Tuesday, Apr 24, 2018
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Real Estate

Home buying for beginners

Closing costs. Inspections. Points. The difference between credit reports and credit scores, not to mention the pros and cons of fixed-rate versus adjustable-rate mortgages.

The home-buying process can be confusing and heart-palpitating to those who have done it before. It can be downright overwhelming for those searching to buy their first home.

I bought the book Home Buying for Dummies and I read the entire thing in a week when we found a house we wanted to buy, said 24-year-old Sara Bassler, who is in negotiations to buy her first home, in west Toledo.

And what I didn t understand from the book, I went on line and Googled it, she said. She works at Medical University of Ohio and is studying to be a physician s assistant.

If she had known about online tutorials or seminars, she would have done those too, she added.

With foreclosures rising at an alarming rate, more housing agencies and organizations are attempting to educate people long before they sign contracts for their first homes.

The Toledo Board of Realtors has a designation for real estate agents who specialize in helping first-time buyers.

Neighborhood Housing Services of Toledo Inc. holds four-week workshops devoted to the basics of cleaning up credit and launching a search for a home.

The U.S. Department of Housing and Urban Development just launched five Web-based tutorials that give details on what to do before finding a house.

The reason for the education is simple, said Sally Wylie, president of the Realtors group.

This is to not only make them understand the process, but to make sure they re not getting themselves into something that is going to be a problem later on, said the agent with Danberry Co. Realtors in Toledo.

To get help more renters become owners, the board has identified selling affordable housing as one of its goals and has devised the Certified Affordable Real Estate Specialist designation as a way for agents to prove their expertise in issues facing buyers of affordable housing, most often first-time buyers.

To qualify for the designation, a real estate agent must have sold 10 homes in three years that would be considered affordable housing, described as costing $90,000 or less; must complete 15 hours of some type of community-related activity, such as building a home for Habitat for Humanity or putting on a buyer s seminar; and take 10 hours of approved education related to financing and other affordable-housing issues.

Diane Critchet, corporate senior vice president and mortgage product manager for Sky Financial Group Inc., said loan officers will guide potential clients to the right type of loan or get help for them.

Several of the first-time-home-buyer loans require credit counseling or budget counseling that really help clients understand all expenses of a home, not just a mortgage but when the furnace goes out, she said.

Many banks offer products for first-timers, some of which waive bank fees and have lower closing costs.

But the rationale for providing counseling, too, said Ms. Critchet, is that selfishly, we feel that if consumers understand their credit, they will pay their mortgages and we ll have less collection expense.

For many renters seeking to buy a home, it s too early to consult with a lender or real estate agent until they have a grip on their finances and credit history.

That s where Neighborhood Housing Services comes in.

On the second Tuesday of each month, the nonprofit community development corporation holds orientation meetings to introduce people from Lucas County to its four-week course on home-buying that is free.

Participants are asked to bring recent credit reports from the three major reporting agencies to the orientation, and then they meet with credit counselors for a one-on-one session, said Eleanor Mays, the program s trainer.

(The agency can obtain the reports and credit scores for a fee of $22.65 if someone has not pulled his or her own free reports).

At that point, the counselors try to determine whether the person needs simple credit repair and can go ahead and join the four-week session on how to buy a home or if the potential buyer will need more time to repair their credit, Ms. Mays explained.

For the four-week session, participants meet on Wednesdays and learn the ins and outs of buying a home, including the simple definitions of what a mortgage is and what they need to think about before going through the process.

Successful participants get a certificate, good for one year, that they can take to area lenders when they apply for a loan.

Such information is included in HUD s five-part Web series: The ABCs of Homebuying, Elevate Your Credit, Easy to Understand Mortgage Programs, Where to Find the Homeownership Money You Need, and Ten Homeownership Facts That Will Save You Thousands.

Key to knowing how much home a person can afford is knowing the person s credit report and score, said the HUD counselors. Credit scores typically are between 300 and 900, and mortgage lenders want applicants to have scores of at least 620, the HUD series reports.

Suggestions on how to boost a credit score include limiting the times a credit inquiry is triggered, such as applying to buy a car or furniture on credit. Also, the borrower should work on correcting errors found on the credit report and make sure monthly bills are paid on time.

The advice is common sense, but many people do not know it, said Lisa Rice, executive director of the Fair Housing Center of Toledo. A Federal Reserve study, she said, found more than 90 percent of home buyers did not understand the closing process or the papers they signed at the closing.

The center s sister agency, Northwest Ohio Development Agency, will start in September offering a five-week course on money management, which includes budgets, improving credit scores, and the basic terminology of buying a home.

There can never be enough education out there, Ms. Rice said.

Consumers with computers can access the HUD tutorials once they download a free video player, and others can request free disks from the Toledo area s regional HUD office, in Cleveland; the disks are expected to be available in two months.

Not all counseling ends once the moving truck departs.

The Toledo Urban Federal Credit Union counsels people on buying a home, including having them do the work to get errors fixed on credit reports. But it also offers one-on-one counseling, called Second Chance, to make sure the buyers stay in the home, said Suzette Cowell, executive director.

A lot of people can tell you how to get there, but you want them to have the staying power when the little things come up that do come up in everyday life, she said.

Contact Mary-Beth McLaughlin at: mmclaughlin@theblade.com or 419-724-6199.

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