It is prudent to obtain a free copy of your credit report early in order to detect and repair any discrepancies. Credit problems may delay your ability to purchase.
STEPS TO USING HOC FINANCING FOR THE PURCHASE OF YOUR HOME
You can get a free credit report once a year. It is prudent to monitor your credit report to determine that all of the credit belongs to you and that no incorrect negative information appears. If you have credit problems, you may need to fix them before you can seriously engage in purchasing a home.
The lender will order a credit report of its own during the loan application process.
DO NOT acquire significant debt during the loan application process. This may cause your loan to be denied.
At least one borrower per household must present a certificate of completion of a homebuyer education class before a lender is allowed to reserve funds for any HOC MPP financing option. HOC does not conduct these classes. Free classes are available through Housing and Community Initiatives, Inc. (HCII). You must register for a class. See the HCII website at http://www.hcii.org/ for the class schedule and to register. The class is a 3 hour session and reviews the role of the real estate agent and the sales contract, the loan approval process and settlement as an introduction to the homebuyer process. Upon completion of the class, the attendee will receive a certificate which will be provided to the lender. Top
Select a HOC participating lender from the list. Call to arrange a brief interview. Mention that you are interested in HOC financing and are seeking prequalification.
Prequalification is an estimate of what you can afford to purchase based on your income, credit, and debt load. It is not a commitment to make a loan. Usually, there is no cost for prequalification. Prequalification serves two purposes: it gives you an affordability range and it gives a seller more confidence that you, as a buyer, are approvable for a loan. (Preapproval is a longer process and does result in a commitment for a loan. You may have to pay for a preapproval letter). Prequalification or preapproval are lender decisions made prior to your purchase of a property.
HOC does not supply homes to purchase. You must search for your own home to buy. You may hire a real estate agent to help you locate a home in your price range or you may do this by yourself. A real estate agent will have access to homes listed for sale with the asking price and description. In addition, the agent understands and knows the sales contract and what belongs in it and what is negotiable. The seller will have an agent of his/her own. The property must be in Montgomery County and may be new or existing; market priced or MPDU.
You will sign a real estate contract (purchase agreement) with the seller to purchase the home. A ratified contract is one signed by you and the seller. The contract is a legally binding document and identifies obligations of the buyer and the seller. You will place a deposit on the property upon signing a contract. The amount of a deposit is at the discretion of the seller and is credited toward your downpayment when settlement occurs. You may make an offer and the seller may counteroffer. When everyone is in agreement, both seller and purchaser sign a contract at which time the contract becomes a ratified sales contract. Top
HOC believes the buyer should be as aware as possible of the condition of the property to be purchased. If the property is a resale, the HOC MPP requires the buyer to obtain a home inspection for the property. The buyer hires the inspector and pays for it. The home inspection is not the appraisal which is ordered by the lender in order to establish a value to support the mortgage. The sales contract should specify a contingency for a home inspection satisfactory to the buyer.
HOC does not take loan applications for mortgage financing. For HOC financing, the purchaser must use a HOC participating lender. HOC loan terms are the same regardless of the lender being used.
You may select any HOC participating lender, although the lender that did your prequalification is a good first choice. You will need a ratified sales contract to take to the lender. The lender will collect credit information and other documentation and order a credit report and an appraisal of the property. In most cases, you pay for the credit report and appraisal at the beginning of the process. Those fees are for services by outside vendors and generally are not recoverable if the application does not proceed to settlement. For HOC financing, each borrower must provide the lender with a complete, signed copy of his/her federal tax returns for the last 3 years. From application until loan approval may take 30 to 60 days; but each case is different.
Settlement or closing is the final stage when you sign all the loan and legal documents and pay for the closing costs and fees and receive the keys to the home. You will receive copies of all the documents you sign at settlement from the settlement agent.
The purchaser selects the agent to conduct the settlement. This agent does not specifically represent the purchaser, however.
All borrowers are required to attend settlement unless an approved power of attorney has been prepared for the absent borrower(s). Nevertheless, at least one borrower must attend settlement in person. Top
Housing and Community Initiatives, Inc. (HCII) conducts two post purchase classes annually. They are 3-hour sessions which review the mortgage payment, homeowner association/condominium responsibilities, predatory lending, and maintenance.