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To conclude our sixteen segment series on home buying, we are going to talk about a few

things to consider now that you have taken possession.

First, and foremost, you must make a commitment to make your house payment in full and on

time every month. It is easy to get quickly caught up in buying new furniture, fixing up, and

remodeling. Be careful not to raise your debt beyond your ability to meet your house payment.

You purchased the home with a certain amount of debt in mind, and doing these things right

away may quickly move you beyond your means.

You should receive a statement or coupon book from the lender before your first payment. Be

sure to follow the payment instructions carefully. If you do not receive either before your first

payment is due, contact your lender.

Over the life of your loan, it is likely that the taxes and homeowner͛s insurance premiums will

increase. The county and your insurance company will notify you and the lender of any

changes. If your lender does not change the amount of your house payment, you may end up
being charged a substantial back payment at the end of the year. If you do not hear from your

lender about increasing your payment, contact them.

If your taxes and insurance premiums are not escrowed by the lender, you will need to pay

them personally and they will not be included in the house payment. Be sure you budget for

these payments and put the necessary amount in savings each month.

If possible, consider making additional payments on the principle of the loan, above and

beyond what is due. First, you must contact the lender and find out which method they require

to make extra principle payments, as procedures vary. Do not just assume that adding extra to

your check will go to principle. Secondly, be sure there is no pre-payment penalty, or that it will

be less than what you save by paying off early.

Some borrowers make extra principle payments by adding to their monthly payments. Others

pay half a payment every two weeks, which means they will average an extra payment per year.

Or, you might use your tax refund or other occasional income to go toward the mortgage. Any

extra you pay can have big dividends. For example, if you borrow $100,000 at 7% for 30 years

and make the minimum payment each month, the loan will cost you over $139,000 in interest.

If you were to add $50 to the principle payment each month, the loan would be paid off in

slightly over 25 years and you would save over $25,000 in interest!
If you do fall behind on your home payments, there are some ways your lender can assist you in

getting back on track.

 !"#$%&  ʹa written agreement between you and your lender that could include a

repayment plan, a temporary reduction in payments, or a suspension of payments for a short

period of time.

$''$(!)! !$&ʹa permanent change in one or more terms of a loan, such as interest

or length of the loan. This most likely would be when you have experienced a permanent

change in income.

!" "!* ʹ You lender can work with you to obtain an interest-free loan from HUD to bring

your mortgage payment current. You would have to repay the loan when you refinance or sell

the home.

If you cannot afford the mortgage payments you might have to consider a pre-foreclosure sale

or deed-in-lieu of foreclosure. A pre-foreclosure sale allows you to sell the house yourself and

use the proceeds to pay off your lender. If the sale does not cover what you owe, you may be

able to convince the lender to settle for the sale price. As a last resort, you may be able to

voluntarily give your property back to the lender and save legal fees and damage to your credit.

Good luck and best wishes in buying the home of your dreams!
Bill Taylor
Weston County Extension Office

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