Washington Homeownership Center

If you are considering applying for a mortgage or other loan, you should make sure that you have recently pulled a credit report and are familiar with everything that is contained on it. Nowadays, you do not need perfect credit to obtain financing, but your credit history and FICO score are important factors in your ability to qualify for the best loan products available. Your credit score tracks what kind of credit you use and how you have repaid your creditors. Establishing a good credit history takes time and commitment but it makes it easier to qualify for lower interest rates and can also affect the amount of money a lender is willing to loan you.

If you do have some credit blemishes, there are several ways to improve them-keep in mind that there are no “quick-fixes” as far as your credit is concerned. You can also do it on your own---beware of agencies that charge money to clean up your credit report.

Tips to improving your credit

• Pay your bills on time
• Keep balances on open credit lines low
• If you have high balances on multiple credit lines make sure you pay at least the minimum due on all lines, but try to concentrate on 1-2 cards at a time and pay as much as you can to pay off your credit debt
• Keep in mind that older credit cards show more history so work on keeping your credit in good standing-opening new cards won’t improve your score if you have a history of late payments on older cards.
• Check your credit report regularly! The Federal Government passed a law to make it easier for consumers to have free access to their credit reports once a year

Click here to learn more about how get a free copy of your credit report and tips to fixing errors.

by Leigh Bezezekoff, HomeStreet Bank (www.homestreetbank.com)

Just looking through homes on the internet can give you an idea of what your budget can buy. Is it realistic to hope that you can live in a particular neighborhood, if homes in that area are beyond your current financial abilities? But don’t give up, because getting your foot in the door of a modest starter home or condominium that is not located in your neighborhood of choice can help you to slowly build wealth so that you can later move up the property ladder.

The second step in finding a home that you can afford is to set priorities. Since you may not be able to buy the home of all of your dreams, you need to prioritize which dreams are most important to you. Is the neighborhood or the school district your most important prioritity? Are you willing to buy a home that needs some work and if so, can you do the work yourself? Can the kids sleep in the same bedroom for the time being instead of having separate bedrooms? Is a garage critical? Can you get by with one bathroom instead of two? These and many other questions should be discussed and considered with other members of your family.

Your first home is often called a “starter home” for good reason. Statistics show us that the average person lives in their first home for about 4 years. You may not live there forever as you once thought, but it can be a terrific way to start on the road to homeownership and allow you to move on to a bigger, better, and more luxurious home later in your life.

by Vikki Selig, Wilson Realty ( www.getrichslowly.com)

Dear Emily,
After addressing some errors on my credit report, I finally got pre-approved for a low interest loan through a local non-profit housing agency. I have $5,000 saved up for a down payment and closing costs, and we are ready to purchase our first home. However, there don’t seem to be any homes that I can afford where I currently live. Now what do I do?
Signed, Ready to Go

Dear Ready to Go: First of all, good job on addressing the issues on your credit report and saving money for a down payment and closing costs. Many people are faced with the same dilemma as you, homes are not as affordable as they used to be, and they often don’t have enough money saved for a larger down payment. Don’t get discouraged, there are several different options to look at. First, you may qualify for down payment assistance - several programs exist and are administered through counties, cities and non-profit groups. These funds are loans and will have to be paid back, but most are deferred and do not have compound interest. Second, there are several agencies around the state that develop affordable housing. There are also Community Land Trusts in some areas. The land trust partners with you and in essence they pay for the land your home is on and you buy the house. Third, find a real estate professional that understands your situation and is knowledgeable about programs that are available to first time home buyers.

Programs and services vary depending on what area of the state you live in; to see what resources are available in your area, log onto www.homeownership-wa.org and search under ‘Resources Near You’.

Dear Emily,
I have been renting for the last ten years and am tired of paying towards someone else’s mortgage. I am interested in buying a home, but not sure if I can really do it. How do I get started and who can help me?
Signed, First Steps

Dear First Steps: The first thing I suggest is attending a free 5 hour home buyer seminar sponsored by the Washington State Housing Finance Commission. These seminars are taught by a lender and real estate professional or a non-profit agency. The seminars are filled with great information including the following topics, what a lender is looking for when you apply for a loan, different types of loans, what a real estate professional does when working with you and costs associated with buying a home. After you take the seminar you can determine if there are any other issues you may need to take care of such as, credit, budgeting, and research of assistance programs before you meet with a lender to get pre-approved for a loan. You may also find that you are in need of some additional help to get started, or to address financial issues that you may have. There are several housing counseling agencies as well as consumer credit agencies that may be able to work with you. Services are usually free and these agencies can work with you to set up a household budget, address credit issues, help determine if a loan is appropriate for your financial situation, and they may also be able to help you find financial assistance programs.

To find a seminar or housing counseling agency near you log onto www.homeownership-wa.org and search under ‘Resources Near You’ or call the Homeownership Hotline at 1-866-600-6466.

Dear Emily,
I have been doing a lot of research into programs and loans that are available, and it seems like I keep getting a different story with each person I talk to. How can I sort everything out and find the right loan for me.
Signed, Confused

Dear Confused: You have to keep in mind that there are many loan products and assistance programs and they don’t all have the same guidelines. You can’t compare yourself to a friend or co-worker…everyone has a different financial situation. It is a good idea to keep notes and ask a lot of questions. If you are told you don’t qualify for a program or loan, ask what it is that would need to change to qualify. You may have one or two things to do to become eligible. For example, your credit score may affect what sort of loan you are offered. You might not meet income guidelines for one assistance program, but be qualified for another. Interview various loan officers at different banks and find a loan officer who is familiar with first-time homebuyer programs that are offered by government and non-profit agencies. Then spend some time with them going over what all of your options are.

If you are having difficulty finding the right fit for you, call the Homeownership Hotline at 1-866-600-6466 for assistance.

'Ask Emily' is written by Emily Nolan, Program Manager for Washington Homeownership Center.

(enolan@homeownership-wa.org)

WHC advocates following these eight steps in order, and as completely as possible, to ensure that your loan and home are the best possible fit for you and your family and that your homebuying experience is positive and stress-free. For a more detailed description of each step, click here.

#1 GET EDUCATED!: If you haven’t already, attend a Commission-sponsored homebuyer education seminar. These classes are always FREE and are at least five hours long. A list of all Commission-sponsored classes given by presenters that have received training are available by clicking here. When you complete this class you will really understand the homebuying process and be an informed consumer.

#2 KNOW YOUR CREDIT HISTORY: Get a copy of your credit report. Review the information, address any issues, and correct any errors in the report as necessary. Click here for information about obtaining a free credit report without a FICO (credit) score, or better yet, an official copy of your credit history and scores from all three credit bureaus.

#3 DO A BUDGET: You want to be able to answer the question “How much am I comfortable paying every month for housing?” which may be less than the mortgage payment that you can qualify for.

#4 RESEARCH ASSISTANCE PROGRAMS: Washington Homeownership Center can provide you with a list of available programs in your region and the income parameters for each. Click here for more information.

#5 LOAN PRE-APPROVAL: Try to interview various lenders that offer the first-time buyer assistance programs you are most qualified to receive.

#6 WHAT ARE YOUR PRIORITIES?: Set realistic personal (or family) priorities for your new home . Your first home may not include everything on your wish list, so it is important that you and your family have agreed on your priorities such as the neighborhood, number and type of rooms, the quality and condition of the home,etc.

#7 SEARCH FOR YOUR NEW HOME: Interview various real estate professionals that have experience working with first-time homebuyers and decide to work with the one that you feel most comfortable with

#8 PURCHASE YOUR NEW HOME !

As the old saying goes, “neither rain, nor snow, nor heat, nor gloom of night” prevents the postman from his duties, which unfortunately includes the delivery of your monthly home energy bill.

There seems to be no end to rising energy costs. The Alliance to Save Energy projects home energy costs increasing by 9 percent by 2010. This bigger chunk out of the average household wallet each month leaves fewer dollars to cover your mortgage payment.

Here are a few tips that can help you to lower your energy bill by making a few simple changes. Small, inexpensive ways to cut down energy usage during household tasks like washing laundry can add up to significant savings.

1) The Alliance to Save Energy, one of the world's premiere energy efficiency organizations, dare consumers to take the ColdWater Challenge and wash their laundry in cold water. This change can save up to $63/year for the average consumer.
2) Take showers instead of baths, and install a low-flow showerhead.
3) Insulate your hot water pipes and water heater with approved insulation materials.
4) Listen to your mother. (“What do you think -- we own the electric company?!”) Turn off everything that's not in use: lights, TVs, computers, electronics.
5) Four for the planet. Replace your four most used incandescent bulbs with compact fluorescent bulbs.
6) Clean or replace AC/heating-system filters monthly.