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Contents The HOYO Process
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| What Can You Do Today?Buying a home is a long process that is different for everyone who undertakes it. For some it can take 6 months, for others it may take 3 years or more. The best approach to making homeownership a reality for you and your family is to identify your next step and to take it. Try not to become discouraged and to give up because it looks as if you are a couple of years away from buying your own home. Keep focusing on your next step and someday homeownership will be a reality for you. Evaluate Your Credit HistoryYour credit history is an accumulation of data from banks, auto finance companies, department stores, mortgage companies, collection agencies and public records detailing your history of repaying financial obligations. A two year history of paying your bills on time is almost a must for obtaining a mortgage loan. How is your history? Paying all your bills on time? Great keep it up! If for some reason you cannot afford a bill's minimum monthly payment, do not stop paying the bill. Contact the vendor today and work out an alternate payment schedule. Obtain a copy of the agreement you have made in writing and stick to it! Have you paid some bills late? If you have made some late payments, begin to establish an on-time payment history today. Contact the vendors to develop an alternate payment schedule if necessary. Even if you are only paying $5 per month toward a debt you owe, you are showing a good faith effort to repay a financial obligation. What about past accounts? If you know of accounts that have been turned over to a collection agency or charged off, contact the vendor or the agency to develop a repayment plan Be sure to obtain the terms of the repayment plan you have arranged in writing. Then stick to the plan! Numerous Debts?!? You may need the help of Consumer Credit Counseling. In most metropolitan areas and in many smaller cities and towns, there is a nonprofit organization called Consumer Credit Counseling that works with individuals to clean up derogatory credit history. Check your telephone directory to see if there is one that can assist you in your area. You can also work on your credit history by yourself, but remember to put everything in writing. Be careful, there are a number of credit repair services that charge you fees to repair your credit. Make sure the company is associated with Consumer Credit Counseling or check them out with the Better Business Bureau and ask for references. You don't want to spend any money on services that won't help you in the long run. Nontraditional Credit HomeChoice accepts nontraditional credit histories. If you do not have traditional credit, an ontime payment history with utility and telephone companies, your landlord and insurance companies can substitute as a non-traditional credit history. So if you are not already doing so, pay your rent, telephone bill, auto insurance, cable bill, electric bill and gas bill on time to maintain a strong bill-paying history! Reduce Your DebtMortgage companies use a number of formulas, such as debt-to-income ratios to determine how much money to lend you. This is based primarily on two figures: your income and your debt. Reducing your debt may be necessary in order for you to qualify for enough of a mortgage to buy a home in your area. Take a good look at your budget. If there are things that you normally spend money on that you do not need, consider using that money to pay off your credit cards or loans. While few of us enjoy making sacrifices like not eating out, or not buying that new CD, the money we save adds up quickly and can make a major difference in reducing our debt. In addition, the more you reduce your debt, the less interest you will be paying - saving you even more money. Save Your MoneyEven with down payment and closing cost assistance from the Texas Home Of Your Own Coalition or some other organization, you will be asked to contribute some of your own money towards the purchase of your home. You will need your money for... A Down Payment Depending on what mortgage loan product you use and are eligible for you will need anywhere from $250 up to 5% of the total cost of the home you want to purchase. Cash Reserves Some loan products, including HomeChoice, require a borrower to have at least two month's mortgage payments held in reserve to be used to make loan payments in case of emergency. Up Front Expenses After you have negotiated an offer with a home seller you will have some expenses you will have to pay up-front. These expenses include fees for inspections and appraisals, earnest money, and a credit report the bank obtains. Please remember: SOCIAL SECURITY HAS A $2,000 LIMIT ON THE AMOUNT OF MONEY YOU CAN HAVE SAVED THEN YOUR ELIGIBILITY FOR SOCIAL SECURITY BENEFITS SUCH AS SSI WILL BE AFFECTED. |
