jefferson workbook 2

1st Time Homebuyer’s Education Program

This program is made possible with the generous support of our sponsors: POWERHOUSE REALTY ERICA DENISE HOLIFIELD ACADEMY MORTAGE CORPORATION THE AL RUCKER SHOW & KSHX POWER 101.5 FM HOUSTON For more information visit our website

www.jcdhousing.org

In Accordance with the compliance standards of

Our Mission The mission of Jefferson Community Development Foundation, Inc.; Is to provide social services for First Time Homebuyer Assistance & Education, Financial Literacy and/or resources to develop affordable housing for first-time homebuyers.

Vision Statement The vision of the Jefferson Community Housing Development Foundation, Inc is to serve as the development arm and social service provider of consumer finance education to social ser- vices agencies, churches, and other non-profits that are not able to service the targeted populations in Jefferson, Brazoria, Harris, Waller and Grimes County and the State of Texas.

Purpose and Class Overview The purpose of the Homebuyer Education Certification is to educate prospective homebuyers in the principals of homeownership. Buying a house represents one of the greatest financial commitments a family can make. At the same time owning a home come with a sense of accomplishment and pride.

While we can expect to experience mixed emotions and high stress at times, this class has been developed to educate those who have no experience in the home buying process.

In taking this class, attendees will have the opportunity to learn about the following topics during a very interac- tive class session: Renting vs. Owning, Steps in the home buying process, Understand the role of real estate and mortgage professionals, Determine affordability, Create a budget, Understand cred- it, Affordable mortgage products, Find the right home, Maintain a home and take care of finances.

At the completion of the class, attendees will be able to determine their position in the home buy- ing process and the steps they would need to take individuality to attain the goal of a smooth pro- cess with the help of their purchasing team.

This class is the first step that takes prospective homebuyers closer to the “American Dream.�

Realizing The American dream

Are You Ready To Buy A Home?

Realizing the American Dream – use the Following to follow along with the Presentation S1: Are You Ready to Buy a Home?

• Is owning a home right for you • How you buy a home • Your homeownership team • Mortgage payment and other costs • How much you can afford • Qualifying ratios

S1: the agenda • Is owning a home right for you • How you buy a home • Your homeownership team • Mortgage payment and other costs • How much you can afford • Qualifying ratios

S1: Advantages of Homeownership

S1: Disadvantages of Homeownership

• Stable housing costs • Tax benefits • Equity • Control over your environment • Stability

• • • • •

S1: Steps in the Home buying Process

S1: steps cont’d

• • • • •

Attend homeownership education class Determine how much you can afford Meet with lender for pre-approval Determine wants and needs in a home Shop for a home

S1: Your Home buying Team • Homeownership Counselor • Real Estate Agent • Lender • Attorney or Escrow Agent

• • • • •

Title Insurance Agent Home Inspector Appraiser Surveyor Homeowners Insurance Agent

S1: Costs of Buying a Home Upfront Costs • • • • •

Down payment Closing costs Escrows Reserves Moving costs

Ongoing Costs • Mortgage payment • Utilities • Maintenance and repairs

Monthly costs No guarantees Maintenance and repairs Decreased mobility Fewer features included

• • • • •

Make an offer Have professional home inspection Apply for mortgage loan Obtain homeowners insurance Close the loan

S1: The Mortgage Payment • • • •

Principal Interest Taxes Insurance

S1: The 4 Cs of Credit • Capital • Capacity • Credit History • Collateral

S1: Ordering a Credit Report Experian

www.experian.com (800) 831-5614

TransUnion

www.transunion.com (800) 888-4213

Equifax

www.equifax.com (800) 685-1111

S1:

Qualifying Ratios

S1: How Much Can You Afford?

S1: Prequalification Financial Calculations  How much money the lender will lend you  What price home you can afford  How much down payment you need  How much your monthly payments will be This is not a guarantee

S1: Managing Your Money - Agenda S1: Next Steps

 Getting started  Planning how to spend your money  Developing and making a spending plan to meet your goals  The importance of saving  Getting help

 Sign up for education or counseling  Order copies of your credit report

S1: Why a Spending Plan?

• • • • •

S1: How Do You Use Money?

• The Super Saver • The Conservative • The Carefree • The Big Spender • The Over Spender

Prepare for large expenses Encourage savings Prepare for surprise expenses Identify wasteful spending Accomplish goals

S1: Rate Your Spending Habits

S1: Rate Your Spending Habits

• • • • •

• • • • •

Things easiest to change?

Things hardest to change?

Is a house worth giving these things up?

Are you ready to do this?

Other things you want to do first?

Things easiest to change?

Things hardest to change?

Is a house worth giving these things up?

Are you ready to do this?

Other things you want to do first?

S1: Establishing a Spending Plan

S1: Setting Household Goals

• Determine your monthly net income • Calculate your monthly expenses • Subtract your regular expenses from your income

• • • • •

Keeping Track of Spending • Save all receipts • Record in a small notebook

S1: Wants vs. Needs

Discuss household goals Be specific and realistic Rank household goals in order of importance Agree on top goals Figure out how much it will cost to reach your goals

S1: Different Types of Expenses

 Needs = items you must have for basic survival

• • • •

 Wants = things you desire but can live without

S1: Trimming Expenses • • • • •

Clip coupons Use a list to do grocery shopping Make cost comparisons fun Get three quotes for large purchases Agree on allowance for each household member

S1: Money Management Tips • • • •

• • • •

S1: Trimming Expenses (Cont’d) • • • • •

Is the spending plan working?

Are all household members able to follow it?

Which costs always seem to be over the planned amount?

Are we getting closer to reaching our goals?

Eat at home Take lunches to work Shop in resale stores Trade services with friends Find fun activities that are free

S1: Money Management Tips (Cont’d) • Set money aside for maintenance & reserves • Pay yourself first - at least 10% of take-home pay • Get consensus from entire household

Plan according to current income Plan ahead for six months Include spending money for all Keep record keeping simple

S1: Reviewing the Plan

Fixed expenses Periodic fixed expenses Flexible expenses Indebtedness expenses

S1: Making Money Management Easier • • • • • • • •

Decide who pays bills Know when bills are due Use utilities’ level billing payments Open a checking account Open a savings account Consolidate credit card accounts Consider selling a car Check your interest rates Stick to the plan

S1: Controlling Day-to-Day Spending • • • • •

S1: Importance of Saving

Carry written reminders of your goals Carry as little cash as possible Pay with cash, check or debit card Avoid using credit cards Buy only what you need

S1: Types of Savings Accounts • • • • •

S1: Tips for Savers

Regular savings account Club account Certificate of deposit (CD) Money market account Matched savings account (IDA)

• • • •

S1: Understanding Credit

S1: Importance of Good Credit

Your Credit Rating • How much you have borrowed • From whom you borrowed • How well you have repaid your debts • How you are handling current debts S1: Credit Reporting Agencies Experian TransUnion Equifax

• • • • •

To obtain a lower interest rate To get a job To lease property To establish utility services To obtain insurance

S1: credit scores

www.experian.com (800) 831-5614 www.transunion.com (800) 888-4213 www.equifax.com (800) 685-1111

S1: What Makes Up a Credit Score?

• Payment history • Amount of outstanding debt • Length of credit history • Types of credit • New credit

Pay yourself first Open a savings account far away from home and work Save change at end of day Bank your surprises

Credit agency Eqifax Experian transUnion

Fico score Beacon Experian/ empirica

Range 300-850 340-820 150-934

What Makes Up a Credit Score?

S1: Tips for Improving Your Credit Score 35% 30% 15% 10% 10%

• • • • •

Correct any inaccurate information Pay your bills on time Minimize outstanding debt Open new accounts only if needed Manage credit accounts responsibly

S1: Correcting Errors and Omissions

S1: Common Credit Problems

• Follow the instructions provided • Explain the problem in a brief letter • Contact the creditor directly if the credit reporting agency does not find the error • Write a consumer statement if the issue remains unresolved

• • • • • •

S1: How Long Does Information Remain?

S1: Solving Credit Problems

• Negative information 7 years • Bankruptcies 10 years • Judgments 7 years • Student loans 7 years • Inquiries 2 years Generally, the period runs from the date of the last transaction

S1: Debt-Management Plans • • • •

At start, accounts may be paid late Not all creditors “re-age” accounts Some creditors report the plans Many view the plans as Ch 13 bankruptcy

Credit Counseling • •

Neighbor Works® organizations Consumer Credit Counseling Services

S1: Nontraditional Credit • • • •

Rent payments Gas, electric and other utility payments Child care or child support payments Any other large, recurring expense

S1: Managing Your Debts • • • • • • • •

Be honest about your debts Add up what you owe to all creditors Figure out why you have money problems Decide how many credit cards you really need Pay off or pay down debts Consider consolidating credit card bills Make or revise a family spending plan Pay cash for everything you buy

Pattern of late payments on current debts Bankruptcies Judgments or liens Past-due or collection accounts Charge-offs Foreclosures or repossessions

• • • • • • • •

Prepare a realistic spending plan Contact creditors Seek professional help Pay past due accounts Negotiate discounted payoffs Negotiate a workout plan Write an explanation letter Negotiate a debt-management plan

S1: Danger Signals of Quick Credit Fixes • • • •

Asking for payment before credit repair services are provided Advising you to dispute all negative information Over-promising quick results Helping you get a new identity

S1: Establishing Credit • • • • •

Always pay bills on time Open checking and savings accounts Apply for a loan using savings as collateral Apply for a limited-use credit card Apply for a loan with a co-signer

S1: Managing Your Debts (Cont’d) • • • • •

Establish or maintain savings plan Automate to be on time Give up luxuries temporarily Look to the future Try “Power-Pay” for smarter paying

Pizza Cost Comparison Cash/ pay now = $10

Credit card/18% = $42.40

S1: Obtaining A Mortgage Loan What Is A Mortgage?

• Promissory Note • Mortgage or Deed of Trust • Collateral • Secured Loan What Does a House Payment Include?

• Principal Taxes • Interest Insurance

S1: Steps in Obtaining a Loan • • • • • • •

Research Pre-approval Loan application Loan processing Underwriting Approval Loan Closing

S1: The 4 Cs of Credit / Capital • • • •

Capital Capacity Credit History Collateral

• • • • • •

Down Payment Loan Fees Closing Costs Escrow Impounds Reserves Moving Expenses

S1: Credit History • • • •

Are bills paid on time Current liability Past history No credit history

S1: Affordability and You

S1: Capacity • • •

Current income Income history and future earning potential Amount owed  Installment accounts  Revolving charge accounts  Other monthly payments

S1: Collateral Is the house worth what you are paying for it?

Ratios • Housing Ratio = maximum % of gross monthly income that can be used for a monthly mortgage payment • Debt-to-Income Ratio = maximum % of gross monthly income that can be used for the house payment plus all other debts

S1: Getting Prequalified Calculations using affordability ratios show: • • • •

how much money the lender will lend what price home you can afford how much down payment you need how much your monthly payments will be This Is not a Guarantee

S1: Obtaining Pre-approval

S1: Subprime Loans

• •

• For those with credit problems • Higher interest rates • Risk-based financing Loan Price Cost Comparison Mo principal and Total interest paid Rate

Obtain pre-approval before searching for house Guarantees that the lender will lend a fixed amount within a set time period • May have a fee Conforming Conventional Loans • Conform to Fannie Mae/Freddie Mac guidelines • Available in many types of loans

interest

6.20% 12.30%

$612 $1,052

$120,488 $278,643

S1:

S1: Predatory Lending • • • • • •

High-pressure sales tactics and steering High interest rates and fees Balloon payments and negative amortization Prepayment penalties “Flipping” Deceptive practices and fraud

Government Loans • FHA insured loans • VA guaranteed loans • Rural Housing Services guaranteed loans • State or local financing insured loans Special Loan Programs • Fannie Mae and Freddie Mac • Local bank programs • State and local bond programs • Nonprofit programs

S1: Types of Loans

S1: Loan Fees

• • • • • • •

• • • • • •

Fixed-rate mortgages Adjustable-rate mortgages Interest-only or balloon mortgages Graduated payment mortgages Bi-weekly mortgages Incentive rate reduction mortgages Shared-equity mortgages

Loan application fee Credit report fee Appraisal fee Loan origination fee Document preparation fee Broker fee

S1: Shopping for a Loan

S1: Comparing Loan Programs

•

• • • • • • •

• • • •

Get referral from homeownership counselor or Realtor® Check with current financial institution Get referrals from friends and family Shop online Check local or state financing programs

S1: Applying for the Loan • • • • • •

S1: Loan Application Documents

Discuss details of loan terms Complete and sign written application form Provide copies of required documents Sign permission letters for verifications Sign authorization for credit report and pay fee Pay for application fee and appraisal

S1: Steps to Approval Processing - Order/Review credit report - Mail verifications of employment and deposit - Calculate housing and debt ratios - Order property appraisal

Mortgage loan amount and type of loan Down payment Term of mortgage Interest rate and APR Monthly payments Other costs and fees Any prepayment penalty

• • •

Application (Form 1003) Truth in Lending Statement Good Faith Estimate

S1: Legal Reasons for Rejection Underwriting Review case file Recommend accept, deny or give conditions for approval

• • • •

High debt Insufficient funds Low appraisal Poor credit rating

S1: Standard Loan Conditions • • • • • •

Mortgage insurance Hazard and possibly flood insurance Clear title report and lender’s title insurance Clean termite inspection and certification Survey Other inspections common in area

S1: Closing Associated Costs • • • •

Loan fees Interim interest Insurance premiums Escrow account deposits

S1: Other Conditions • • •

Property condition contingencies Documentation contingencies Other requirements  sale of another property you own  pay off debt  resolve legal problems

S1: Shopping for a Home Your Rights • Equal Opportunity • Fair Housing Act • Enforcement Agencies

Steps in the Home buying Process • • • •

Prepare for homeownership Determine how much you can afford to spend Get your loan pre-approved Decide what kind of home you want and need

S1: Your Home buying Team S1: Steps in the Process (Cont’d) • • • • • •

Shop for a Home Make an offer Have a professional home inspection Apply for a mortgage loan Obtain homeowners insurance Close the loan

S1: Homeownership Counselor • •

Works for nonprofit organization, credit counseling service or housing agency Provides objective information and unbiased recommendations

Real Estate Professionals • • • •

Real estate broker Real estate agent Realtor® Realtist®

S1: The Buyer’s Agent’s Job • • • • • •

Helps determine your wants and needs Provides neighborhood information Helps you get prequalified Researches homes available in price range Provides copies of listing sheets Shows you properties for sale

• Home ownership Counselor • Real Estate Agent • Lender • Attorney Escrow Officer

• • • • •

Title Insurance Agent Housing Inspector Appraiser Surveyor Insurance Agent

S1: Who Do Agents Work For? • • • •

Listing agent Buyer’s agent Dual agent Agents are paid through the transaction

S1: Buyer’s Agent’s Job (Cont’d) • • • • •

Prepares purchase offer (in most states) Negotiates with seller Provides names of lenders Refers you to other professionals needed Reviews all legal paperwork

S1: Finding an Agent • • • • •

Ask friends and relatives for recommendations Research online web sites Call your local Association of Realtors Interview more than one agent Check out the agent’s professional record

S1: Buying a Home without an Agent • • •

FSBO (For Sale By Owner) Hire an attorney Order an independent appraisal

The Lender • • •

Recommends best type of loan Pre-approval strengthens offer to purchase Lender’s primary concern is for loan to be repaid

S1: The Real Estate Attorney

S1: Escrow Officer/Closing Agent

May do any of the following: • Write real estate contract • Search title • Conduct closings • Settle disputes • Review contracts

• •

S1: Title Insurance Agent • • • • • •

Neutral party not representing either buyer or seller May keep original purchase contract, other documents and earnest money deposit Makes sure all people involved in sale do their job Prepares deed and HUD-1 Settlement Statement Fee usually split between buyer and seller

• • •

S1: Items Checked in a Home Inspection

Researches chain of title ownership Lists liens that use the house as security Shows easements or unusable land areas Verifies amount of taxes and if paid Includes any deed or zoning restrictions Ensures that any condo or homeowners association dues are paid

Structural

Mechanical

• • • • • • •

• • • • • • •

Foundation Roof Doors Windows Ceilings Walls Floors

Plumbing Electrical systems Heating Air conditioning Insulation Ventilation Septic systems

S1: “Green Tips”

S1: The Appraiser

 Check for lead-based paint and/or radon  Look for signs of water damage, leaks/ mold  See if there is good ventilation for bathroom and kitchen

• Hired by the lender • Determines fair market value • Conforms to Uniform Standards of Professional Appraisal Practice (USPAP) • May require survey for correct legal description

S1: The Surveyor   

Measures property and land Lender may require Part of the title search

The Insurance Agent • Homeowners policy covers hazard and liability • Flood insurance required in FEMA-designated areas

S1: Shopping for a Neighborhood    

Visit at different times of the day Check out local schools Check with local police for crime statistics Visit with neighbors

S1: Different Types of Homes • • • • • •

Detached single-family Duplex, triplex, fourplex Planned unit development (PUD) Townhouse or row house Condominium or Cooperative Manufactured Home

S1: Ways to Own a Home • • • •

Sole and separate: single person Tenancy in common: different shares and can will to heirs Joint tenancy: equal, undivided shares, often with rights of survivorship Shared-Equity (deed restriction, land lease, shared appreciation)

S1: Exploring on Your Own • • • • • •

S1: Land Lease • • •

Common on Native-American and manufactured housing sites Owner owns the house and rents land Way nonprofit organizations are able to provide more affordable housing

S1: Things to Consider • • • •

Current and future size of household Living needs and interests Proximity to work, schools, shopping, recreation How “green” do I want my home?

S1: Exploring on Your Own (Cont’d) • • • • • •

Research on Internet Drive through selected neighborhoods Check real estate section and TV channel Check real estate shopping guides Visit open houses Visit new home projects

Check out foreclosed homes Attend auctions (always sold “as is”) Attend tax and foreclosure sales Contact nonprofit organizations Ask friends and relatives who are moving Look at For Sale By Owner homes

S1: Evaluating Your Dream Home

S1: Determine Fair Market Value

     

•

Prices of comparable or similar homes for sale and sold

•

Features your home has that others do not

•

Relative price per square foot of your home

Inspect the house carefully Estimate maintenance and repair expenses Check out the neighborhood Visit schools, daycare centers Make the rush hour drive to and from work Observe other homes on same street

S1: The Offer Includes…

• • • • • •

Price being offered Amount of earnest money Legal names of buyers and sellers Address and legal description of house Provision for home inspection Proposed closing date

S1: The Offer… (Cont’d) • • • • •

Financing to be obtained List of items the seller is leaving All contingencies Breakdown of fees and who pays them Time limit for seller acceptance (maybe)

S1: Typical Contingencies • • • • •

Financing Appraisal Clear title Satisfactory home and other inspections Sale of existing home

S1: From Contract Acceptance to Closing • • • • •

S1: Negotiating Seller can:  Accept  Reject  Counteroffer Buyer can:  Accept  Reject  Counteroffer

S1: Types of Insurance Required • • • • •

Buyer makes formal loan application Lender orders appraisal and verifies all information provided by borrower All required inspections are made Survey is done if required Title and homeowners insurance are obtained

•

S1: Homeowners Insurance

Hazard or homeowners insurance Flood or special hazard insurance Mortgage insurance Title insurance Mortgage life insurance (not recommended) Home warranty policy

Property protection • Coverage A: The home • Coverage B: Detached structure • Coverage C: Contents (personal property) • Coverage D: Additional living expenses • Replacement Cost • Liability Protection • F.A.I.R. plans in states where coverage denied

S1: Cost of Insurance: External Factors

S1: Preparing for Closing

S1: Closing Documents

• • • • •

• • • • • •

•

Do final walk-through inspection Get copy of the HUD-1 settlement statement Obtain cashier’s check for amount due Be sure homeowners insurance policy is in Call the utility companies

S1: Closing Documents (Cont’d) • • • • • •

Deed Title insurance policy Title abstract Survey of property Termite inspection report Escrow analysis

• • • • •

Type of construction and fire protection Type of contents Size and condition of the house Proximity of fire hydrant and station Your credit score

Final Truth in Lending statement Final Good Faith Estimate HUD-1 settlement statement Mortgage note Mortgage (or Deed of Trust) Necessary affidavits

S1: Closing Costs • • • • • •

Settlement charges Charges associated with loan Pre-paids required by lender Title search and title insurance fees Government recording and transfer fees Notary, survey and other miscellaneous fees

S1: Protecting Your Investment

S1: Things You Need to Know • • • •

Why Protect Your Home Three-way Investment 1) shelter for your household 2) life and heart for your community 3) financial asset for your future

Main cutoff valves for water and gas Main electrical switch Marked fuse or circuit breakers Hot water heater thermostat

S1: Questions for the Seller

S1: More Questions

• • • • • •

• • • • • •

What is the history of the home?

Are there wiring diagrams or blueprints?

Are any appliances or repairs under warranty?

When is trash day? Who picks it up?

Who provides water and sewer?

What other services are available?

S1: Building a Healthy Environment • • • • • • •

Eliminate smoking from home Check smoke and carbon monoxide alarms Avoid accumulation of moisture and chemical pollutants indoors Vacuum weekly and reduce clutter Increase air flow in the home Reduce use of pesticides Do not run car in attached garage

Who is the fuel oil supplier?

How to use energy-efficient systems What seasonal maintenance has been done?

Who has worked on the house?

How much do the utilities and services cost?

Is there extra (matching) paint available?

S1: More Ways to Healthy Environment • • • • •

Do not heat home with unvented heater Address water leaks ASAP Use cleaners and pesticides in well-ventilated area Look for natural alternatives to household products Keep food and trash in sealed containers

S1: First Priorities on Move-In

S1: Keep Safe and Secure!

• • • • • •

• Change all locks on doors & windows • Lock doors and windows when you go out • Trim shrubs that hide windows and doors • Install outside lighting • Put up “beware of dog” sign • Stop mail and newspaper when you go away

Post emergency numbers Have a fire safety inspection Install smoke and carbon monoxide alarms Place fire extinguishers on each floor Plan fire escape route Stock first-aid kit (out of children’s reach)

S1: Energy-Saving Tips • • • • • • • •

Turn lights off when you leave a room Don’t let water run during chores Plan meals to cook more than one item at a time Don’t use appliances during the heat of the day Close windows when the heat or AC is on Close the refrigerator door completely Dress appropriately for the season Adjust the thermostat to the season

S1: Energy-Savings Tips for the Home • • • • •

Add attic insulation Change to low-flow faucets, shower heads and toilets Service furnace and change filter regularly Caulk around doors and windows Install storm windows and doors

S1: More Energy-Savings Tips • • • • •

Set water heater low and cover with blanket Install attic fans or vents Buy energy-efficient appliances with Energy Star® logo Install ceiling fans Monitor your heating and cooling systems

S1: Improvements that Usually Add Value • • • • •

Adding another bathroom Modernizing a kitchen Creating more closet and storage space Building a garage Adding a deck, patio, screened porch and skylights (if they’re common in your area)

S1: Working with Contractors • • • • •

S1: Questions Before Remodel or Repair  Do you need to hire a contractor?  Will the job add value to your house?  How much can you afford to spend?

S1: Planning Your Project • • • • •

Think about the finished product Consider your budget Make sketches Do research on local permits and codes Think about timing and weather

S1: More to Know About Contractors • • • • •

Decide which type of contractor you need Interview at least three contractors Get references Visit at least one completed job Ask how long the contractor has been in business

Check out the contractor’s reputation Check the contractor’s insurance Ask about guarantees Get firm, line item bids Get contract specifics

S1: Managing Your Contractor

S1: Know Your Community

• • •

• • • • • • •

• •

Control costs by controlling changes Agree on payment up front Don’t make the final payment until the job is done Specify responsibility for permits Get a lien waiver on larger jobs

Meet your neighbors Read community newspapers Contact Welcome Wagon Visit city or town hall Join a service or professional club Volunteer for special events Attend neighborhood association meetings

S1: Asset Building

S1: Common Reasons for Refinancing

• Manage your money • Mortgage payments • Utilities • Maintenance & repairs • Reserves • Develop a savings plan • Beware of the credit trap

• • • • •

Save money by lowering your interest rate Convert to another type of mortgage Build up equity faster Convert some equity to cash Hope for Homeowners as refinancing option

S1: Warning: You Pay a Price With a Predatory Lender • • • •

High-pressure sales tactics and steering High interest rates and fees Balloon payments and negative amortization “Packing” and padding costs and fees

S1: Protect Yourself from Predatory Lenders • •

Shop around Don’t sign incomplete documents or anything you do not understand • Work with a homeownership or credit counselor Use your right to cancel (three-day right of rescission for refinance)

S1: Predatory Lending Practices •

Flipping

•

Locking in borrowers

•

Equity stripping

•

Deceptive practices and fraud

S1: What to Do If …

• Cannot meet your financial responsibility • Are in danger of foreclosure COMMUNICATE WITH YOUR LENDER AS SOON AS TROUBLE STARTS!!

Call national foreclosure prevention hotline: 888-995-HOPE

S1: Loan Workout Programs • • • •

Payment plan Forbearance Loan modification Partial claim

Moving On • Pre-foreclosure sale • Deed in lieu of foreclosure

S1: Make the Most of Counseling •

Be honest

•

Be cooperative about gathering information

•

Be willing to make sacrifices and changes

S1: Delinquency Counseling: There’s Help for You • • • • •

Nonprofit agency that helped you buy HUD: (800) CALL FHA or hud@custhelp.com Your mortgage insurance company National foreclosure prevention hotline: 1-888-995-HOPE Local VA office for a VA loan

S1: Your Best Resource For more information, contact: NeighborWorks® America 1325 G St., NW, Suite 800 Washington, DC 20005 Call 202.220.2300 or 800.438.5547 or visit www.nw.org

1: Are You Ready to Buy a Home?

Housing Affordability Worksheet If you are paid: Weekly

$

x 52

$

pay before deductions

Twice a Month

$

annual income

x 24

$

pay before deductions

Once a Month

$

annual income

x 12

$

pay before deductions

Other Monthly

$

Income

other monthly income

annual income

x 12

annual income

Total Gross Annual Income (Add annual income from all borrowers to other monthly income)

$

$

$

x 2.5

$ Low Range of Housing Cost

Gross Annual Income

$ Gross Annual Income

x3

$ High Range of Housing Cost

2: Managing Your Money

Monthly Income Worksheet Figure Your monthly income

Your weekly pay

X 52 ÷ 12

$

$ (take-home pay)

(monthly income)

Or Your twice-a-month pay

$____________________

X2

$ __________________________

(take-home pay)

(monthly income)

Your monthly Take-home Pay

$ ________________________

Figure Other Household members’ monthly income

Weekly pay

$___________________ (take-home pay)

or Twice-a-month pay

$ __________________ (take-home pay)

Other Household members’ Take-home Pay

X 52 ÷ 12

X2

$ _____________________ (monthly income) $ _____________ (monthly income)

$ _______________

Other monthly income

$______________________

Second job

$______________________

Regular overtime

$______________________

Public assistance

$______________________

Child support

$______________________

Pension

$______________________

Social Security

$______________________

other

$______________________

Total Other monthly income

$______________________

Total net monthly income

$___________________

REalizing THE am ERica n dREa m

®



neighborWorks America

2: Managing Your Money

Monthly Expenses Worksheet Housing Rent or mortgage $ Heating (gas or oil) $ Electricity $ Water or sewage $ Telephones (landlines and cell phones) $ Renters or homeowners insurance $ (if not included in mortgage) Trash service $ Home maintenance and furnishings $ Cleaning supplies $ Lawn service $ Transportation Gas $ Car payment $ Car insurance $ Car inspection $ Car repairs and maintenance $ License plates and registration fees $ Public transportation or taxi $ Parking and tolls $ Food Groceries School lunches Work-related (lunches and snacks)

$ $ $

Insurance Health $ (medical and dental, if not payroll-deducted) Life $ Disability $ Medical Doctor Dentist Prescriptions

$ $ $

Childcare Childcare or babysitters Child support or alimony

$ $

Clothing Clothing Laundry and dry cleaning

$ $

Donations Religious or charity

$

Total Regular Monthly Expenses

$ _______

Education Tuition Books, papers and supplies Newspapers and magazines Lessons (sports, dance, music)

$ $ $ $

Gifts Birthdays Major holidays

$ $

Personal Barber or beauty shop Toiletries Children’s allowances Tobacco products Beer, wine or liquor

$ $ $ $ $

Entertainment Movies, sporting events, concerts, etc. $ Video rentals $ Internet service $ Cable/satellite TV $ Restaurants and take-out meals $ Gambling and lottery tickets $ Fitness or social clubs $ Vacations/trips $ Hobbies or crafts $ Miscellaneous Checking account and money order fees $ Pet care and supplies $ Postage $ Pictures and photo processing $ “Mad” money $ Debts Student loan Credit card (monthly minimum) Credit card (monthly minimum) Credit card (monthly minimum) Medical bills Personal loan

$ $ $ $ $ $

Other Other Other Other

$ $ $ __________

REali zi ng THE am ERican dREam

 neighborWorks ® America

2: Managing Your Money

Monthly Spending Plan This spending plan is broken down into the following types of expenses: fixed, periodic fixed, flexible and indebtedness. Depending on your situation, some expenses (for example, a cell phone) may be considered flexible rather than fixed. Be sure to adjust the categories to best reflect your needs and lifestyle.

Budgeted amount

monthly Expense

actual Spent

difference

Fixed Expenses Housing

Rent or Mortgage heating (gas or oil) Electricity Telephones (landlines and cell phones) other:

Transportation

Gas Car Payment Public Transportation or Taxi Parking and Tolls other:

Insurance

health (medical and dental, if not payroll deducted) Life Disability other:

Childcare

Childcare or Babysitters Child Support or Alimony Fixed Expenses Subtotal

Periodic Fixed Expenses (divide annual payments by 12) Housing

Renters or homeowners insurance (if not included in mortgage) Water or Sewage Trash Service other:

Transportation

Car insurance Car inspection Car Repairs and Maintenance License Plates and Registration Fees other: Periodic Fixed Expenses Subtotal

REali zi ng THE am ERican dREam 51

ď Ž

neighborWorks ÂŽ America

2: Managing Your Money

monthly Expense

Budgeted amount

actual Spent

difference

Flexible Expenses Food

Groceries School Lunches Work-Related (lunches and snacks) other:

Housing

home Maintenance and Furnishings Cleaning Supplies Lawn Care other:

Medical

Doctor Dentist Prescriptions other:

Savings

Emergency Fund Down Payment Fund

Clothing

Clothing Laundry and Dry Cleaning other:

Education

Tuition Books, Papers and Supplies newspapers and Magazines Lessons (sports, dance, music) other:

Donations

Religious or Charity other (if not payroll deducted):

Gifts

Birthdays holidays other:

Personal

Barber or Beauty Shop Toiletries Children’s Allowances Tobacco Products Beer, Wine, Liquor other:

Source: CreditSmart by Freddie Mac

52

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 neighborWorks ® America

2: Managing Your Money

monthly Expense

Budgeted amount

actual Spent

difference

Flexible Expenses continued Entertainment

Movies, Sporting Events, Concerts, Theater, Etc. Video Rentals internet Service Cable/Satellite TV Restaurants and Take-out Meals Gambling or Lottery Tickets Fitness or Social Clubs Vacations/Trips hobbies or Crafts other:

Miscellaneous

Checking Account Fees, Money order Fees, Etc. Pet Care or Supplies Postage Pictures and Photo Processing “Mad” Money other: Flexible Expenses Subtotal

indebtedness Expenses Debt*

Student Loan Credit Card (monthly minimum*) Credit Card (monthly minimum) Credit Card (monthly minimum) Medical Bills Personal Loan other: indebtedness Subtotal

Total Total Monthly Expenses (fixed + periodic fixed + flexible + indebtedness) income Total Monthly net income Additional Savings Amount Left over for Savings (total monthly net income – total monthly expenses) *Although it is strongly recommended that you pay more than one monthly minimum payment due, lenders will use this amount when calculating monthly debt obligations.

REali zi ng THE am ERican dREam

3: Understanding Credit

Sample Credit Report from Trans Union 1. Your name and current address.

2. Use this identifier (unique to this report) if you contact customer support. Also known as the File Identification Number or FIN.

doe, John J. 123 Nowhere Street Wonderland, IL 12345

information.

8/01/2008 104452642

Social Security number:

999-99-0000

Estimated date of birth: You have been in our files since: Phone number:

08/01/1970

123 Main Street Anywhere, IL 10/18/2007

Personal data: Former address reported: 321 Noplace Road Greatworld, MN 54321

3. Previous addresses.

4. Your personal

date of report: File number:

10/01/1988 (000) 123-4567

Employment data: Employer:

Noname Inc.

Address:

Position:

Manager

Date verified:

Public Record:

5. Information obtained

from public records.

The following items obtained from public records appear on your report. You may be required to explain public record items to potential creditors. Any bankruptcy information will remain on your report for 10 years from the date of filing. Civil suits, civil judgments and records of arrest will remain on your report for 7 years or until the governing statute of limitations has expired, whichever is longer. Paid tax liens may be reported for 7 years from date of payment. All other public record information and any accounts containing adverse information remain for 7 years. Generally, the period runs from the date the event took place. docket number: SM102030 Small Claims

Paid civil judgment entered:

Plaintiff: Someone Corp Plaintiff attorney: Pro Se

assets: liabilities: Paid:

01/01/2005

$819 09/01/2005

adverse account information Section: 6. Credit report information that is not considered to be positive payment behavior, such as a past due account, remark code or late payment history.

The following accounts contain information that some creditors may consider to be adverse. Adverse account information may generally be reported for 7 years from the date the event took place. With regard to any delinquent account placed for collection or charged off, the 7-year period is calculated from the date of the delinquency that occurred immediately before the collection or charge off activity.

The adverse information in these accounts has been printed in >brackets< for your convenience, to help you understand your report. They are not bracketed this way for creditors. (Note: the account number may be scrambled by the creditor for your protection).

XYz inc. >Included in bankruptcy< Updated date: 2/15/2008 Opened: 05/01/2005 closed: 12/01/2005

9. Account types can include installment loans, credit cards, mortgage loans, auto loans, retail accounts and finance company accounts.

Balance: $0 most owed: $939 Past due:

7. Example of adverse information.

8. List of accounts with no adverse information.

acct#: 1010101010101

$0

Installment account Automobile Individual account Payment terms: 60 monthly $80 credit limit: $0

>Status as of 12/01/2005: Collection account<

Satisfactory account information Section: The following accounts are reported with no adverse action. aBcd Bank Updated date: Opened: closed:

Acct#: 1010101010101 2/15/2008 03/01/2001

Balance: $3678 most owed: $3907

Revolving account Credit card Joint account Payment terms:

Past due:

Credit limit: $5000

$0

>Status as of 10/10/2006: Paid or paying as agreed<

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3: Understanding Credit

10. Companies that are deciding if they should offer you credit, insurance, etc., may make regular inquiries.

These inquiries affect your credit report and score.

11. Companies that have received your name and address to make you a firm offer or credit or insurance make promotional inquiries.

These do not affect your credit report and score.

Regular inquiry Section The following companies have received your credit report. Their inquiries remain on your credit report for two years. (Note: TransUnion consumer disclosure inquiries are not viewed by creditors).

date 09/13/2007 08/06/2007

Subscriber name ZYX Financial Corp Credit Data/Someone Corp.

Promotional inquiry Section The companies listed below received your name, address and other limited information about you so they could make a firm offer of credit or insurance. They did not receive your full credit report, and these inquiries are not seen by anyone but you.

date 02/10/2008 11/01/2007 12. Companies that have an existing relationship with you may make account inquiries.

These do not affect your report and score.

inquiry type Individual Joint

Subscriber name Noname Bank XXYY Financial

account Review inquiry Section The companies listed below obtained information from your consumer report for the purpose of an account review or other business transaction with you. These inquiries are not displayed to anyone but you and will not affect any other creditor’s decision or any score.

date 13. Any consumer statement 2/15/2008 that you added to your report 2/01/2008 appears here.

Subscriber name AFDE Financial ABCD Bank

consumer Statement Section

14. Comments regarding discrepancies in your personal information may appear here as a method of fraud prevention.

No consumer statements on file

Special messages Section No special messages on file

End of Report Section If you believe any of the information in your credit report is incorrect, please let us know.

Please address all correspondence regarding your credit report to:

contact bureau:

TransUnion LLC

Bureau address:

2 Baldwin Place, PO Box 2000

Chester, PA 19022 800-916-8800 Our business hours in your time zone area:

8:30 a.m. to 4:30 p.m. Monday thru Friday, except major holidays

REalizing THE american dream ■ NeighborWorks® America

3: Understanding Credit

15. Your name and current address.

16. Your File Identification

TransUnion Personal credit Score name: address:

Number. This is a unique

identifier you will use when referring to this credit report if you contact customer support.

Doe, John J. 123 Nowhere Street Wonderland, IL 12345

Date of credit score: 3/01/2008 File number: 104452642

About your credit score: A credit score is a computer generated mathematical calculation of the information that appears in a credit report. It represents your creditworthiness as a number or numerical value. The credit score is based on data about your credit history and payment behavior. Credit scores are listed to assist a lender or insurance company in determining the level of risk associated with granting you a loan, or evaluating an insurance policy. Credit scores may change over time, depending on how your credit history and payment behavior changes and how well you manage your credit obligations.

Since the credit score is based on information in your credit history, it is important that you review the credit report that is being furnished with this document to make sure it is complete and accurate.

The credit score, displayed below, is created by TransUnion. A higher credit score means a lower likelihood of delinquency in the next two years on a new account. The credit score is presented with up to four key factors. These factors will print in order of importance as to the reasons your credit score is not higher.

Please note that this credit score may be different than a credit score used by a lending institution or insurance company. The credit industry and the insurance industry use many different types of credit scores. For more information, visit www.transunion.com

17. Your TransUnion personal credit score.

Personal credit Score Your credit score: minimum score: maximum score:

18. The TransUnion personal credit scores range from 150 to 934.

+520 +150 +934

Factor description Scores are formulated based on the amount of credit information reported and the type (adverse or satisfactory). High scores reflect a long and positive credit history. Other bureaus may use different ranges and criteria.

Factor 1:

Collection amounts ever owed are too high Consumers with collection activity are more likely of future delinquency. Making prompt payments over a longer period of time may improve your score.

Factor 2:

Too many serious delinquencies Your credit record reflects one or more accounts with a delinquent payment history of 90 days or more delinquent. Making prompt payments over time may improve your credit score.

19. The factors that most significantly affect your score.

Factor 3:

Average balance of revolving accounts is too high Lowering your balances on these accounts may improve your credit score.

Source: www.transunion.com

Factor 4:

Too many delinquencies Your credit report reflects delinquent payment history on one or more accounts.

Making prompt payments over time may improve your credit score.

REalizing THE american dream â&#x2013; NeighborWorksÂŽ America

3: Understanding Credit

Credit Report Quiz 1. How many potentially negative items appear on John J. Doe’s credit report?

2. What year did the small claims court from Someone Corp. occur?

3. In what year will the negative information regarding Someone Corp. be removed?

4. What is the status of XYZ, Inc.’s account?

5. What is the status of the ABCD bank credit card?

6. How many inquiries are there that affect John J.’s credit score?

7. What has been John J.’s highest credit limit?

8. Why did Noname Bank make an inquiry on John J.’s report?

9. How many inquiries are on the report?

10. What should John J. do if he sees an error in his credit report?

3: Understanding Credit

Credit Report and Credit Score Order Form Credit Reporting Agency

date

Address City Please send to me a copy of:

State My credit report

Zip Code

My credit score

I have enclosed a check in the amount of $ First Name

Middle Initial

Last Name

Generation

City

State

Zip Code

Previous Address

City

State

Zip Code

Previous Address

City

State

Zip Code

Previous Address

City

State

Zip Code

Previous Address

City

State

Zip Code

Social Security Number

date of Birth (Month/Day/Year)

Spouse’s First Name Current Address

Enclosed is the following for verification of my current address and phone number: Copy of my driver’s license

Signature

Copy of current statement

Other:

Date

Thank you.

REalizing THE american dream ■ NeighborWorks® Ame

3: Understanding Credit

[Date]

RE: DELETIONS FROM CREDIT REPORT To Whom It May Concern: I received a copy of my credit report and am disputing some items that need to be deleted. I have highlighted and numbered these disputed items on the attached copy. The reasons these items should be deleted are indicated below: Item #

Reason for Deletion

According to the provisions of the Fair Credit Reporting Act 611(a) [15 USC 1681i(a)], these disputed items must be investigated or deleted from my credit record within 30 days. In the interim, these items should be noted on my credit record as “in dis-pute.” I am also requesting the names, addresses and telephone numbers of all individuals you contact during your investigation so that I may follow up.

Please notify me that the above items have been deleted pursuant to 611 (a)(6) [15 USC 1681j (a) (6)]. I am also requesting an updated copy of my credit report, which should be sent to the address listed below. According to the provisions of 612 [15 USC 1681j], there should be no charge for this report.

If you have any questions or need additional information, please contact me at (305) 555-1111.

Thank you.

Sincerely, Bruce Smith Address City, State, Zip Social Security # Account #

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NeighborWorks® America

3: Understanding Credi

Federal Laws Matching Exercise Select the letter that best corresponds to each law below.

Requirements 1. Requires creditors to provide complete and accurate information about credit costs and terms ______ 2. Protects consumersâ&#x20AC;&#x2122; right to correct errors on credit card statements ______ 3. Prevents lenders from asking you about your sex, race, color, religion or place of birth on credit applications ______ 4. Prohibits abusive collection practices ______ 5. Protects consumersâ&#x20AC;&#x2122; right to fix mistakes on their credit report ______

Acts A. Equal Credit Opportunity Act B. Fair Credit Billing Act C. Fair Credit Reporting Act D.

Fair Debt Collection Practices Act

E. Truth-in-Lending Act

4: Obtaining a Mortgage Loan

Case Study: Determining Affordability Now that we’ve covered all the basic information you need to know to calculate af-fordability, you’re ready to help the Murphy family figure out how much house they can afford. Read the following information and determine their affordability by using the prequalifying worksheet and the factor table.

Personal Information Terrance and Wilma Murphy live with their children, Anita and Jerome, in a three-bedroom apartment in a large complex. The complex is crowded and noisy, and the children don’t have a place to play. Last year, they established the goal of moving to a house within two years. They have been sticking to their budget and have managed to save $1,200 toward a down payment. They have had several credit problems and have been working to clean up their credit record before they begin the purchase process.

Recently, Terrance and Wilma have been spending their weekends driving around look-ing at houses for sale.

When they see the prices of homes these days, they usually go back to the apartment feeling discouraged. They really want to buy a house, but they don’t know where to begin.

Perhaps you can help them get started by calculating their affordability. The Murphys checked their local paper for mortgage rates and terms offered by lenders in their area. They found a mortgage company that offers an 8.0 percent interest rate for a 30-year fixed-rate loan. The housing ratio for this product is 29 percent and the debt-toincome ratio is 41 percent.

Prospective buyers: Children: Occupations:

Combined gross monthly income: Savings: Debts: Creditor

Balance Amount

Terrance and Wilma Murphy Anita and Jerome Terrance: mechanic at a car dealership for seven years Wilma: full-time teacher’s aide $2,890 $1,200

monthly Payment

Months Remaining

Macy’s

$800

$16

50

ABC Furniture

$2,100

$52

40

Freeman’s Auto

$2,200

$195

11

Visa

$1,600

$48

33

J.C. Penney

$1,200

$36

33

Ford Motor

$4,000

$159

25

REalizing THE american dream ■ NeighborWorks® Amer

4: Obtaining a Mortgage Loan

How does debt affect affordability?

Assume that Wilma and Terrance opt to take out $390 from their savings and make two payments on the car loan to Freeman’s Auto. This debt could then be discounted (not counted) when determining affordability. In the margin of the prequalifying work-sheet, recalculate their affordability without this monthly payment. How much did this $390 payment buy them in affordability?

The Murphys’ Prequalifying Worksheet Total Gross Monthly Income (from the Calculating Your Gross Monthly Income Worksheet )

$ __________________(1)

Total Gross Monthly Income x ______ % (housing ratio)

$ __________________(2)

Total Gross Monthly Income x ______ % (debt-to-income ratio)

$ __________________(3)

Total Monthly Debt Payments (from the Total Monthly Debt Worksheet) Subtract line (4) from line (3)

$ __________________(4) $ __________________(5)

Maximum Mortgage Loan Payment Allowed Enter whichever is less, line (2) or line (5)

$ __________________(6)

Escrows Multiply line (6) by 20%* (estimated taxes and insurance)

$ __________________(7)

Maximum Principal and Interest Payment Allowed Subtract line (7) from line (6)

$ __________________(8)

Affordability (maximum principal and interest payment allowed) Divide line (8) by factor from sample factor table

$ __________________(9)

Maximum Mortgage Loan Amount Multiply line (9) by $1,000

$ ____________________

*percentage may be greater if mortgage insurance and/or homeowner association dues are required.

REalizing THE american dream ■ NeighborWorks® Ameri

4: Obtaining a Mortgage Loan

Worksheet: Prequalifying Total Gross Monthly Income (from the Calculating Your Gross Monthly Income Worksheet )

$ __________________(1)

Total Gross Monthly Income x ______ % (housing ratio)

$ __________________(2)

Total Gross Monthly Income x ______ % (debt-to-income ratio)

$ __________________(3)

Total Monthly Debt Payments (from the Total Monthly Debt Worksheet) Subtract line (4) from line (3)

$ __________________(4) $ __________________(5)

Maximum Mortgage Loan Payment Allowed Enter whichever is less, line (2) or line (5)

$ __________________(6)

Escrows Multiply line (6) by 20%* (estimated taxes and insurance)

$ __________________(7)

Maximum Principal and Interest Payment Allowed Subtract line (7) from line (6)

$ __________________(8)

Affordability (maximum principal and interest payment allowed) Divide line (8) by factor from sample factor table

$ __________________(9)

Maximum Mortgage Loan Amount Multiply line (9) by $1,000

$ ____________________

*percentage may be greater if mortgage insurance and/or homeowner association dues are required.

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5 : Shopping for a Home

Prospective Agentsâ&#x20AC;&#x2122; Profiles Name of firm Phone number Managing broker Recommended agent How many years has the agent sold real estate full time?

Is the agent well informed about your targeted community?

In general, what services will the agent and firm provide?

During your meeting, did the agent pay attention to your concerns?

Would you enjoy working with this person?

Miscellaneous notes:

Name of firm Phone number Managing broker Recommended agent How many years has the agent sold real estate full time?

Is the agent well informed about your targeted community?

In general, what services will the agent and firm provide?

During your meeting, did the agent pay attention to your concerns?

Would you enjoy working with this person?

Miscellaneous notes:

REalizing THE american dream

â&#x2013;

NeighborWorksÂŽ America

5: Shopping for a Home

Neighborhood Checklist 1 = Weakest

5 = Strongest

Community Services Schools

1

2

3

4

5

Childcare

1

2

3

4

5

Parks/recreational facilities

1

2

3

4

5

Religious institutions

1

2

3

4

5

Hospitals

1

2

3

4

5

Entertainment

1

2

3

4

5

Police station

1

2

3

4

5

Fire station

1

2

3

4

5

Close to job

1

2

3

4

5

Near grocery and other stores

1

2

3

4

5

Near public transportation

1

2

3

4

5

Easy access to highway

1

2

3

4

5

Near relatives or friends

1

2

3

4

5

Children

1

2

3

4

5

Active community groups

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

Convenience

Neighbors

Other Write in things that are important to you.

REalizing THE american dream â&#x2013; NeighborWorksÂŽ America

5 : Shopping for a Home

Worksheet: Homebuyer’s Wish List Features

Wants needs

location School district neighborhood Public transportation Churches and organizations Quiet Parks and recreation near friends and family near work near shopping other Style older newer traditional Contemporary two-story Split-level detached Multifamily Condo other

Exterior Brick Stucco Wood siding Vinyl siding Landscaping Porch deck Large yard Fence Garage driveway other mechanical Systems Forced air heat Radiator Central air conditioning other Othe

interior house Size number of bedrooms number of bathrooms Kitchen size Kitchen appliances Living room size dining room Laundry room Closet space and storage Finished basement hardwood floors Carpets Fireplace other

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Features

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NeighborWorks® America

Wants needs

5: Shopping for a Home

House Hunting Checklist Address Asking Price $

number of Bedrooms

neighborhood (how it looks and feels,

Satisfactory? yes no

transportation, schools, shopping)

House Style (older, newer, twostory, detached, condo, etc.)

construction (type and quality)

condition of Rooms Master bedroom Second bedroom Guest bedroom Living room dining room Kitchen Bathrooms other rooms Basement (finished/unfinished)

Pluses and minuses (what you like and what you don’t like about the house)

monthly cost of Utilities natural gas $ ______________ Fuel oil $ ______________ Electric $ ______________ Water $ ______________ Sewer $ ______________ trash collection $ ______________ Heating and Ventilation heat pump ❑ Forced air ❑ Radiator (hot water) ❑ Central air conditioning ❑ Window air conditioners ❑ Ceiling fans ❑ other:

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NeighborWorks® America

condition of appliances (Staying) Stove Refrigerator dishwasher Washing machine dryer Other Features Lot size Garage Porch Fireplace Landscaping notes:

5: Shopping for a Home

Homeowners Insurance Consumer Quote Guide Use the following guide to help you compare what you are buying.

What are you buying?

Property coverage dwelling Replacement cost Actual cash value other structures Garage other Contents (personal property) Contents Endorsements (extra coverage for) Antiques Jewelry Furs Silverware Money Business property on premises Business property off premises Electronic data processing equipment

liability coverage Liability Medical Payments additional Protection Fire department charges debris removal trees and shrubs other other Optional coverage Sewer back-up Mine subsidence Flood Earthquake other any discounts?

Protective devices new/renovated home 55 and retired Fire resistive other Total annual cost

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NeighborWorksÂŽ America

Quote #1 amount of cost coverage

Quote #2 amount of cost coverage

Quote #3 amount of cost coverage

6: Protecting Your Investment

Home Maintenance Checklist Timing is everything, especially when it comes to home maintenance. Maintenance performed regularly can help maximize the lifespan of your home and its systems and prevent expensive problems. Timing may vary according to where you live. This checklist is designed to give you basic suggestions from which you can pick and choose what’s right for you, your home, your location and your family.

Tasks Foundation and Basement inspect for signs of termites and wood decay Check grading to assure that water will drain away from foundation Check basement for dampness or leaking following wet weather doors and Windows Check doors, windows and trim for finish failure Check glazed openings for loose putty Check for broken glass and damaged screens take down screens (if removable); clean and store them Lubricate window hardware Check weatherstripping for damage and tightness of fit Check caulking at doors, windows and all other openings and joints between different materials (e.g., wood and masonry) Exterior Walls Check masonry for cracks and loose joints Check painted surfaces for paint failure Check siding and trim for damage or decay Check all trim for tightness of fit at joints, caulk Roof Check for damaged or loose shingles and blisters Check underside of roof where accessible (or attic) for water stains or dampness Check for damaged flashings around vents and chimneys Check for damaged gutters, downspouts, hangers, strainers and splash blocks or if paint is needed on them Clean gutters, strainers, downspouts and splash blocks Check vents, louvers and chimney caps and housings for cracks and debris Check fascias and soffits for paint failure and decay Check antenna guy wires and supports Evaluate roof for future replacement

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NeighborWorks® America

S P R i n g

F a l l

a n n U a l

✔ ✔ ✔

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

Tasks interior Surfaces Check all finished surfaces for dirt, finish failure and required repairs Check all joints in ceramic tile, laminated plastic and similar surfaces Check caulk or grouting around bathtubs, showers and sinks Floors Check for wear and damage, particularly where one material meets another (e.g., wood and carpet) Evaluate for replacement or refinishing Electrical System Check condition of cords to all appliances and plugs Check areas where wiring is exposed and replace at first sign of damage Check smoke detectors if fuses blow or breakers trip frequently, call an electrician to locate the cause and make repairs Heating and cooling Systems Clean or change air filters have systems checked by qualified service person Remove window air conditioners for winter or put weatherproof covers on them Clean dirt and dust from around furnaces, condensing unit, grills and registers Service humidifier and dehumidifier Plumbing System Check faucets, hose bibbs, flush valves and sinks for leakage and corrosion have service person check septic system Check water heater for leakage, corrosion and obstruction grounds and Yard drain outside water lines and hoses Clean area wells, window wells and storm drains Check driveways and sidewalks for cracks and yard for soil erosion

S P R i n g

F a l l

a n n U a l

✔ ✔ ✔ ✔ ✔ ✔

✔ ✔

✔ ✔ ✔ ✔ ✔ ✔

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

16

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