Whenever I heard people talk about mortgages, it always sounded like they were speaking a foreign language. So many words I didn’t fully understand: escrow, closing costs, fixed-rate, variable rate, title insurance. I never bothered to learn the vocabulary. I thought someday, down the line, when I’m ready to buy a house or an apartment, when the money for the down payment is in the bank and the house of my dreams (or more likely my means) is for sale, I’ll make the time.
Big mistake! I finally took a mortgage seminar presented by Municipal Credit Union, my credit union. As I listened to the presenters, I tried to enjoy my free cookie and soda, but my stomach just grumbled, along with all the other eager future home-buyers in the packed room. The presenters made it clear that there is so much to do with fixing up your finances before you can even think about getting a mortgage and fixing up a house. The good news is that there is lots of free resources out there provided by neighborhood non-profit organizations to help you get ready to buy an apartment or home.
Here are three ways to get educated on mortgages:
- Meet with a credit counselor. You must take care of your credit!!! Don’t wait until you are just about to apply for a mortgage to look into your credit. If your credit is good, you can get low-interest rates. If you have bad credit, you might not even qualify for a mortgage. And don’t rely on a family member to have good credit. I kept thinking that my husband has good credit, so it won’t matter if mine is not perfect. But then I learned there is no such thing as co-signing for a mortgage. You are co-applicants, so your credit will count. If you live in New York City, call 311 and ask them to help you schedule a free credit counseling session. It’s time for me to get my ducks in order, so I signed up to meet a counselor at Neighborhood Housing Services (NHS) of New York City. NHS has locations throughout the country.
- Go to a first-time homebuyer’s meetings. Many local organizations provide these classes. These classes will let you know if you qualify for first-time homebuyer’s assistance programs. There are also online homebuyer’s courses, but you need to take an in-person one if you want to qualify for assistance programs.
Check out classes provided by Mutual Housing Association of New York: http://mutualhousingny.org/
- Learn the vocabulary. These are just some of the words you will need to understand:
- Earnest money: Deposit you make on a home when you submit an offer.
- Down payment: A percentage of the cost of the home that you must pay when you got to settlement.
- Closing cost: The cost associated with processing the paperwork.
- Title report: A title investigator does a 40-year search on the property to make sure there are no liens on the property and the person selling the property is actually the owner. For more information and vocabulary look at:
- Meet with a loan officer. Banks and credit unions want your business so make an appointment with a mortgage loan officer. Bring a list of questions. Find out if your bank holds mortgage seminars. When you are ready to go ahead and get pre-approved for a mortgage, you will need to bring documents for the loan officer to review. Do not take this step until you are fully committed to getting a mortgage. The bank will use the documents to look into your credit and this can have a small negative effect on your credit rating. You only want them to have to look into your credit once – not multiple times.
- Flip through those pretty home decorating magazines. Go to an open house in your favorite neighborhood. Do whatever you need to do to get excited about owning a house or apartment and then use that excitement to motivate you work on your credit and savings. Remember, for most of us, this is a long-term goal (I’m 41 and finally ready), so start young and save.
Connect with Kara @frugalfeminista