CT HOUSING FINANCE AUTHORITY
NEWS & INFORMATION
Following the Right Path to Homeownership
By Rose Holbrook
CHFA Marketing & Customer Service
Coordinator
Posted February 1, 2008
Being a homeowner is the “American Dream.” Finding the right path to homeownership is important to having a good home-buying experience.
For first-time homebuyers, determining and following the right path to homeownership can sometimes seem confusing. The key to finding the right path lies your ability to fully understand the whole mortgage process--from pre-qualification, to working with a Realtor® to find a home that meets your needs and desires, to applying for the mortgage loan with a mortgage lender and ultimately becoming a homeowner and maintaining your home for years to come.
There are many types of loans available and choosing the one that makes financial sense to you should not be a decision you make without thoroughly looking at all options available to you as a first-time buyer. Many first-time buyers can get overwhelmed when they realize all the mortgage program options that may be available to them in the housing financing market. If you are thinking of taking out an adjustable rate mortgage loan (ARM), it is important that you know when the rate will reset to a higher interest rate and determine if that higher rate will be financially feasible for you in the future.
Because purchasing a home is most likely the largest investment you will ever make in your lifetime, you should make every effort to understand all aspects of the transaction. Researching mortgage options and understanding how they work is a key component of the home-buying process. Another key component is taking a homebuyer education class to help you determine what program fits your personal financial situation and whether this is the right time for you to become a homeowner.
Free homebuyer education classes offered by CHFA are geared towards preparing you to becoming a homeowner. They review credit and budgeting, shopping for a home, explain how to make a purchase offer, and give you guidance on getting the right mortgage loan that fits your financial situation. Additionally, the classes will review home maintenance and managing your finances after you become a homeowner. CHFA also offers credit and financial counseling free of charge to assist prospective borrowers who may have some concerns about their credit. A list of class locations offered by CHFA is available at www.chfa.org under Homebuyer Programs/Counseling Class Schedule.
Steps to Homeownership – What Every First-time Buyer Should Know
By Rose Holbrook
Marketing & Customer Service Coordinator
Posted July 20, 2007
Buying a home can seem overwhelming with many decisions and options such as choosing a lender, identifying the right mortgage program and interest rate and finding a real estate agent to work with to find you a home. Planning is key when considering purchasing a home. You want to make sure that you are ready to take on the role of homeowner, and to do so you should understand the steps in the buying process.
Step 1:
Take a free 8-hour CHFA
Homebuyer Education Class. Classes are held throughout the State every month
through approved Housing Counseling Agencies. The schedule of classes and
Counseling Agencies can be found on the CHFA website at:
http://www.chfa.org/FirstHome/counseling_classes.asp The classes will help
you prepare you to become a homeowner, teach you how to maintain your home, go
over credit and budgeting, discuss shopping for a home and how to make an offer
as well as understanding the mortgage loan process. Individual financial and
credit counseling is also available, depending on need.
Step 2: Consult a reputable mortgage lender to get pre-qualified or pre-approved for a loan amount that you can comfortably afford. CHFA has over 95 participating lenders in its network that can assist you with your mortgage loan. The lender will qualify you for a CHFA loan based on eligibility criteria which includes your stability of employment, sufficient income, and credit history. It is important that you organize your financial files before you meet with a lender. The lender will need to verify your income, employment status, and will need a list of your assets and outstanding debts. Typically, a lender will recommend that your monthly payments including principal, interest, insurance and taxes do not exceed 28% of your monthly gross income and your total monthly debt (including your mortgage) should not be more than 36% of your gross monthly income. Ratios can vary depending on the insurer of the loan. Your lender will review this information during the loan application process.
Step 3: Select a real estate agent to assist you with finding a home. It is important that you provide the agent with your pre-qualification or pre-approval letter from your mortgage lender so he/she will know what price range you can afford. An informative meeting with your selected real estate agent will help him/her understand exactly what type of home you are looking for and identify those that fall into your affordability range. Having the mortgage pre-qualification or pre-approval is an advantage, as sellers are more likely to consider an offer where a buyer has already begun the preliminary mortgage process with a lender. A real estate agent can also help you with writing up the offer once you find a home to purchase. One consideration when putting in an offer is to put a contingency on having a satisfactory home inspection. Although CHFA does not require a home inspection, the insurer of the loan may require an inspection. It is recommended that you hire a home inspector to conduct a thorough inspection of your home. Having the condition of a satisfactory home inspection will give you the option to not go forward with the purchase if construction or maintenance deficiencies are discovered. During this process you should also engage the services of a real estate attorney.
Step 4: Once your offer to purchase the home is accepted by the seller, you will then return to your lender to fill out a formal application for a CHFA loan. Generally, CHFA requires a minimum downpayment of 3% of the purchase price. If you have not saved enough for the downpayment, CHFA can also lend you downpayment funds and can also lend you closing costs as a second mortgage, depending on need. Your lender will work with you to determine what assistance you will require. Your lender will lock your rate in at the current interest rate offered by CHFA when your loan is reserved. The rate is locked in for 120 days. During this period your loan will be underwritten by the lender and then submitted to CHFA for approval. This process generally takes between 4-6 weeks.
Step 5: At this step you are on your way to homeownership. Upon receipt, CHFA will review the complete underwriting package submitted by the lender and issue a commitment with 48 hours. Once you have a commitment letter, you can schedule your closing and accept the keys to your new home!
As a first-time homebuyer, you should make informed decisions. Understanding the steps to follow when looking to purchase your home will make your home buying experience more pleasurable.
For more information on CHFA’s affordable Homebuyer Programs, visit our website at www.chfa.org. We look forward to opening the door to homeownership for you!
CHFA – Not Just a Mortgage Loan
By Rose Holbrook
Marketing & Customer Service Coordinator
Posted January 29, 2007
You may have heard that Connecticut Housing Finance Authority (CHFA) has low, fixed-rate mortgages for first-time homebuyers. But did you know that we also offer many other services to our borrowers?
Working with our counseling agencies and over 90 lenders who originate our loans, CHFA provides affordable, low-interest rate mortgages for first-time homebuyers or prior homeowners who are looking to purchase homes in targeted areas of the State.
CHFA not only provides the
loan to purchase the home, but also offers downpayment assistance loans for
those who are ready to purchase a home but have not been able to save for their
downpayment. Generally, the minimum downpayment requirement with a CHFA loan is
3% of the purchase price. However, first-time homebuyers who qualify for a CHFA
loan may also qualify to borrow the downpayment funds. Closing costs can be
overwhelming to a new buyer, and in many cases, the buyer may not have the funds
saved to cover these expenses. Borrowers may also qualify for a loan to cover
their closing costs, which can range from $3,500 to $5,000 or more. Borrowers
who qualify for downpayment and closing cost assistance loans may qualify for a
CHFA loan with little or no out-of-pocket expenses!
Over the past few years, we have developed several different pre-purchase and loss mitigation programs to educate borrowers and help keep them in their homes for years to come.
Pre-purchase education consists of our 8-hour Homebuyer Education classes that are offered through several HUD-certified counseling agencies across the State. Classes are free of charge to anyone who is looking to become a homeowner and include topics such as understanding the home purchase process from pre-approval to securing mortgage financing, preparing to become a homeowner, and teaching the prospective borrower how to maintain their home for years to come. In addition, CHFA offers individual financial and credit counseling, if needed, to assist prospective borrowers who may have budgeting credit issues that need to be resolved prior to purchasing their home.
If a borrower is laid off, underemployed, is temporarily unable to work due to a short-term disability, or experiences another acceptable hardship, CHFA has several loss mitigation tools that may help the borrower stay in their home and avoid foreclosure.
From pre-purchase counseling, to mortgage financing, to post-purchase loss mitigation programs, CHFA is more than just a mortgage loan. Visit our website at www.chfa.org for more information on all of our affordable mortgage programs. Let us open the door to homeownership for you!
CHFA—The Affordable Choice for
Homebuyer Mortgage Financing
By Rose Holbrook
Programs that get borrowers in their homes, and keep them there: CHFA provides free homebuyer education classes taught by FHA-approved counseling agencies across the state. These classes help prospective homebuyers understand the home purchase process; prepare to become a homeowner; and teach them how to maintain their home for years to come. Individual financial and credit counseling is also available to those who need it, at no charge.
CHFA partnered with Genworth Financial, Inc., to offer CHFA borrowers HomeOpeners Involuntary Unemployment Insurance. This is additional insurance that gets added on after the loan closes for any loan insured by GE Mortgage Insurance. The additional insurance can make mortgage payments including the principal, interest, taxes and insurance up to $2,000 for up to six payments ($12,000 maximum benefit available during the first five years only) for borrowers who are involuntarily unemployed. This special insurance is available at no extra charge to the borrower.
Downpayment and closing cost assistance: Many buyers delay the
purchase of their first home because of the difficulty in saving the necessary
funds, and obtaining enough money for a downpayment is a major obstacle to
becoming a homeowner. CHFA has a way of overcoming that obstacle with its
Downpayment Assistance Program (DAP). CHFA provides downpayment loans as a
second mortgage to qualified borrowers purchasing a home anywhere in the State.
Funding for closing costs can be a challenge, but appraisal fees, origination
charges, insurance premiums, and the cost of legal representation, which can
total several thousand dollars, can also be incorporated into the DAP loan.
Loans to fit borrowers’ needs: In addition to its statewide
program, CHFA offers several mortgage programs that provide a lower-cost
financing choice. These programs that include: 1) the Teachers Mortgage
Assistance Program provides financing to public or vocational school teachers
teaching in priority or transitional school districts. Those who are employed
in the Priority or Transitional School districts and teach in subject-matter
shortage areas may be eligible to purchase a home anywhere in the State; 2) the
Police Homeownership Program is offered to municipal or state police offices in
any of the 17 participating cities and towns; 3) the Military Homeownership
Program offers a program for full-time enlisted military personnel in any branch
of the military; 4) persons with disabilities can utilize CHFA’s Home of Your
Own (HOYO) Program; and 5) the Homeownership Program provides a loan for persons
living in public or subsidized housing.
Income and Sales Price Limit Increases: CHFA programs follow income and sales price limits, which recently increased in many areas this past July. The increases open the door of opportunity for more first-time homebuyers to purchase their homes using CHFA affordable mortgage program financing. The statewide income limits for a 1-2 person household is $81,000 and the income limit for 3 or more in the household is $93,150. Sales price limits vary by county and are as high as $725,000 in some areas of the State.
With so many affordable mortgage programs available, CHFA is clearly the best choice for first-time homebuyers. For more information on CHFA’s Homebuyer Programs, visit www.chfa.org. Let us open the door to homeownership for your clients.
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