Tips for Preparing for Homeownership
Owning a home plays a critical role in communities across America. It’s part of “the American Dream,” and more and more businesses, government officials and non-profit agencies like Transformance are working hard to create a more durable and fair housing finance system for hard-working individuals.
In honor of National Homeownership Month, Pam Webb, a certified credit counselor with Transformance, shares her thoughts on what it takes to be a homeowner in today’s financial climate.
Q: Tell us how Transformance is helping people with homeownership.
A: Our Pre-Purchase Seminar is a great program that empower individuals with knowledge that they need to understand before becoming a homeowner. This seminar will allow attendees the opportunity to gain understanding from lenders, insurers, realtors, appraisers and more. At the successful completion of this seminar, a HUD certificate will be issued. Transformance is also providing educational Webinars and Counseling sessions that will make individuals mortgage ready with the information regarding credit scores, budgeting and savings.
Q: What type of clients do you normally work with?
A: I am currently counseling clients that are considering a FHA reverse mortgage known as a “Home Equity Conversion Mortgages” aka a HECM Loan.
Q: What are some of the unforeseen costs of homeownership?
A: Some of the unforeseen cost of homeownership can be the increasing cost of property taxes and homeowner’s insurance as well as the ongoing cost of maintenance. Natural disasters can also bring unexpected expenses when you have to pay your homeowners insurance deductible.
Q: What are some of the pros and cons about refinancing your loan?
A: A refinance may allow you to obtain a lower interest rate, which can lead to a lower mortgage payment. The cost of refinancing can be one of the biggest cons. It’s important to have a good credit score and determine if the terms of the refi are going to help you meet your long term financial goals.
Q: What is a reverse mortgage and how might it benefit homeowners?
A: There are three types of reverse mortgage loans: a Single Purpose Reverse Mortgage, which is a loan offered by the state or local government; the Proprietary RM, which is a privately insured loan; and the FHA mortgage program that offers the Home Equity Conversion Mortgage, also known as the HECM loan. The HECM loan will enable a homeowner that is 62 years or older to withdraw some of the equity in their home and use as cash or a line of credit to help gain financial security. Many seniors use these funds to meet unexpected medical expenses or make home improvements, or reduce debts. This type of loan does not have to be paid back until the homeowner permanently moves from the home.
Q: How does talking to people about homeownership and reverse mortgages affect you?
A: I’ve gained insight and understanding from the programs that we provide our clients and this has benefited myself and my own family. Making thoughtful and informed decisions is something we can benefit from at all stages of our life. I’m proud to work for an agency that has a mission and vision to empower individuals and families to achieve their financial freedom that will provide an opportunity for financially sound communities as this will impact us all.
For more information on how Transformance can help you achieve your financial dreams, please visit www.transformanceusa.org.