Setting Up a Home Buyers Education Program

1. Setting Up a Home Buyers Education Program Virginia Cooperative Extension 2005 FCS In Service Training March 1-4, 2005

2. Establishing Your Program Partnerships VHDA Certification HUD Approval Use of “Experts”

3. Partnerships • County & City Offices of Housing • Public School System • Departments of Social Services • Police & Fire Departments • Non Profits • e.g. Habitat for Humanity

4. VA Housing Development Authority (VHDA) Certification Virginia’s Mortgage Finance Company www.VHDA.com • Train the Trainer Classes • Home Ownership Classes • English, Spanish, Korean, Vietnamese • Upcoming Home Ownership Classes • VA Beach - March 15 • Fredericksburg - March 22 • Harrisonburg - April 7

5. U.S. Dept of Housing & Urban Development (HUD) • How to become a HUD approved housing counseling agency • Housing Counseling Program Handbook 7610.1 (In revision) Write: US Department of Housing and Urban Development Distribution Section, Room B-100 451 Seventh Street, SWWashington, DC 20410 Call: (800) 767-7468 Fax: (202) 708-2313 www.HUD.gov click on • Index • Housing Counseling • “How to Become a HUD approved ….”

6. Qualifying Criteria 1. Nonprofit Status. The applicant must function as private or public nonprofit organization. The agency must submit evidence of nonprofit status as demonstrated by Section 501 (c) of the Internal Revenue Code. 2. Experience. The applicant must have successfully administered a housing counseling program for at least one year. 3.Community Base. The applicant must have functioned for at least one year in the geographical area that the applicant proposes to serve. 4. Counseling Resources. The applicant must have sufficient resources to implement its proposed counseling plan no later than the date of HUD approval.

7. Electronic Grant Application Must apply for HUD grants electronically • Go to http://www.grants.gov • Register • Get DUNS number • Download & Install Pure Edge Viewer • Sign Up with Central Contract Registry • Register with Credential Provider • Sign on as an Authorized Organization Representative • Pull out hair, scream, don’t give up…. • Go to http://www.grants.gov • Register • Get DUNS number • Download & Install Pure Edge Viewer • Sign Up with Central Contract Registry • Register with Credential Provider • Sign on as an Authorized Organization Representative • Pull out hair, scream, don’t give up….

8. Use of “Experts” • Develop a policy (Prince William Example) • If representing your program then they can’t • Take participants as clients or refer to others • Hand out business cards • Contact clients • Representing their program then • Announce Disclaimer • Participants can contact them (they can’t initiate contact) • Business cards & literature OK • No self promotion ? ? ?

9. What to Include Legal Issues of Taking Title Financing Shopping for a Home Post Purchase

10. Legal Issues of Taking Title

11. Title • How you hold title to property (real or personal) determines what you can do with that property • Sole ownership • Tenants in common • Joint tenants with right of survivorship (JTWROS) • Community property • Tenants by the entirety

12. Sole Property and Separate • You have 100% ownership and control of property • Passes to named beneficiaries if the you have a will or trust • Passes according to the laws of intestacy if no will or trust. • Property will pass through probate if you die with or without a will

13. Share of Tenants in Common • You can sell or transfer your share • Technically, you could mortgage just your share but in practice mortgage companies require both signatures as they do not want to deal with the partial ownership • Your share passes to your heirs the same as if you owned it as sole and separate

14. Joint Tenancy with Right of Survivorship (JTWROS) • Passes to the Surviving Joint Tenants by title regardless of what a person’s will or trust states • Passes outside of probate • If you put someone on the title of property (other than a spouse) who has not contributed to the purchase of the property, you are making a taxable gift and must file a gift-tax return. • At the death of the surviving joint tenant the property passes by that person’s will or the laws of intestacy

15. “AND” vs. “OR” in Joint Tenancy With Right of Survivorship • “And” means that both parties must sign to sell or mortgage the home • John and Mary Doe • Required for tenants by the entirety • “Or” means the either party may sell or mortgage • John or Mary Doe

16. Tenants by the Entirety • Married couples only • One cannot sell or dispose with out the other • At death of one spouse the property passes to the surviving spouse by title outside of probate – similar to JTWROS

17. Financing

18. Financing • Determining what can you afford • Obtaining a mortgage • Insurance • Credit scoring & the credit model

19. Determining What You Can Afford Lender Qualifying Guidelines... Mortgage Debt Monthly housing costs no more than 28% of gross monthly income Total Debt Monthly housing costs and all other debt no more than 36% of gross monthly income VHDA & Program lenders use 29/41% (36/45% in Northern VA)

20. Reality Check • Client determines “comfort level” for housing • Not necessarily what lender says • Financial assessment • Assets liabilities income expenses • “With and without” home assessment • VHDA Spending Plan

21. Costs of Purchasing a Home • Up Front • Down Payment • Closing • Settling In • Ongoing • Upkeep & Utilities • Monthly Mortgage Payment • “PITI” • Consider tax savings

22. Sources Obtaining a Mortgage • Savings & Loan Associations • Commercial Banks • Mortgage Companies • Federal Credit Unions • Finance Companies $

23. MORTGAGE TERMS  Loan Amount  Loan Term  Interest Rate Fixed Rate ARM  Annual Percentage Rate "Points"   Lock In Rate

24. = “Adjustable Rate Mortgage” ARM  Financial Index Margin Adjustment Interval  Rate Cap (Periodic & Lifetime)  Payment Cap  Convertibility

25. Insurance  Private Mortgage Insurance Lender - Buyer Pays  Title Insurance Lender - Buyer Pays Borrower - Optional  Life Insurance (Mortgage Life or Term?) Borrower - Optional  Hazard Insurance Borrower - Buyer Pays  Disability Income Insurance Lender - Buyer Pays

26. Recent payment history total credit available and amount you are using How long your credit history If you are shopping for credit Liens, bankruptcies, etc Race, religion, gender Married, single, divorced Where you were born Credit Scoring Model In Model Not in Model

27. What Makes Up YourCredit Score? Source: Craig Watts, Consumer Affairs Manager for Fair, Isaac - March/April 2002

28. What the Number Means* *Range of numbers being expanded.

29. Shopping for a Home • Working with a realtor • The home inspector • Municipal planning departments • Offer to purchase & contingencies • Settlement (Closing)

30. Real Estate Professional • Seller’s Agent • Buyer’s Agent How Paid? “Multiple Listing Service”

31. Home Inspector Vs. Appraiser... • appraisers look at things such as condition of property, comparables, etc. • home inspectors look at systems, structure, foundation, etc. Don’t perform the same service

32. Home Inspection • Items that should be covered • foundation • roof • plumbing/electrical systems • heat/air conditioning systems • doors and windows • insulation • ventilation American Society of Home Inspectors (800) 743-2744

33. Municipal Planning Departments • Area comprehensive plan • Zoning for property and surrounding property • Easements or restrictions • Home Owners Association • Buffers • Open space restrictions • Roadway maintenance • Future roadway plans

34. Offer to Purchase • Complete legal description of the property • Amount of earnest money deposit • Price offered • Size of down payment • How the remainder of the purchase will be financed (including maximum interest rate buyer willing to pay) • financing must be date specified • Closing date & occupancy date • pre-occupancy? • Length of time offer is valid • SPECIFIC CONTINGENCIES...

35. Specific Contingencies • Financing • Inspections • Appraisal • Repairs • Personal property - what “conveys?” • Clear title

36. Closing

37. Post Purchase Finally, It's Your Home

38. Know Your Property

39. Home Maintenance -Fall & Spring • Check roof for loose or broken shingles • Check attic for leaks, critters • Clean gutters & downspouts • Check siding for cracked or peeling paint • Service heating/cooling system • clean filters monthly • Check basement for wet spots, cracks in foundation Establish a reserve fund & beware of solicitations….

40. Resources VHDA Guide CD - PowerPoint Files & Other Handouts) Fannie Mae & Freddie Mac Home Buying Education Festival

41. Fannie Mae • Fannie Maewww.fanniemae.com • “Achieving Home Ownership” • “Maintaining a Home” • Fannie Mae Foundation www.fanniemaefoundation.org • Knowing and Understanding Your Credit • Opening the Door to a Home of Your Own • Borrowing Basics: What You Don’t Know Can Hurt You • Choosing the Mortgage That’s Right for You Fannie

42. Freddie Mac – www.freddiemac.comCalculators • Preparing For Homeownership • Rent vs. Buy • Tax Savings • How Much Can You Afford? • How Much Can You Borrow? • All About Mortgages • Fixed or Adjustable-Rate? • Adjustable-Rate Mortgages • 15-year or 30-year Term? • Down Payments • Closing Costs • Refinancing Costs Freddie