Frequently Asked Questions

Home Buyers

Am I ready to buy my own home?
Find out by asking yourself a few simple questions:
- Do I have a steady source of income?
- Is my income reliable and consistent?
- Do I pay my bills on time?
- Do I have very few outstanding bills, like car payments?
- Do I have the ability to pay a mortgage every month, in addition to home maintenance costs?
If you answered “yes” to these questions, you are probably ready to buy your own home.

How do I begin the homeownership process?
Start by thinking about your situation:
- Are you ready to buy a home?
- How much space do you need?
- What areas of town do you like?
- What do you want close to your home, like schools, work places or a mall?
- How much can you afford in a monthly house payment? A Participating Lender can help answer this question.
After you answer these questions, make a "To Do” list and start doing research on the type of house you would like. Talk to friends, drive through neighborhoods, look in the local paper or search on the Internet.

What is the difference between homeownership and renting?
One of the advantages of renting is being generally free of most maintenance responsibilities. Some of the advantages of owning your own home include the opportunity to build equity, take advantage of tax benefits and protecting yourself against rent increases. You are also free to decorate without first getting permission from an apartment manager and have a yard to relax in or allow your children to play! Owning a home has many benefits. When you make a mortgage payment, you are building equity and that is an investment. Owning a home also qualifies you for tax benefits that may assist you in dealing with your new financial responsibilities, such as homeowner’s insurance, real estate taxes and home maintenance. But given the freedom, stability and security of owning your own home, it is worth it!

How does the lender decide the maximum I can afford when buying a home?
The lender will consider your debt-to-income ratio. This is a comparison of your gross (before-tax) income to housing and non-housing expenses.

Non-housing expenses include debt (bills or loans), such as car payments, student loan payments, alimony or credit card bills. Your monthly mortgage payment should be no more than 29% of your gross income. Your mortgage payment, added to your non-housing expenses, should total no more than 42% of your income.

The lender also considers cash available for down payment, closing costs, credit history, bill payment history as well as other things to determine your maximum loan amount.

Are there any other useful tips to consider during the home buying process?
Keep accurate records of payments and statements including:
- Monthly Bills
- Bank Statements
- Credit Card Statements
- Other Regular Monthly Payments
Keep a good working relationship with your current landlord.
Pay your bills on time. By paying your phone, utility and cable bills on time each month, you can enhance your credit worthiness. If you have no credit history, these types of payments can be used to establish credit history.

Pay off outstanding bills. Whenever you can, pay off your bills in the form of credit cards, installment loans and luxury items. In many cases, high debt levels decrease the amount of a mortgage loan you can afford.

Work at getting any large outstanding debt under control by making payment arrangements. Even if you can not afford to pay off the entire amount, call the creditor and agree on a payment plan that will allow you to pay off the bill by making small monthly payments.