June is National Home Ownership Month. Many Americans purchases homes during June. In June 2010, home sales increased 24% from the previous month. Owning a home is one of the best ways to generate wealth. Owning a home requires financial discipline and sacrifice. Create a budget or spending plan to help manage your finances to make sure you can stay in your home for as long as you like and to help reduce the chances of filing for bankruptcy or foreclosure.
Your monthly mortgage payment should be no more than 38% of your total monthly income. This will ensure that you have extra cash to pay for unexpected expenses and will reduce the chances of using a credit card and going into debt. The advantages of owning a home are: it increases your credit score, proves that you are a responsible spender, provides a tax write-off, increases your financial worth, and provides you with an asset that will appreciate over time.
Before you buy a home you need to prepare for the home buying process. Estimate your monthly mortgage payment. Subtract the difference of the estimated monthly mortgage payment and your current rent (if you pay rent). Here are 6 tips to help you buy a home.
1. Find the best loan
2. Use home buying programs
3. Find a home and make an offer
4. Get a home inspection
5. Shop for homeowners insurance
6. Prepare for settlement and closing
Here are 10 programs to help homeowners stay in their homes.
1. Hope Now Program – www.hopenow.com, 888-995-4673
2. FHA Secure Loan Program – http://portal.hud.gov.
3. Home Affordable Refinance Mortgage Program (HARP) - http://www.makinghomeaffordable.gov/refinance_yes.html
4. Home Affordable Modification Program (HAMP) - https://www.hmpadmin.com/portal/programs/fha_hamp.jsp
5. Second Lien Modification Program (2MP) –https://www.hmpadmin.com/portal/programs/second_lien.jsp
6. HAFA (Home Affordable Foreclosure Alternatives) Program - https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.jsp
7. FHA HAMP (FHA Home Affordable Modification Program) –https://www.hmpadmin.com/portal/programs/fha2lp.jsp
8. FHA Second Loan (FHA2LP) – https://www.hmpadmin.com/portal/programs/fha2lp.jsp
9. UP (Unpaid Principal) –https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.jsp
10. Retired Veteran Program, www.va.gov
Here are 8 tips on how to stay in your home or sell your home.
1. Short Sale. If you cannot afford to keep your home and you are upside down on your mortgage, then a short sale might work for you. Your lender must approve the sale because you would have to sell your home for less than what you owe your lender. As part of your negotiations, you need to make sure that the lender agrees to accept the sold proceeds as satisfying your loan debt.
2. Reinstatement. Your loan is reinstated to current status after you pay the default amount and any other costs or fees.
3. Loan modification. Your lender modifies your current loan to make your payments more affordable by lowering the interest rate and/or extending the mortgage term and adding the default amount to the back end of your loan or forgiving it. Provide documentation to show you are experiencing a hardship.
4. Forbearance. Your lender works out a short term payment plan for you to get caught up on your payments. After you are caught up, you go back to paying your regular mortgage payments. Occasionally, the lender will reduce the principal amount on your loan as well.
5. Deed in lieu of Foreclosure. Signing the deed back to the lender, handing them the keys, and walking away owing the lender nothing.
6. Repayment. Pay the past due amount over a period of months. Read the terms carefully to be sure you can afford the payment.
7. Refinancing. If you have equity, you can refinance by obtaining a new loan with a lower interest rate, at a fixed term with a lower monthly payment and pay off your existing mortgage.
Fraud is an aspect of every industry including the mortgage industry. Beware of mortgage scams and illegal practices. Here are 8 tips to prevent being a victim of predatory lending and discrimination:
1. Do you research before applying for a mortgage loan
2. Shop around to several lenders before making a selection
3. Ask questions if you don't understand something
4. Take the paperwork home and read it over, contact a real estate lawyer or law school student to help explain any legal terms and information you don't understand
5. Make sure all of your questions regarding the loan are answered
6. Make sure you are comfortable with the terms provided
7. If the terms keep changing find another lender to do business with
8. Go with your gut instinct, if it seems too good to be true it probably is
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