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FAQ

Why should I buy?
A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you are essentially investing that money. And there’s a good chance that the value of your home will go up over the years. Plus, come tax time, in addition to the property taxes you pay as a homeowner, you can also deduct your mortgage loan interest payments, which will save you a lot of money each year. Finally, you'll enjoy the freedom and pride that comes with owning a home.

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What are HUD homes?
HUD homes are homes with an insured mortgage from the US Department of Housing and Urban Development—and they can be a very good deal. When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed and takes ownership of the home, then sells it at fair market value.

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Can I become a homebuyer even if I have bad credit, and don't have much for a down-payment?
The short answer is “yes”. First, you should talk with us to find out what you qualify for. It may surprise you. In addition, you may be a good candidate for a federal mortgage program. To find out, contact one of the HUD-funded housing counseling agencies that can help you sort through your options.

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Are there special homeownership grants or programs for single parents?
Yes, there is help available. Start by becoming familiar with the homebuying process and pick a good real estate broker. Although as a single parent, you won't have the benefit of two incomes on which to qualify for a loan, consider getting pre-qualified, so that when you find a house you like in your price range you won't have the delay of trying to get qualified. Again, your local government may have local homebuying programs that could assist you. Look in the blue pages of your phone directory for your local office of housing and community development. And for more information, contact us at Hanover Mortgage.

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Should I use a real estate broker? How do I find one?
Using a real estate broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier. A real estate broker will be well-acquainted with all the important things you'll want to know about a neighborhood you may be considering (the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more). He or she will help you calculate the price range you can afford and search the classified ads and multiple listing services for homes you'll want to see. With immediate access to homes as soon as they're put on the market, the broker can save you hours of wasted time. When it's time to make an offer on a home, the broker can point out ways to structure your deal to save you money. And you don't have to pay the broker anything! The payment comes from the home seller - not from the buyer.

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How much money will I have to come up with to buy a home?
That depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs:
• Earnest Money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house
• Down Payment - a percentage of the cost of the home that you must pay when you go to settlement
• Closing Costs - the costs associated with processing the paperwork to buy a house.

When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies.

As for your down payment, the more you put toward it, the lower your mortgage payments will be. Closing costs, which you will pay at settlement, average 3-4% of the price of your home. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won't be caught by surprise.

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How do I find a lender?
These days, there are a lot of options out there. You can finance a home with a loan from a bank, a savings and loan, a credit union, a private mortgage company, or various state government lenders. But shopping for a loan is like shopping for any other large purchase: it requires exploring your options and careful consideration. Different lenders can offer quite different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how much home you can afford. But that’s not the only factor to be considered. You need a lender who looks out for your best interest, one who understands your goals, and is willing to work with - and for - you. Most of all, you need someone you can trust. And at Hanover Mortgage, that’s exactly what you’ll get. Because we realize that a loan starts with a relationship.

When you’re ready, call us and we’ll help you evaluate your loan potential—and possibly get you pre-qualified.

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In addition to the mortgage payment, what other costs do I need to consider?
In addition to utilities and general maintenance, you’ll have property taxes, and possibly city or county taxes. Taxes normally are rolled into your mortgage payment.

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What will my mortgage cover?
Most loans have 4 parts:
• Principal - the repayment of the amount you actually borrowed
• Interest - payment to the lender for the money you've borrowed
• Homeowners insurance - a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders
• Property taxes - the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year.

Most loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you'll pay far more in interest than you will in principal. Because of the way loans are structured, in the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly principal.

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What do I need to take with me when I apply for a mortgage?
If you have everything with you, you'll save a good deal of time. For starters, you should bring:
• Social security numbers for both your and your spouse, if both of you are applying for the loan
• Copies of your checking and savings account statements for the past 6 months
• Evidence of any other assets like bonds or stocks
• A recent paycheck stub detailing your earnings
• A list of all credit card accounts and the approximate monthly amounts owed on each
• A list of account numbers and balances due on outstanding loans, such as car loans
• Copies of your last 2 years' income tax statements
• The name and address of someone who can verify your employment

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How do I know which type of mortgage is best for me?
There are many types of mortgages, and the more you know about them before you start, the better.

Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower.

You may have heard of FHA mortgages. FHA doesn't actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan. Again, if you have any other questions, we’ll be glad to go over them with you.

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When I find the home I want, how much should I offer?
Your real estate broker can help you here. But there are several things you should consider:
• Is the asking price in line with prices of similar homes in the area?
• Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it?
• How long has the home been on the market? If it's been for sale for awhile, the seller may be more eager to accept a lower offer.
• How much mortgage will be required? Make sure you really can afford whatever offer you make.
• How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.

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What if my offer is rejected?
They often are. But don't let that stop you. Now you begin negotiating. Your broker will help you. You may have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs that wouldn't normally be expected. Often, negotiations on a price go back and forth several times before a deal is made.

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So what will happen at closing?
Basically, you'll sit at a table with your broker, the broker for the seller, probably the seller, and a closing agent. The closing agent will have a stack of papers for you and the seller to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you're signing. And don't be afraid to ask questions.

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What else should I know?
You should know that at Hanover Mortgage we’re here to answer all your questions. We understand the home buying process, and more importantly, we understand our customers. So don’t hesitate to call any one of us—we’re here for you.

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