Nid House Call October 06

1. More Mortgage Info
An Informational Publication of the NID-Housing Counseling Agency
The NID House Call is a quarterly publication designed to provide useful and timely information and resources to our community of
stakeholders, which includes clients, consumers, real estate professionals, housing counselors, and our partners.
A National HUD-Approved Housing Counseling Agency • October 2006
Housing Counselors Help News
FHA Resource Center
Simplify the Homebuying Process The FHA Resource Center provides answers to
questions regarding FHA home insurance pro-
Owning a home is a rewarding experience, but admittedly it can be grams, processes, and requirements. The FHA
quite intimidating. The most important factor in purchasing a Resource Center began taking inquiries from the
home is understanding exactly what you are purchasing and if it’s mortgage lending and housing counseling industry
affordable for you and your family. in May 2006. You can contact the Resource Center
Education is the key for purchasing a home. A housing counselor is by phone from 8:00am – 8:00pm ET at (800)
your conduit to receive unbiased real estate related information. CALLFHA (225-5342), or you may email your
Counselors help with any type of housing questions, including the questions 24 hours a day to hud@custhelp.com.
homebuying process, how to qualify for a mortgage, what you can
afford, understanding credit, and working with professionals in the
homebuying process. A housing counselor will also assess your Increasing FHA Mortgage Limits
affordable housing opportunities, money management skills, and
FHA is a great resource to help individuals and
your post-purchase success.
families purchase homes. FHA loans offer low
Homeowners can also benefit from visiting a housing counselor. downpayments, low closing costs, and easy credit
Ever had difficulty paying your mortgage? Want to learn how to qualifying guidelines. However, FHA loan limits,
effectively communicate with your lender? Interested in refinanc- which set the maximum purchase price FHA will
ing? A housing counseling session can benefit you and your family insure, at times are not competitive in high-cost
in a wide variety of ways. markets. Any interested party may submit a re-
quest to HUD for the mortgage limits to be in-
Meet one-on-one with a counselor or attend a free First-Time creased in a particular area. Any request for an
Homebuyer workshop to discuss the criteria for buying a home, increase must be accompanied by sufficient hous-
review mortgage products, determine how much home you can af- ing sales price data to justify higher limits. To
ford, identify downpayment assistance resources, and begin the learn how to get started, please visit http://
home purchasing planning process. Homeownership is a large re- www.hud.gov/offices/hsg/sfh/lender/sfhmolin.cfm.
sponsibility that reaps many benefits. Thorough planning before
you purchase a home is the fuel for long-term, sustainable home-
ownership.
Requesting an Extension of Time in
Repaying FHA Loans
Inside this issue:
Often, when homeowners who are facing foreclo-
sure visit an NID office, time is a huge factor in
Unlocking the Doors of 2 implementing preventive measures to avoid fore-
The Path to 2 closure. This issue is magnified when loan ser-
Homeownership vicers are not actively pursuing workout options
for their delinquent borrowers. If you’re experienc-
Is Interest-Only In Your 3 ing delays with repayment workout options for
Best Interest? Mission Statement FHA-insured mortgages and it is in the best inter-
Tips for Successful 3 Our goal is to improve the quality of life est of the government to delay foreclosure until a
Renting in America’s cities. We will accomplish loss mitigation assessment can be completed,
this as partners working together with please submit form HUD-50012 “Mortgagee’s Re-
NID’s Faith-Based 4 our friends and neighbors. We will help quest for Extensions of Time.” You may download
Partnership our communities become places where the form at
families can live in safety, prosperity and
Legislative Update 4 http://www.hudclips.org/sub_nonhud/html/pdfform
harmony; places where the American
s/50012.pdf. The completed form should be sent to
dream of homeownership can flourish,
How Our Website Can 4
and where decent & affordable housing is
HUD’s National Servicing Center in Tulsa, Okla-
Help
a reality for all people. homa. Please call 1-888-297-8685 for information.

2. More Mortgage Info
NID-HCA is the Educational Key to Unlock
the Doors of Homeownership!
NID-HCA is an innovative HUD ing and real estate related informa-
and Fannie Mae approved nonprofit tion on a variety of topics,
organization. We partner housing including:
counselors and real estate profes- Housing
Education
sionals to deliver free housing coun- Homebuying Counselor
seling and real estate related ser- Loss Mitigation
vices. NID-HCA trains counselors
Foreclosure/Pre-
who are licensed real estate profes- Foreclosure
sionals and are equipped with the
knowledge and resources to prepare Reverse Mortgages
you for homeownership. Financing Options
Home Real Estate
Your Housing Counselor Credit & Budgeting Professional
Housing counselors provide free Renters Assistance
education to improve and sustain
the quality of life in the community. Downpayment Assistance
Through NID-HCA, individuals Affordable Housing
have access to free housing counsel-
The Path to Homeownership
Becoming a first-time homebuyer is through your payments, versus backs, including:
an exciting process. It may seem the portion that you owe the • Homeownership often costs
overwhelming at times, but with mortgage lender. And, unlike more. If you’re renting now, you
proper planning it can be done. most things you buy, a home can expect to pay more with the
Typically, the first step is to figure can actually increase in value added cost of utilities, home
out how to qualify for a mortgage over time, building more equity. repairs, and maintenance.
loan. Before you visit a real estate • Homeownership offers certain • Owning a home usually makes
professional or a lender, perform a tax advantages. Since the mort- moving more difficult and com-
self-assessment to determine your gage interest and real estate plicated, and you may not have
readiness and commitment to pur- taxes are deductible, you may as much flexibility in choosing a
chasing a home. How is your credit subtract part of your housing- new location or job.
history? How long have you been related expenses from your tax-
employed at your current job? Do able income, which can reduce There are lots of factors to consider
your monthly expenses exceed your your tax bill. before moving forward in the pur-
income? This self-assessment will • A first home often leads to a chasing process. Fortunately, there
help determine your strengths, better second home. As you is help available to guide you. Ac-
weaknesses and help direct your build up equity in one home, it cording to the Fannie Mae Founda-
attention to areas where you may is usually easier to afford an- tion, “No matter where you live or
be able to improve your profile as a other home in the future. which type of house you choose,
potential borrower. lenders will use general guidelines
• Homeownership offers satisfac-
to determine if you qualify for a
Next, consider the advantages and tion and security. As a home-
mortgage loan. Before you begin
disadvantages. The list below gives owner, you can decorate and
house hunting, you may want to sit
some potential advantages of home- improve your home the way
down with a housing counselor, one-
ownership. Think about which ad- that best suits you. Owning a
on-one to discuss how to reach your
vantages are most important to you. home may also give you a
housing goal.”
greater sense of pride in your
Advantages: surroundings and stronger ties As a first step, visit an NID-
• A home is usually a sound in- to your community. Housing Counseling Agency in your
vestment. When you carefully area. Housing counselors are avail-
There are many financial, emo-
choose a home you can afford, able to help with the preliminary
tional, and economical benefits to
the payoff can be great. When foot work and to discuss the home
homeownership. However it’s easy
you make your mortgage pay- buying process. To schedule a one-
to get caught up in the excitement
ment, you’re building equity. on-one appointment or register for a
of buying a home and forget that
Equity is the portion of the First-Time Homebuyer workshop,
homeownership may have draw-
property that you actually own please visit www.nidonline.org.
NID HOUSECALL 2 OCTOBER 2006

3. More Mortgage Info
Is Interest-Only in Your Best Interest?
An interest-only loan is a mortgage maining term of the loan. Your in- with the amortized loan puts that
loan program where you have an terest rate will adjust regularly same amount toward repaying
option to pay just the interest for a (usually on an annual basis) accord- principal.”
defined period of the note. An inter- ing to the original terms of the in-
est only loan does not mean you will terest-only mortgage note. Interest- Because the interest-only option
never pay principal. In most cases only products can be beneficial, but increases default risk, it increases
the note will state how long your borrowers should clearly under- the price of the mortgage. According
interest-only payments will last. stand what the benefits are. If to CNN/Money, “On any given type
you’re considering cost as a benefit, of loan, whether fixed or adjustable,
Pay close attention to the terms of the following example from MSN the same payment will amortize the
an interest-only loan. When the ad- Money compares an interest-only interest-only version and the other-
justment period arrives on these loan to a fully amortized loan, a wise identical non-IO version in
mortgages the monthly payment loan that is 100% paid at the end of exactly the same time frame. But
can increase substantially. In its repayment term (principal and borrowers are led to believe that
preparation for an upcoming adjust- interest): this comparison is between interest-
ment period, families must review only and non-interest-only when in
their budget, determine when the “…if a 30-year fixed-rate loan of fact it is between an adjustable and
adjustment period will arrive, and $100,000 has an interest rate of a fixed-rate mortgage.”
how long the adjustment period will 6%, the standard "fully amortiz-
last. Thoroughly review your mort- ing" monthly payment is $599.56. To avoid surprise changes with your
gage note to understand all the This payment, if continued with mortgage, read your note to under-
terms of your loan. the same interest rate, will pay stand clearly all the terms. A hous-
off the loan at maturity. The in- ing counselor can help you with
Although your loan will be subject terest-only payment, however, is your mortgage questions and con-
to future market rates, your margin only $500. The interest-only bor- cerns.
will not change throughout the re- rower saves $99.56; the borrower
Tips for Successful Renting
Renting a place to live is a big re- Inspect your rental unit with ment will be late, have the courtesy
sponsibility! Here are some helpful your landlord and make a de- to call and inform your landlord.
renting tips from MSN Money: tailed list of existing problems. Give your landlord appropriate no-
Keep a copy of this for your records. tice if you intend to move.
Future landlords appreciate a Documenting the condition of the
neat, thoroughly completed entire unit will protect you from Landlords are required to keep
rental application. Written refer- being charged for pre-existing dam- rental units in good repair. In-
ences from previous landlords, cur- age. Remember that signing a lease form your landlord in a timely man-
rent and past employers, and probably obligates you to make all ner of maintenance and repair
friends, and a copy of your current monthly payments for the term of needs. If a repair has not been
credit report may also be benefi- the lease agreement. made, a friendly reminder or genu-
cial. Honestly represent yourself ine inquiry as to the status may
and your history. Tell your prospec- Keep copies of all contracts, bring speedy results.
tive landlord what you have to offer agreements, and requests made
and your vision for the place you’d between you and your landlord. Remember, as a tenant you
like to rent. If a verbal agreement is made, send have the responsibility to keep
your landlord a letter stating your your rental unit clean and or-
Always review all the condi- understanding of that agreement. derly. Refrain from purposely dam-
tions of the tenancy before you Know your privacy rights and the aging rental property. Show proper
sign any rental agreement. If amount of notice (usually at least care and respect for common areas
your rental agreement contains any 24 hours) your landlord must give you might share with other ten-
terms that you find unacceptable, before entering your unit. ants. Be courteous to those around
address those concerns before com- you and keep your noise level so
mitting to your lease. Make sure Maintain good communication that it does not bother others.
your rental agreement clearly states with your landlord. A peaceful
what the security deposit refund resolution of differences through Establish friendly relationships
procedures are and what would pre- open dialog can solve most problems with those in your neighbor-
vent a portion or all of the deposit and is less expensive than legal ac- hood. This will facilitate better re-
from being refunded. tion. If you know your rent pay- sults should problems or needs arise
between you and your neighbors.
NID HOUSECALL 3 OCTOBER 2006

4. More Mortgage Info
NID’s Faith-Based Organization
Community Development Partnership
The outreach mission to faith-based cohesive effort to serve individuals
organizations is to increase home- and families on their path to home-
ownership, homeownership educa- ownership and outreach to current
tion, and community access to homeowners on a variety of issues,
mainstream financial resources.
Reportedly, individuals and families
including foreclosure counseling,
budgeting, and refinance opportuni- Legislative Update
who live in urban neighborhoods ties.
The U.S. Congress is considering
experience a high visibility of sub-
Homeownership is a proven anchor housing legislation designed to ex-
prime or even predatory financial
for stable, vibrant communities. pand homeownership opportunities
institutions that charge high inter-
The faith-based initiative is a long- by modernizing the FHA mortgage
est fees and other tactics that in-
term effort to enhance community insurance policies. Policy changes
crease the cost of services and/or
well being by promoting new home- would accommodate mortgage lend-
products to its borrowers. To help
owners and sustaining current ing flexibility guidelines for lenders
level the playing field of high cost
homeowners. and borrowers using the government
products in urban areas NID-HCA
mortgage insurance program. If
partnered with Fannie Mae San Faith-based organizations, individu- passed into law, the bills will increase
Francisco Bay Area Community als and families interested in learn- FHA mortgage insurance program
Business Center to help facilitate a ing more about the NID-HCA Bay assistance for lower- and moderate-
Bay Area wide initiative. The initia- Area faith-based initiative may call income homebuyers and/or homeown-
tive links mainstream lender part- 510-562-6573. ers. Lower downpayments and higher
ners with homebuyers, church lead-
loan amounts in certain areas are key
ers, and NID-HCA counselors in a
for many families to achieve home-
ownership. The legislation has broad
How Our Website Can Help You support in both parties, popular sup-
port with the general public, and has
The NID-HCA website is an excel- qualified real estate professionals a good chance to become law this
lent source of information. It offers who will provide unbiased answers. year. Look out for updates on our
a very complete explanation of the These answers can be obtained via website at www.nidonline.org.
services we provide to help you. e-mail or by phone. The website
Some of the topics we cover on the contains contact information for
website are: each of our local offices, nationwide.
Visit us online today at
• An explanation of the home www.nidonline.org.
buying process;
• A discussion and explanation of
the opportunities that exist for
homeowners, and Upcoming In the Next Issue:
• Information regarding opportu-
THE IMPORTANCE OF CREATING WEALTH WHILE RENTING
nities for faith-based and com-
munity-based organizations and CURRENT TRENDS IN PRE-PURCHASE
how we can help them take ad-
vantage of these opportunities. NID’S OUTREACH TO THE FAITH-BASED COMMUNITY
Most importantly, our website is a SETTING AND ATTAINING HOMEOWNERSHIP GOALS
way for you obtain free and accu-
rate answers to your real estate HANDLING UNEXPECTED HOME-RELATED EXPENSES
questions. All questions that are
submitted are answered by highly-
President of NID Executive Director NID-HCA NID-HCA National Office
Ray Carlisle Jacqueline Carlisle 1301 85th Ave., Oakland, CA 94621
Phone: 510.562.6573 • Fax: 510.568.4582
Chairman of the Board Editor nidonline@nidonline.org
Joanne Baker Latisha Carlisle www.nidonline.org
NID HOUSECALL 4 OCTOBER 2006