Your first experience in buying a home can be overwhelming. For even well-educated people, the language of home buying can be confusing. Fortunately, it is in the best interest of the mortgage industry that home buyers understand what they are purchasing and how to repay it. After all, if you default on your loan, nobody wins.
That is why mortgage industry companies and relevant government organizations have established free basic resources to help educate consumers on the home buying experience. They provide online links to area resources that can help with more direct counseling and education, and have created standards to serve as industry guidelines.
Any lending institution will have some degree of counseling available for you, either in person or through online resources, but they have a vested interest in steering you toward their products. It may be best to start with a broader view that is focused more on you as a homebuyer instead of the products available to you.
The U.S. Department of Housing and Urban Development (HUD) is probably the best place to start your search. Not only does HUD have a wealth of resources, but it is also the entry point for information on home ownership assistance programs and lower down-payment loan programs such as FHA loans – which, as a first time homebuyer, you are likely to consider. Since they are a governmental agency, they are supported by your tax dollars, so they should work on your behalf. Unlike your neighborhood bank, they are not trying to get your business.
HUD has extensive material on their website that outline the basic steps for figuring out affordability, go over your rights as a homebuyer and homeowner, assist with all aspects from loan shopping through home selection and closing and settlement costs, and direct you to home buying programs and counseling services in your state.
By selecting the housing counseling menu and clicking on your state in the U.S. map, you will receive links to all the resources available in your state that are HUD-approved Counseling Agencies. The listing will include all contacts (e-mail, website, phone and physical address) as well as a summary of all counseling services that particular vendor provides and the available languages for their resources.
HUD has established similar maps specializing in reverse mortgages and avoiding foreclosure; they can also be found on the HUD website.
While these sources are clearly HUD-approved, it is also worth verifying that any organization you work with meets the National Industry Standards for Homeownership, Education and Counseling. A product of the National Advisory Council, this entity provides a Homeowner's Education and Counseling Guide and Code of Ethics and Conduct for Homeownership Professionals for agencies to use as standards in the areas of communication/education skills, training, performance, and updated knowledge of home buying procedures.
These standards were derived with a broader view than HUD, including input from mortgage insurers, working counselors, GSE's, and other organizations. The National Industry Standards Committee includes members from the Bank of America and Wells Fargo, Fannie Mae and Freddie Mac, the Federal Reserve Board, the National Association of Realtors, and several consumer credit agencies.
An agency may either endorse the standards -- essentially saying that they support them and strive to meet them -- or adopt the standards, which means a commitment to implement them.
Check out the various resources on this list and seek advice from those on your specific situation. Soon you will have enough background to objectively assess the information you get from lenders and other non-objective sources, and find the home and mortgage that fits your needs. Even more impressively, you did it all for free!
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