Disclaimer
This guide is published by USA Homeownership Foundation, Inc., dba the Veterans Association of Real Estate Professionals (VAREP), and is intended solely for general informational and educational purposes. It is not legal, nancial, tax, or credit advice and should not be relied upon as a substitute for professional consultation with quali ed attorneys, nancial advisors, or licensed housing counselors.
While VAREP is a HUD-Approved Housing Counseling Agency and a registered Veteran Service Organization, the content presented herein is based on publicly available information, commonly accepted nancial practices, and organizational experience as of the date of publication. VAREP makes no representations or warranties regarding the accuracy, completeness, or timeliness of the information. Laws, regulations, policies, and nancial products are subject to change without notice.
VAREP is a nonpro t 501(c)(3) organization and is not a liated with, endorsed by, or sponsored by the U.S. Department of Veterans A airs (VA), the U.S. Department of Housing and Urban Development (HUD), the U.S. Department of Defense (DoD), or any other government agency. The views and information expressed herein do not necessarily re ect those of any government entity.
No client-counselor, duciary, or professional relationship is created by the use of this guide or reliance on its content. Users are solely responsible for decisions made based on this material and are strongly encouraged to seek individualized advice from appropriately licensed professionals.
VAREP expressly disclaims any liability for any loss, harm, or damages arising from the use of or reliance on this publication.
Compliance and Non-Discrimination Notice
Fair Housing and Equal Access Statement
VAREP (Veterans Association of Real Estate Professionals), a HUD-Approved Housing Counseling Agency, is committed to providing housing counseling and nancial education services in accordance with the Fair Housing Act and all applicable civil rights laws.
We do not discriminate based on race, color, religion, national origin, sex, familial status, disability, age, sexual orientation, gender identity, or any other protected status. We are committed to equal opportunity and equitable access for all individuals and families.
Limited English Proficiency (LEP) Access
VAREP is committed to ensuring meaningful access to services for clients with limited English pro ciency. Upon request, we will provide translation materials or access to interpreter services in accordance with HUD guidelines.
For assistance in another language, please contact us at: info@varep.net.
HUD Disclaimer
The content does not necessarily re ect the views or policies of HUD or the U.S. Government.
Privacy and Confidentiality Statement
VAREP protects the con dentiality of all personal information shared during housing counseling or nancial education.
We do not disclose any personally identi able information to third parties without your written consent, except as required by law or for HUD grant compliance and reporting purposes.
Welcome, First-Time Homebuyers
Making the leap from renting to owning can feel overwhelming—but you don’t have to navigate it alone. Whether you're just starting to explore the idea of homeownership or you're ready to begin the process, this guide was built with you in mind.
This guide provides clear, step-by-step information to help you move con dently from tenant to homeowner. You’ll learn how to assess your nancial readiness, explore loan options, tap into grants and programs, and understand the entire homebuying journey from start to nish.
How to Use This Guide
• Read Cover to Cover for a complete understanding of what it takes to buy your rst home
• Skip to the Sections You Need—whether you're focused on credit, nancing, property search, or post-purchase planning
• Check Out Section 6 to learn about the MVP Heroes Housing Network, a VAREP program o ering personalized support and exclusive savings for government and community heroes
• Don’t forget to explore the appendices—packed with checklists, worksheets, and practical tools to guide you every step of the way.
If you need personalized help, reach out to a HUD-approved housing counseling agency like VAREP by visiting hud.gov/counseling.
Let’s begin your journey home—together.
Disclaimer
Compliance and Non-Discrimination Notice
Welcome, First-Time Homebuyers
Section 1: Is Homeownership Right for You?
Section 2: Understanding Your Finances
Section 3: Getting Pre-Approved and Understanding Loans
Section 4: Choosing the Right Home
Section 5: The NAR Settlement – What it Means to You as a Homebuyer
Section 6: Real Estate Savings with the MVP Heroes Housing Network
Section 7: The Homebuying Process
Section 8: Life as a Homeowner
Section 9: Avoiding Pitfalls and Scams
Appendix A: Basic Real Estate Glossary of Terms
Appendix B: Rent vs. Buyer Worksheet
Appendix C: Homebuyer Readiness Checklist
Appendix D: Needs vs. Wants Worksheet
Appendix E: Homebuying Process Checklist
Appendix F: Post-Purchase Checklist
Appendix G: Obtaining Your Annual Free Credit Report
SECTION 1 IS HOMEOWNERSHIP RIGHT FOR YOU?
• Renting vs. Owning: Pros and Cons
• Renting vs. Buying: Making the Right Choice
• Signs You're Ready to Buy
• When It Might Be Better to Keep Renting
• Lifestyle Considerations
• Special Considerations for Military & Government Employees
• Self-Reflection: What’s Your ‘Why’?
• Owning a home means
• Decision Worksheet (Mini-Exercise)
Renting vs. Owning: Pros and Cons
Buying a home is a major life decision— nancially, emotionally, and logistically. This section will help you re ect on your goals, evaluate your current lifestyle, and understand what owning a home really means.
Renting vs. Buying: Making the Right Choice
to relocate at lease end
can increase; lease may not renew
Harder to move; may need to sell or rent out
Signs You're Ready to Buy
• You plan to stay in the same area for at least 3–5 years
• Your income is steady and reliable
• You've saved for a down payment and closing costs
• Your credit and debt are in good shape
• You're emotionally ready for responsibility (repairs, taxes, etc.)
• You want to build equity and invest in your future
When It Might Be Better to Keep Renting
• You're unsure about your job stability or relocation potential
• You don’t have a stable income or emergency savings
• You haven’t had time to build or improve your credit
• You prefer low responsibility and exibility
Lifestyle Considerations
• Do you work remotely and need home o ce space?
• Are you planning a family and need room to grow?
• Will commuting distance impact your decision?
• Would a condo or townhome with HOA bene ts better t your needs?
Special Considerations for Military & Government Employees
• Are you likely to receive PCS orders or relocate within 1–3 years?
• Does your agency or union o er homeownership bene ts or relocation assistance?
• Are you eligible for a VA loan or other housing program?
•
Self-Reflection: What’s Your ‘Why’?
1. Why do I want to buy a home?
2. What does owning mean to me: stability, pride, investment, security?
3. What sacri ces am I willing to make to own?
4. Do I want to be a homeowner—or do I feel pressure to become one?
Owning a home means
• Paying for repairs—even the big ones (like a new roof)
• Handling yardwork, plumbing, heating, and pest issues
• Budgeting for property taxes and insurance increases
• Being committed for the long term
Decision Worksheet (Mini-Exercise)
Statement
I can afford a monthly payment that includes taxes and insurance
I have savings to cover at least 3 months of expenses
I plan to stay in the area for at least 3–5 years
I’m prepared to take care of home maintenance and repairs
I’ve checked my credit and know where I stand
I have a strong reason why I want to buy a home
Score: The more “Yes” responses, the closer you are to readiness.
SECTION 2 UNDERSTANDING YOUR FINANCES
• Understanding Your Finances
• What’s in a Credit Report?
• How to Improve Your Credit Before Buying
• Understanding Pre-Qualification vs. Pre-Approval
• Deep Dive: Debt-to-Income (DTI) Ratio
• How Much House Can You Afford?
• Recurring Monthly Costs to Budget
• One-Time Costs
• Readiness Timeline
• Financial Readiness Checklist
Understanding Your Finances
Financial readiness is the foundation of successful homeownership. This section dives deeper into how to assess your nancial health, prepare for the costs of buying a home, and build a realistic, sustainable plan.
What’s in a Credit Report?
Your credit score is a summary of the information in your credit report, which includes:
• Payment history (35%)
• Credit utilization (30%)
• Length of credit history (15%)
• New credit inquiries (10%)
• Credit mix (10%)
Tip: Dispute errors on your credit report through AnnualCreditReport.com. Under federal law, you can request one free report per bureau (Equifax, Experian, TransUnion) per year.
How to Improve Your Credit Before Buying
• Pay all bills on time—set up automatic payments if needed
• Keep credit card balances under 30% of the limit
• Avoid opening new credit lines before applying for a mortgage
• Don’t close old credit accounts—longevity helps
Deep Dive: Debt-to-Income (DTI) Ratio
Front-End DTI
• Housing costs (mortgage, taxes, insurance, HOA)
• Lenders prefer this to be ≤ 28% of gross income
Back-End DTI
• Housing + all other debts (loans, cards, alimony, etc.)
• Ideally ≤ 36–43%, depending on loan type
Note: VA Loans: Often allow higher DTI if residual income is strong.
How Much House Can You Afford?
The 28/36 RulePOA must speci cally authorize real estate and loan transactions.
• Spend no more than 28% of gross income on housing
• Spend no more than 36% on all debts combined
Saving for a Down Payment & Closing Costs
• Conventional: 3–20%
• FHA: 3.5%
• VA/USDA: 0% (for eligible borrowers)
Closing Costs
• Typically 2–5% of the home price
• Covers lender fees, title insurance, appraisal, etc.
Tip: Seek a HUD-approved housing counseling organization like VAREP for assistance with Down payment assistance programs and/or Grants from state housing agencies.
Recurring Monthly Costs to Budget
Pre-Qualificationva
Depends on loan amount and rate 1–2% of home value annually (varies by state)
$50–$100+ per month
$100–$500/month
One-Time Costs
• Earnest money deposit (1–3% of purchase price)
• Home inspection ($300–$600)
• Appraisal ($400–$700)
• Moving expenses
• Furniture, appliances, or immediate repairs
Financial Readiness Checklist
• I know my credit score and reviewed all 3 credit reports
• My DTI is under 43%, and my credit utilization is under 30%
• I’ve saved for a down payment (or found assistance options)
• I have a separate emergency fund (3–6 months of expenses)
• I’ve budgeted for hidden and ongoing homeownership costs
• I’m pre-approved for a mortgage, not just pre-quali ed
• I’ve researched assistance programs and tax incentives in my area
SECTION 3 GETTING PRE-APPROVED AND UNDERSTANDING LOANS
• Getting Pre-Approved and Understanding Loans
• What Lenders Look For
• Document Checklist
• Types of Mortgage Loans
• First-Time Homebuyer Programs & Grants
• National Assistance Options
• State and Local Housing Agencies
• How to Find Programs
• Understanding Loan Basics Checklist
Getting Pre-Approved and Understanding Loans
Once you're nancially ready, your next step is securing nancing. Understanding how mortgages work and getting pre-approved helps you shop with con dence—and helps sellers take you seriously.
What Lenders Look For Document Checklist
• W-2s (2 years)
• Recent pay stubs
• Tax returns (2 years)
What It Means
2+ years of consistent employment (exceptions possible)
The amount you’re contributing toward the purchase
• Bank and asset statements
• ID and Social Security number
• Rental history (for rst-time buyers)
Types of Mortgage Loans
Tip: Shop Around: Compare interest rates, fees, and closing costs from multiple lenders using the Loan Estimate form. CFPB’s loan comparison tool can help.
First-Time Homebuyer Programs & Grants
Many federal, state, and local programs assist rst-time buyers:
National Assistance Options
• FHA Loans – backed by HUD, for buyers with low credit or limited down payments
• VA Loans – for military borrowers through the VA
• Down Payment Assistance Programs – grants, forgivable loans, or matching savings programs
•
State and Local Housing Agencies
Many states o er programs through Housing Finance Agencies (HFAs) like:
• CalHFA (California)
• TSAHC (Texas)
• SONYMA (New York)
• Florida Hometown Heroes
• DC Open Doors
How to Find Programs
• HUD’s state-by-state program nder
• Down Payment Resource
• Local nonpro ts or housing counseling agencies
Understanding Loan Basics Checklist
• I understand the di erence between pre-quali cation and pre-approval
• I have my nancial documents ready
• I’ve researched multiple loan options
• I’ve shopped with at least 3 lenders or mortgage brokers
• I know what rst-time homebuyer programs I qualify for
• I’ve received a Loan Estimate and understand my projected costs
SECTION 4 CHOOSING THE RIGHT HOME
• Choosing the Right Home
• Define Your Needs vs. Wants
• Evaluate Neighborhoods & Communities
• Tools to use
• Choosing the Right Real Estate Agent
• What to Look For
• Questions to Ask
• Types of Homes to Consider
• Home Features to Consider (Checklist)
• Red Flags
• If You’re a Veteran or Active-Duty Buyer
• Summary Checklist
Choosing the Right Home
Finding your dream home is more than scrolling through listings. It’s about making informed decisions based on your needs, budget, and long-term goals. This section helps you de ne your priorities, navigate neighborhoods, and work e ectively with your real estate agent.
Define Your Needs vs. Wants
Before you fall in love with granite countertops or a trendy neighborhood, clarify what truly matters. A clear list keeps you focused and prevents buyer’s remorse.
Must-Haves (Non-Negotiables)
Example: 3 bedrooms
Example: Within 30-min commute
Example: VA loan-eligible home
Nice-to-Haves (Flexible)
Example: Walk-in closet
Example: Large backyard
Example: Updated kitchen
Evaluate Neighborhoods & Communities
The home’s location impacts your daily life and long-term value. Consider:
• Commute to work or base
• School districts (even if you don’t have kids—a ects resale)
• Crime rates and safety
• Proximity to healthcare, shopping, parks, etc.
• Public transit access
• Zoning laws or future developments
• HOA rules and fees (if applicable)
Tools to use
• NeighborhoodScout.com
• Local county property appraiser sites
• School rating sites like GreatSchools.org
Choosing the Right Real Estate Agent
A knowledgeable agent can be your advocate and guide—especially as a rst-time buyer.
What to Look For
• Experience with rst-time or VA buyers
• Familiarity with local DPA or grant programs
• Good communication and transparency
• No pressure to “upsell” you beyond your budget
• Registered with the National Association of REALTORS® or equivalent
Questions to Ask
• How many rst-time buyers have you worked with?
• What local programs can I qualify for?
• Can you help me understand VA loan requirements (if applicable)?
• How do you help in competitive o er situations?
Types of Homes to Consider
limited equity growth in some markets
responsibilities, more upfront cost
Home Features to Consider (Checklist)
Category
Bedrooms/Bathrooms
Kitchen
Storage
Outdoor Space
Accessibility
Structural Condition
Energy Efficiency
Pet Needs
Red Flags
Key Items
Number, layout, accessibility
Size, appliances, condition
Closets, garage, shed
Fenced yard, balcony, patio
Single story, ramps, bathroom accessibility
Roof age, foundation, HVAC, plumbing
Windows, insulation, solar panels, smart meters
Fenced yard, ooring type, HOA rules
• Homes priced signi cantly below market without explanation
• Major repairs needed that exceed your budget
• Poor inspection history or ipped homes with cosmetic-only upgrades
• HOA restrictions that limit future renovations or rentals
• Sellers unwilling to negotiate or disclose major issues
If You’re a Veteran or Active-Duty Buyer
• Check for VA loan property eligibility
• Prioritize PCS-friendly locations (resale/rental value)
• Look for homes close to base, VA hospitals, or military-friendly areas
• Use a VA-knowledgeable agent and lender—not all understand nuances of VA appraisals or minimum property requirements
Summary Checklist
• I created a clear needs vs. wants list
• I researched neighborhoods using crime, school, and commute data
• I interviewed and selected a quali ed real estate agent
• I explored di erent home types and considered pros/cons
• I’m aware of red ags and questions to ask during home tours
• I understand what types of properties are eligible for my loan
SECTION 5
THE NAR SETTLEMENT –
WHAT IT MEANS TO YOU AS A HOMEBUYER
• Background:
• What Does the NAR Settlement Change?
• How This Affects You as a Homebuyer
• Tips to Navigate the Changes
Background:
In 2024, the National Association of REALTORS® (NAR) reached a legal settlement related to the way real estate commissions are structured and disclosed. The lawsuit challenged the long-standing industry practice where sellers typically pay the commission for both their listing agent and the buyer’s agent.
Under the terms of the settlement—expected to take e ect in mid-2025—some key changes will reshape how real estate professionals are compensated and how those costs are presented in home sales.
What Does the NAR Settlement Change?
Here are the major implications of the settlement that may a ect you as a homebuyer:
1. Buyer Agent Compensation Is No Longer Automatically O ered by the Seller
• Sellers and listing brokers can no longer advertise compensation for buyer’s agents through the MLS (Multiple Listing Service).
Notes
• This means buyer agent fees may no longer be baked into the price of the home and paid by the seller.
2. Written Buyer Representation Agreements Are Required
• Real estate agents representing buyers will now be required to enter into written agreements with their clients before showing homes.
• These agreements will spell out the services the agent provides and how much compensation the buyer is expected to pay, if any.
3. Greater Transparency, but Possibly More Out-of-Pocket Costs
• As a buyer, you’ll now see agent fees more clearly—potentially separated from the home’s sales price.
• In some cases, buyers may be asked to pay their agent directly, negotiate a reduced fee, or request that the seller cover it as part of the purchase agreement.
How This Affects You as a Homebuyer
Pros:
• Greater transparency in how agents are paid
• More freedom to negotiate agent fees and services
• Buyer-agent relationships become clearly de ned upfront
Possible Cons:
• You may now need to budget for your agent’s fee in addition to your down payment and closing costs
• Not all sellers may be willing to cover buyer agent compensation
• Some agents may begin o ering fee-based or à la carte service models
•
Tips to Navigate the Changes
• Ask Early: During your rst conversation with a real estate agent, ask how they’re compensated and whether you’ll be responsible for any fees.
• Get It in Writing: A buyer representation agreement is now required—make sure it clearly outlines services and fees.
• Negotiate Smartly: Just as you negotiate the home price, you may be able to negotiate agent compensation or ask the seller to contribute as part of your o er.
• Work with Trusted Professionals: Partner with trained and certi ed agents—like MVP Real Estate Ambassadors—who are transparent and mission-aligned.
SECTION 6 REAL ESTATE SAVINGS WITH THE MVP HEROES HOUSING NETWORK
• What is the MVP Heroes Housing Network?
• The program is open to
• To be eligible for MVP program benefits, you must:
• Real Rewards Disclosure
What is the MVP Heroes Housing Network?
The MVP Heroes Housing Network (MVPHHN) is a national initiative powered by the Veterans Association of Real Estate Professionals (VAREP). It connects military and veteran heroes with a trusted team of certi ed real estate, lending, and business professionals—known as MVP Ambassadors—who are trained to understand and serve your unique needs throughout the homebuying process.
The program is open to
• Active-duty servicemembers
• Veterans of all eras
• Reservists and National Guard
• Gold Star and surviving spouses
• Law Enforcement
• Fire ghter
• First Responders
• Healthcare Professionals
• Teacher & Educators
• Civil Servants a.k.a. Government Workers
To be eligible for MVP program benefits, you must:
• Register at www.mvphhn.org
• Complete the onboarding process
• Connect with your local MVP team
• Be represented at closing by an MVP Real Estate Ambassador
Notes
• For additional savings, work with an MVP Lender and MVP Business Ambassadors
Real Rewards Disclosure
Post-closing payments are not available in Alabama, Alaska, Iowa, Kansas, Mississippi, Missouri, Oklahoma, Oregon, Tennessee, and Louisiana. However, a credit at closing is permitted in all 50 states. Actual savings vary based on the services used, home price, property type, and commission structure.
SECTION 7 THE HOMEBUYING PROCESS
• The Homebuying Process
• Overview of the Homebuying Journey
• Making an Offer & Negotiating
• Home Inspection
• Appraisal
• Final Loan Approval & Underwriting
• Understanding Key Mortgage Disclosures & Documents
• Review the Closing Disclosure carefully. Check for
• Final Walkthrough Checklist
• Closing Day: What to Expect
• Summary Checklist
The Homebuying Process
Buying your rst home can feel overwhelming—but knowing the steps in advance makes the process smoother and less stressful. This section walks you through the full journey from o er to closing day and beyond.
Overview of the Homebuying Journey
• Get Pre-Approved
• Find a Real Estate Agent
• Shop for Homes
• Make an O er
• Complete Inspection & Appraisal
• Final Loan Approval & Underwriting
• Review Disclosures & Do a Final Walkthrough
• Close on the Home
• Move In!
Making an Offer & Negotiating
Your agent will help you submit an offer that includes
• O er price
• Contingencies ( nancing, inspection, appraisal)
• Preferred closing date
• Earnest money deposit (usually 1–3%)
Negotiation Topics
• Price adjustments
• Seller-paid closing costs
• Repairs or appliance credits
Tip: In competitive markets, include a strong pre-approval letter.
Home Inspection
• Hire a professional to inspect the home’s:
• Roof, foundation, and structure
• Plumbing and electrical systems
• Heating/cooling (HVAC)
• Appliances and water heater
You’ll receive a report. From there, you can:
• Proceed with the sale
• Ask the seller to make repairs or o er credit
• Cancel the deal (if allowed by your contingency)
Appraisal
• Lenders require an appraisal to con rm the home is worth the loan amount.
• If value ≥ o er price continue
• If value < o er price renegotiate or cancel
VA Loans: Appraisals must also meet VA’s Minimum Property Requirements (MPRs).
Final Loan Approval & Underwriting
• Your lender reviews all documentation:
• Employment/income veri cation
• Credit report update
• Inspection and appraisal reports
• If all checks out, you’ll receive a Clear to Close (CTC).
Tip: Don’t open new credit accounts, switch jobs, or make large purchases before closing. Understanding Key Mortgage Disclosures & Documents Document
Loan Estimate (LE)
Closing Disclosure (CD) Purpose
Initial breakdown of your loan terms, interest rate, and estimated costs
Finalized loan details; must be given at least 3 days before closing Promissory Note
Mortgage or Deed of Trust
Legal agreement to repay your mortgage
Gives lender the right to foreclose if you don’t pay
Title Documents Shows legal ownership and any property liens
Review the Closing Disclosure carefully. Check for
• Accuracy in loan terms
• Closing costs you expected
• Cash needed to close
Final Walkthrough Checklist
Typically done 1–2 days before closing, this ensures:
• Home is clean and move-in ready
• Agreed-upon repairs were completed
• No new damage has occurred
• Appliances, plumbing, and lights still work
• Seller has removed all belongings
Tip: Don’t sign the closing documents if anything major is wrong—request a repair agreement or delay closing if needed.
Closing Day: What to Expect
Closing is where you sign legal documents and o cially become the homeowner.
Bring:
• Government-issued ID
• Proof of homeowner’s insurance
• Cashier’s check or wired funds for closing costs
You’ll Sign:
• Final loan documents
• Deed and title forms
• Closing Disclosure
• Escrow paperwork
Then… you’ll get the keys!
Summary Checklist
• I understand the step-by-step homebuying timeline
• I reviewed and understood my Loan Estimate and Closing Disclosure
• I completed the nal walkthrough and documented any issues
• I prepared all items needed for closing day
• I explored remote/digital closing options if needed
• I created a move-in checklist and utility transfer plan
SECTION 8
LIFE AS A HOMEOWNER
• Life as a Homeowner
• New Expenses to Expect
• Home Maintenance: Protecting Your Investment
• Monthly/Quarterly Tasks:
• Seasonal Tasks
• Annual Maintenance Budget
• Building Equity and Wealth Over Time
• Understanding Escrow Adjustments
• Common Reasons for Increases:
• Avoiding Financial Trouble
• Homeowner To-Do List: First 90 Days
• Protecting Your Home & Identity
• Long-Term Homeownership Tips
• Section Summary
Life as a Homeowner
Buying a home is just the beginning. The real journey begins after you move in. This section helps you understand how to protect your investment, plan for future expenses, and stay nancially secure as a new homeowner. New
Expenses to Expect
Home Maintenance: Protecting Your Investment
• Routine maintenance preserves your home’s value and prevents costly repairs.
Tasks:
• Replace HVAC lters
• Test smoke and carbon monoxide detectors
• Check faucets and toilets for leaks
Seasonal Tasks
• Clean gutters and downspouts
• Service HVAC systems
• Winterize pipes and seal windows
• Trim trees away from roof
Annual Maintenance Budget
• Aim to set aside 1–3% of your home’s value annually. For example:
• $250,000 home = $2,500–$7,500/year
Building Equity and Wealth Over Time
Equity is your ownership stake in the home. You build it in two ways:
• Paying down the mortgage
• Appreciation in home value
Ways to Build Equity Faster:
• Make extra principal payments (even $50/month helps)
• Re nance to a shorter-term loan when ready
• Avoid cash-out re nances unless necessary
Understanding Escrow Adjustments
• Escrow accounts are used to pay taxes and insurance. These amounts can change yearly.
• Annual Escrow Review: Your lender will notify you of changes
Common Reasons for Increases:
• Property taxes went up
• Insurance premiums increased
Avoiding Financial Trouble
Even responsible homeowners can face unexpected hardship. Here’s how to prepare:
• Emergency fund: Keep 3–6 months of housing expenses
• Job loss or income drop: Call your lender early—they may o er forbearance or payment plans
• Don’t ignore missed payments: One late mortgage payment can hurt your credit and risk foreclosure
Tip: Contact a HUD-certified housing counselor if you're struggling. Visit hud.gov/housingcounseling
Homeowner To-Do List: First 90 Days
• Change locks and security codes
• Register your home warranty (if included)
• Introduce yourself to neighbors and HOA
• Store your deed, insurance, and loan documents securely
• Create a home maintenance binder or app tracker
Protecting Your Home & Identity
• Set up two-factor authentication on accounts (mortgage, utilities, insurance)
• Beware of deed and mortgage scams (you do NOT need to pay for a copy of your deed)
• Consider identity theft monitoring—especially if you bought online or used digital signatures
Long-Term Homeownership Tips
• Revisit your insurance policy every 1–2 years to check for savings or gaps
• Keep receipts for major home improvements (can reduce capital gains tax later)
• Start a savings account for future renovations or emergencies
• Consider energy-e cient upgrades (eligible for federal tax credits)
Section Summary
• I’ve updated my monthly budget to include new homeowner costs
• I’ve scheduled regular maintenance tasks
• I understand my mortgage and escrow setup
• I have an emergency fund and know what to do if I miss a payment
• I’m tracking my home equity and keeping records of improvements
• I’ve taken steps to protect my home, identity, and credit
SECTION 9
AVOIDING PITFALLS AND SCAMS
• Avoiding Pitfalls and Scams
• Red Flags in Real Estate and Lending
• How to Spot Predatory Practices
• Protecting Personal and Financial Information
• Reporting Housing Discrimination or Fraud
Avoiding Pitfalls and Scams
Purchasing a home is a signi cant milestone, but it's also a process where vigilance is crucial. Being aware of potential pitfalls and scams can protect you from nancial loss and emotional distress. This section outlines common red ags, predatory practices, and steps to safeguard your personal and nancial information.
Red Flags in Real Estate and Lending
• Unrealistic Offers: Listings with prices signi cantly below market value may be bait for scams.
• Pressure to Act Quickly: Fraudsters may urge immediate decisions to prevent you from conducting due diligence.
• Requests for Upfront Payments: Be wary of demands for wire transfers or cash payments before any formal agreement.
• Lack of Proper Documentation: Missing or inconsistent paperwork can indicate fraudulent activity.
• Unverified Identities: Ensure all parties involved are legitimate and have veri able credentials.
How to Spot Predatory Practices
Predatory lending involves unfair, deceptive, or fraudulent loan practices. Recognize these tactics:
• Excessive Fees and Interest Rates: Charges that far exceed standard rates without clear justi cation.
• Loan Flipping: Repeated re nancing that bene ts the lender but increases your debt.
• Balloon Payments: Large, lump-sum payments at the end of a loan term that were not clearly disclosed.
• Prepayment Penalties: Fees for paying o a loan early, limiting your nancial exibility.
• Misrepresentation of Loan Terms: Verbal promises that di er from the written agreement.
Protecting Personal and Financial Information
• Secure Communication: Use encrypted channels when sharing sensitive information.
• Verify Contacts: Con rm the identities of real estate agents, lenders, and other parties through o cial channels.
• Monitor Financial Accounts: Regularly check your bank and credit accounts for unauthorized activity.
• Limit Sharing of Personal Information: Only provide necessary details, and avoid oversharing on public platforms.
• Use Strong Passwords: Implement complex passwords and change them regularly.
Reporting Housing Discrimination or Fraud
• If you encounter or suspect fraudulent activities or discrimination, take immediate action:
• Housing Discrimination: Report to the U.S. Department of Housing and Urban Development (HUD) at www.hud.gov/fairhousing or call 1-800-669-9777.
• Mortgage Fraud: Contact the Federal Trade Commission (FTC) at www.ftc.gov or call 1-877-FTC-HELP.
• Identity Theft: Report to the Federal Trade Commission at www.identitytheft.gov.
• Local Authorities: File a report with your local police department and notify your state's attorney general's o ce.
By staying informed and cautious, you can navigate the homebuying process safely and con dently. Always consult with trusted professionals and report any suspicious activities to the appropriate authorities.
APPENDIX A
BASIC
REAL ESTATE
GLOSSARY OF TERMS
Appendix A: Basic Real Estate Glossary of Terms
• Amortization: The gradual repayment of a mortgage loan through regular payments over time.
• Appraisal: An expert assessment of a property's market value, often required by lenders.
• Assessed Value: The valuation placed on a property by a public tax assessor for purposes of taxation.
• Assumption: The transfer of an existing mortgage from the current owner to a buyer.
• Balloon Mortgage: A mortgage with low initial payments that require a large lump-sum payment at the end of the term.
• Broker: A licensed individual who arranges real estate transactions between buyers and sellers.
• Closing: The nal step in a real estate transaction where the title is transferred to the buyer.
• Closing Costs: Fees and expenses, over and above the price of the property, incurred by buyers and sellers during the transfer of ownership.
• Contingency: A condition that must be met for a real estate contract to become binding.
• Deed: A legal document that conveys ownership of property from one party to another.
• Down Payment: An initial payment made when purchasing a property, typically a percentage of the total price.
• Earnest Money: A deposit made to a seller showing the buyer's good faith in a transaction.
• Escrow: A nancial arrangement where a third party holds and regulates payment of funds required for two parties involved in a given transaction.
• Fixed-Rate Mortgage: A mortgage with an interest rate that remains the same for the life of the loan.
• Foreclosure: The legal process by which a lender takes control of a property due to the owner's failure to make mortgage payments.
• Good Faith Estimate (GFE): An estimate of the fees and costs associated with a mortgage loan, provided by the lender.
• Home Inspection: An examination of the condition of a real estate property, usually performed in connection with its sale.
• Homeowners Association (HOA): An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties within its jurisdiction.
• Interest Rate: The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage.
• Jumbo Loan: A mortgage loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency.
• Lien: A legal right or interest that a lender has in the borrower's property, lasting until the debt obligation is satis ed.
• Loan-to-Value Ratio (LTV): A nancial term used by lenders to express the ratio of a loan to the value of an asset purchased.
• Mortgage: A legal agreement by which a bank or creditor lends money at interest in exchange for taking title of the debtor's property.
• Mortgage Insurance (MI): Insurance that protects the lender in case the borrower defaults on the loan.
• Note: A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a speci ed period.
• Origination Fee: A fee charged by a lender for processing a new loan application.
• Pre-Approval: A preliminary evaluation by a lender that determines whether a potential borrower quali es for a loan.
• Private Mortgage Insurance (PMI): Insurance that protects the lender if the borrower defaults on the loan, typically required when the down payment is less than 20%.
• Quitclaim Deed: A legal instrument that is used to transfer interest in real property.
• Refinancing: The process of replacing an existing mortgage with a new loan, typically with better terms.
• Short Sale: A sale of real estate in which the net proceeds fall short of the debts secured by liens against the property.
• Survey: A process conducted to determine property lines and locate features of the property.
• Title: A legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest.
• Title Insurance: A form of indemnity insurance that protects the holder from nancial loss sustained from defects in a title to a property.
• Underwriting: The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.
• VA Loan: A mortgage loan in the United States guaranteed by the U.S. Department of Veterans A airs.
• Walk-Through: A nal inspection of a property by the buyer before closing.
APPENDIX B RENT VS. BUY WORKSHEET
Financial Considerations
Do I have enough savings for upfront costs?
Can I afford ongoing monthly costs?
Is
Have
Time & Stability
Do I want to avoid maintenance & repairs?
Do I want to customize or renovate my space?
Do I have or plan to have pets?
Do I value flexibility over long-term investment?
Personal Readiness & Lifestyle
Do
Do
Do
Do
Legal & Regulatory Issues
Have I reviewed the
Do
Equity & Investment Potential
Do I want to build equity in a property?
Do I want to benefit from rising home values?
Do I want fixed monthly payments?
Tax & Financial Implications
Do I want access to housing tax deductions (e.g., mortgage interest)?
If renting out a home later, am I prepared to manage rental income taxes?
Decision Tip
• Renting may be better if you need exibility, plan to move soon, or aren’t nancially ready to commit.
• Buying may be better if you plan to stay 5+ years, and want to build long-term wealth.
APPENDIX C HOMEBUYER
Rent vs. Buy Analysis Completed
• Compared monthly costs, stability, and goals over time.
Credit Report Reviewed and Corrected
• Reviewed report from AnnualCreditReport.com.
• Disputed errors and addressed any outstanding collections.
Credit Score Meets Loan Requirements
• Aim for 620+ for VA loans (varies by lender).
• Lower scores may need more documentation or rehabilitation.
• My credit score is
Debt-to-Income Ratio (DTI) Evaluated
• Ideal DTI for VA loans: 41% or less, but compensating factors may apply.
• My DTI is
Budget and Emergency Fund in Place
• Minimum 1–3 months of expenses saved (6+ months preferred).
• Account for utilities, furnishings, maintenance, and move-in costs.
Stable and Documented Income
• W-2s, LES (for active duty), or self-employment documentation for 2+ years.
Loan Readiness
Pre-Approval Secured from VA-Experienced Lender
• Con rms loan eligibility, amount, and strengthens o er.
Certificate of Eligibility (COE) Obtained (VA Buyers Only)
• Veri es entitlement to use VA loan bene t.
Understand Down Payment, Funding Fee, and Closing Costs
• Even with $0 down, plan for other out-of-pocket costs.
Reviewed VA Loan Benefit Features
• No PMI, competitive rates, foreclosure protections, reusable bene t.
Education & Planning
Attended Financial Education or Counseling Session
• Recommended: a HUD-approved housing counselor (like VAREP).
• Covers budgeting, VA loan education, and personalized guidance.
Understands
Local Market Conditions
• Researched prices, interest rates, and property types in desired area.
Identified
Personal Priorities & Deal Breakers
• Must-haves vs. nice-to-haves for home size, location, schools, etc.
Discussed Timing and Logistics (PCS, ETS, Family Needs)
• Especially important for active duty or transitioning servicemembers.
Legal Readiness (POA, Title, Trusts if Applicable)
• Consider Power of Attorney if deployed or unavailable during closing.
Seek Housing Counseling Support
• Connect with a HUD-Approved Housing Counseling Agency like VAREP.
VAREP can help with
• Budgeting
• Credit readiness
• Gather documents
• Finding and applying for closing-costs grants
• Hero savvy real estate and lending professionals
• Visit www.varep.net
APPENDIX D NEEDS VS. WANTS WORKSHEET
Instructions
• Review each category and feature listed below.
• Determine whether each feature is a "Must-Have" or a "Nice-to-Have" based on your personal needs and preferences.
• Use the "Notes" section to add any speci c comments or considerations.
Home Features
Notes Category
Single-level layout
Open floor plan
Number of Bedrooms (specify)
Number of Bathrooms (specify)
Home office space
Energy-efficient appliances
Central heating & cooling
Fireplace
Hardwood flooring
Updated kitchen
Walk-in closets
Garage (specify size)
Basement or attic
Laundry room
Smart home technology
Solar panels
Fenced yard
Garden or outdoor space
Swimming pool
Home security system
Need Want
Location & Community
Proximity to work/school/base
Public transportation access
Quality of local schools
Low crime rate
Proximity to healthcare facilities
Nearby parks & recreational areas
Shopping and dining options
Noise levels
Walkability score
Financial Considerations Need
Within budget
Eligible for VA loan
Low property taxes
Homeowners association (HOA) fees
Potential for property value appreciation
Minimal renovation needs
Energy-efficient features
Insurance costs
Want
Personal & Family Needs Need Want
Pet-friendly accommodations
Accessibility features
Space for extended family
Proximity to support networks
Childcare facilities nearby
Opportunities for community engagement
Cultural or religious community nearby
Future Considerations
Potential for home expansion
Resale value
Rental income potential
Zoning regulations
Environmental risks (flood zones, etc.)
Fenced yard, nearby parks
Ramps, wide doorways
Multi-generational living
Family and friends
For families with young children
Clubs, organizations
Community support
Neighborhood Safety & Security
Safety Consideration
Low crime rate (based on local crime data)
Sex offender registry check (Megan’s Law)
Well-lit streets and sidewalks
Active neighborhood watch or patrol
Presence of security cameras or surveillance
Gated community or controlled access
Close proximity to police/fire station
Low traffic speeds/ safety signage
Environmental risk zone (flood/fire/hazard)
Good visibility from surrounding homes
Need Want Notes
APPENDIX E HOMEBUYING PROCESS
CHECKLIST
Prepare to Buy
Review your credit report and score (aim for 620+ for VA loans)
Create a budget and determine how much home you can a ord
Build or verify your emergency savings (at least 1–3 months of expenses)
Gather important documents: pay stubs, W-2s, tax returns, bank statements
Learn about the VA loan bene t or other programs you qualify for
Attend a homebuyer education session (recommended)
Get Pre-Approved
Choose a VA-experienced lender (or another quali ed lender)
Apply for mortgage pre-approval and receive a pre-approval letter
Obtain your Certi cate of Eligibility (COE) for VA loans
Understand your potential loan amount, estimated monthly payment, and closing costs
Find Your Home
Hire a VA-savvy real estate agent
Create a list of must-haves vs. nice-to-haves
Tour homes in your target area and compare prices, schools, amenities
Research neighborhoods for safety, commute, and future growth
Make an Offer
Review the market with your agent to make a competitive o er
Submit your o er with contingencies (inspection, nancing, appraisal)
Negotiate terms with the seller, if needed
Sign the purchase agreement
Due Diligence Period
Schedule a home inspection and review the report
Negotiate any repairs or seller credits based on the ndings
Lender orders the appraisal (VA appraiser if using VA loan)
Ensure the home meets VA’s Minimum Property Requirements (if applicable)
Finalize Your Loan
Provide any remaining documents to your lender
Lock in your interest rate
Receive nal loan estimate and compare closing disclosures
Schedule your closing date
Closing & Move-In
Conduct a nal walk-through of the property
Attend the closing meeting and sign all legal documents
Pay closing costs (if any) and down payment (if required)
Receive the keys and deed—you’re now a homeowner!
After Closing
Set up utilities and home services
Change your address with USPS and update records
Save your closing documents in a secure location
Prepare for property taxes and ongoing maintenance
APPENDIX F POST-PURCHASE CHECKLIST
Secure Your Home
Change the locks and garage codes
Test and/or replace smoke and carbon monoxide detectors
Set up or transfer your home security system (if applicable)
Create or update your home emergency kit
Identify utility shuto valves and circuit breakers
Organize, Scan, and Save Important Documents
Closing disclosure and mortgage agreement
Deed and title documents
Home warranty and appliance manuals
Property survey, inspection, and appraisal reports
Update Services and Addresses
Electricity, gas, water, trash, internet
USPS, banks, credit cards, insurance, VA, DFAS, DMV, employer
Schedule Preventive Maintenance
Create a maintenance calendar (monthly, seasonal, annual)
Schedule HVAC inspection and duct cleaning
Service water heater, gutters, plumbing, and roof if needed
Review pest control and landscaping services
Build a Homeowner Tool Kit
Buy or organize basic tools (hammer, screwdriver set, pliers, drill, ladder, etc.)
Assemble emergency repair supplies ( ashlight, batteries, re extinguisher)
Review and Adjust Insurance
Review your homeowner’s insurance policy annually
Add coverage if needed ( ood, earthquake, umbrella, etc.)
Update your Servicemembers’ Group Life Insurance (SGLI) and bene ciary info if applicable
Prepare for Taxes and Escrow
Understand your property tax due dates (check with county assessor)
Review your escrow account annually if you have one
Track mortgage interest and taxes for tax ling
Claim your homestead exemption if eligible
Create a Long-Term Plan
Create a monthly housing budget (mortgage, utilities, maintenance)
Set up a home repair/emergency savings fund
Track your home equity and market value yearly
Consider future upgrades or VA renovation loan options
Stay Connected & Informed
Join your local neighborhood group or HOA
Stay updated on homeowner rights, VA loan updates, and property bene ts
Know your options if nancial hardship arises
(loan modi cation, VA assistance, HUD counseling)
APPENDIX G
Appendix G: Obtaining Your Annual Free Credit Report
Under the Fair Credit Reporting Act (FCRA), all U.S. consumers are entitled to one free credit report every 12 months from each of the three major credit bureaus: Equifax, Experian, and TransUnion.
How to Request Your Free Reports
1. Online: Visit www.AnnualCreditReport.com
2. Phone: Call 1-877-322-8228
3. Mail: Send the completed form to:
Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281
You can request all three reports at once or stagger them throughout the year to monitor changes.
Contact the Credit Bureaus
Equifax
• Phone: 1-888-378-4329
• General Inquiries:
• P.O. Box 740241, Atlanta, GA 30374-0241
• Disputes:
• P.O. Box 740256, Atlanta, GA 30374-0256
• Website: www.equifax.com/personal/contact-us
Experian
• Phone: 1-888-397-3742
• All Inquiries:
• P.O. Box 4500, Allen, TX 75013
• Website: www.experian.com/contact/personal-services-contacts.html
TransUnion
• Phone: 1-800-916-8800
• All Inquiries:
• P.O. Box 2000, Chester, PA 19016-2000
• Website: www.transunion.com/customer-support/contact-us-consumers
Realize the American Dream You’ve Earned It!
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— Devon, First-Time Homebuyer
"Rent kept going up, and I was tired of throwing money away. The VAREP housing counselor worked to increase my credit, and my MVP Mortgage Ambassador helped me crunch the numbers and realize I could actually afford to buy."
— Alejandra, Former Renter
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