isn’t any less scary or unknown.

Once you understand your options and your rights, think about signing up for a local homebuyer education course, like those offered by United Housing. These courses explain the foundation of homeownership like the importance of credit, how to build your credit, how to qualify for a mortgage loan, choosing a house, working with a realtor and basic home maintenance (plus much more!).

A home is a place for families – current and future. You can build a solid foundation for your family, one that will exist today and in the future. Ready to become a homeowner? Sign up for one of our homebuyer education classes or call us at 901-272-1122.

Starting the homebuying process can be overwhelming, even if you’re just looking! There are so many intimidating terms that make the process seem complicated and downright scary. One of the most common questions we receive is, “How much money do I need to have to purchase a home?” While the answer to that question is different for every family, we’re going to help you break it down into simple terms. *Pro-tip* You can learn all of this, and more, by signing up for our Homebuyer Education Course!

So, what is a down payment?

Purchasing a home is a significant investment. Fortunately, you don’t have to pay the full cost of the house at the time you buy it. Instead, you make a down payment.

A down payment is a percentage of the home price that the buyer pays up front. The rest of the home value is financed through a loan called a mortgage. Your down payment will vary based on a number of factors, including the price of the home and the type of loan you use. Understanding how down payments work will help you make the choice that’s best for your long-term success and security

What types of down payments are there?

High-percentage down payments

Paying more up front, i.e. a bigger down payment, has several advantages. The more you pay up front, the lower your monthly payments will be. And, more loan products are available to you.

However, bigger isn’t always better. Sometimes the benefits of a bigger down payment take a while to pay off (no pun intended). The time needed to save for a large down payment delays your ability to start seriously looking for a home, which could cause you to lose out on the house you want.

Low-percentage down payments

Choosing a loan product that allows you to pay a substantially smaller down payment has its benefits as well. For example, paying less now doesn’t deplete as much of your savings. This leaves you with wiggle room to handle any emergency expenses that might come up as a homeowner. A smaller down payment also allows you to buy your dream home sooner because you won’t spend as long saving.

There are some downsides to smaller down payments. You usually have to buy private mortgage insurance or have a higher interest rate on your loan, which will both increase your monthly payment amount

Down payment assistance programs

No matter how much money you put down for your home, it’s never an easy check to write! And, we know that even the lowest percentage down payment is an enormous payment for many families. That’s why we help our clients access state and federal programs that aid in your ability to make a down payment faster. There are a number of down payment assistance programs that work for your family. Contact us to find out about these programs and to see if you qualify.

Helpful Hints

When deciding what type of down payment you need, don’t forget to factor in other costs associated with home buying that could affect your budget! These could include moving costs, repair costs and closing costs. Closing costs are one-time fees paid during closing. Usually, closing costs range between 2 and 5 percent of your home’s price. Closing costs can include things like application fees, closing fees and home inspection fees. Sometimes, you can negotiate who pays these costs.

To help with negotiations, it’s always a good idea to work with a credible Realtor. These trained and certified professionals will assist you throughout the home buying process. A Realtor can save you time by finding available homes that fit your budget and parameters. They also provide you with expertise regarding price negotiation, repairs and ways to avoid common homebuying pitfalls. United Housing has a number of Realtor partners we recommend! Reach out to us for information.

Down payments vary depending on many factors, but ultimately, you need to choose the payment option that makes the most sense for you and your family. To learn more about your homebuying options and understand the process a little better, sign up for one of our homebuyers education classes!

December 2018 marked the most recent interest rate hike by The Federal Reserve. Homeowners are now left unsure as to how this rise in rates will affect their mortgages, while those looking to purchase a home might worry they can no longer afford it. But first, let’s break down two of those figures - interest rates and mortgage rates.

• Interest rate: Expressed as a percentage of the total amount of the loan, an interest rate is a fee you are charged by a lender for borrowing money.
• Mortgage rate: A mortgage rate is the amount of interest paid on a home mortgage.

So, what is the connection between the two? When the Federal Reserve adjusts interest rates, it can have an indirect impact on mortgage rates. For example, sometimes mortgage rates increase when short-term rates rise because the central bank’s action can have a ripple effect on all other interest rates. However, while mortgage rates and interest rates are related, they do not always perfectly correlate. There are times when mortgage rates have fallen after the Federal Reserve raised rates.

Now that we’ve discussed the meaning and relationships of the two terms, let’s cut to what’s important – how does this affect you? If you have a fixed-rate mortgage, the changes will not affect you. But, borrowers with adjustable-rate mortgages (ARMs) and home equity lines of credit (HELOCs) might find themselves paying more interest on their mortgage loans because they are indexed to short-term rates.

Those looking to buy a home could also be affected by these changes. If they had been previously approved for a certain sized mortgage, they could see themselves become disqualified. Though, there could be one positive for potential buyers. While mortgage rates are high, fewer people are interested in purchasing a home which means sellers see no other choice than to lower their asking prices.

Regardless of how these changes affect you, don’t panic. Mortgage rates are still historically low and there are always things you can do to ensure that you are a well-qualified buyer, regardless of mortgage rate fluctuation.