Buying a Home: Are you creditworthy?
Several months ago, Dawn and Darrell Swisher applied for a loan to refinance their home mortgage. “My husband had a heart attack two years ago, followed by a stroke, leaving him disabled. I was able to take care of the regular household bills, but he had four credit cards and I couldn’t get anywhere with them. I went to Consumer Credit Counseling Services and they got the credit card companies to bring down the interest rates. Since then, I’ve been able to pay two of them off,” Dawn says.
She cannot work a steady job because she needs to care for her husband, who now receives Social Security disability benefits and insurance from his former employer. She also earns some money by baby-sitting and doing odd jobs for neighbors, as long as she can be available for her husband. When she got a notice from CCCS offering a way for them to refinance the house they bought five months before her husband’s heart attack and stroke, she jumped at the opportunity. “Now my house payment is down $100, and I am able to take care of my other bills,” she says.
CCCS, of Canton and Akron, Ohio, has teamed up with Freddie Mac and Ohio’s National City Bank to help families with credit issues repair their credit and qualify for a conventional market-rate mortgage through its CreditWorks program. CCCS is a private nonprofit organization that has provided free and affordable financial counseling and education to the community for more than 30 years. A member of the National Foundation for Credit Counseling, as well as the Better Business Bureau, it is accredited by the Council on Accreditation for Children and Family Services.
CreditWorks is a new mortgage loan program that helps people who have worked hard to restore their credit reputation to buy a home. “Under the CreditWorks mortgage initiative, families with excessive debt and impaired credit can qualify by successfully participating in Consumer Credit Counseling’s Debt Management Plan for 12 months and taking part in the CCCS housing counseling program,” says Chery Hall, counselor supervisor for the Canton-Akron CCCS office. CreditWorks mortgages are 30-year, fixed-rate loans on single-family properties, with 97 percent loan-to-value ratios and flexible underwriting requirements. “Without CreditWorks, people with similar credit issues would have to spend several years rebuilding credit to qualify for market-rate mortgages,” Hall says.
“Once the clients have been successful in the debt-management program through CCCS, they are eligible to apply for a market-rate mortgage through CreditWorks,” says Jonette Edmonds, community reinvestment officer for National City Bank in Akron, Canton and Youngstown, Ohio. One of the requirements is attending a seminar where clients learn about the mortgage process. Then the client is put in contact with the mortgage originator [loan officer] at the bank.
Before You Sign...
Getting ready to buy a home or refinance your current one? Jonette Edmonds, community reinvestment act officer for National City Bank in Akron, Canton and Youngstown, Ohio, believes you should ask the following questions about your loan before you sign on the dotted line:
• What will my monthly payment be? Does it include taxes and insurance?
• How many payments will I make? Are the payment amounts the same for the entire term of the loan?
• Will the loan be fully repaid at the end of my payments?
• What fees am I paying, and what are they for?
• What is the interest rate? Is it the same throughout the loan?
• Can I pay the loan off early, and will I have to pay a penalty if I do?
• Am I sure I can afford the payments? Do I really need this loan?