The Back to Work loan program has made it possible to apply for a new mortgage only 12 months after an economic event. After a situation like bankruptcy or foreclosure, it can be frightening to begin the move from an apartment or another shelter, to a house that you can call your own. Here are two often-forgotten ideas that will make your transition smoother.
1. What is your budget?
This may seem like a silly question, but many families don’t know what they can afford. It is easy to overestimate what is affordable when each living cost is yet to be pieced together.
Earnest money is the deposit made on a home after a family submits an offer. This proves to the seller that you are serious about buying the house. A down payment is an initial and partial payment made at the time of settlement. The Back to Work lending program allows borrowers to put down only 3.5 percent on a new mortgage.
As soon as you move in, there will be other factors to consider as well, like heating and cooling, water and electricity. Don’t forget other living expenses, such as food, internet, cable, car insurance, fuel and cell phones.
To avoid making the same mistakes twice, families should have a back-up plan for handling the loss of employment or income. If the main provider lost his or her job, would the family be able to continue paying the mortgage? Does the family have a sufficient savings plan?
Calculating these numbers can become complicated and stressful, which is why most families avoid budgets. However, it becomes much easier when families keep track in an Excel file or other documenting program. “Back to Work” lending program participants are required to complete at least one hour of housing counseling, in which the counselor can help create or assess a household budget.
2. Create a “wants” and “needs” list.
Although a fireplace, a finished basement or backyard pool sound great. Extra wish-list items only make homes more costly, especially when there are other financial factors to consider. Your family’s needs should be your first priority.
Location is key. Consider how close your desired location is to your job, your children’s school and the supermarket. Look into whether public transportation is an option and if the garage will fit your family’s vehicle. Some neighborhoods have strict rules about parking on the street, fencing and sheds.
Townhouses, condominiums and duplexes will each have different ways of landscaping and disposing of garbage. Creating a list of what will be truly beneficial to your family will narrow your choices down to the perfect home that will make the “Back to Work” loan program a successful one.
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