Video Blog: We Call It Our "Miracle Home"

Melanie Reyes tells her story through laughter and tears, her story of being the homeless single mother of three young boys to becoming a homeowner who can now provide her family with new opportunities.

“Miracles happen,” she said in her Anaheim condominium. “Hope is real. This is a miracle. That’s my soul cry.”

NeighborWorks Orange County, which taught her the ins and outs of homeownership and created for her an affordable loan package, was the key to making her family’s miracle happen, she said.

“We had our moments of anxiety and sadness, but we believed there was a better end to our story,” Melanie said. “NeighborWorks is the catalyst. They helped us. “

Melanie, 44, is a licensed marriage and family therapist holding down three jobs. Make that four when you add the title “Mom.”

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She is a mental health clinician and crisis counselor at a residential treatment center for youth in Riverside County, where she has worked in various capacities for the past year, starting as an intern and moving into a staff position in which she works with severely traumatized foster youth.  She has served clients at Thomas House Family Shelter, a domestic violence shelter in Garden Grove, for nearly three years on an as-needed basis.  And she has her own nascent counseling practice.

Melanie is a native of the Philippines whose father, a career Navy man, brought her to the U.S. as a toddler. A graduate of Vanguard University in Costa Mesa, she had been a teacher, a Zumba instructor and had run a successful business from her home selling jewelry. She obtained a certificate in interior design. Her life overturned when she went through a divorce in 2012 after about 18 years of marriage. She was left, she says, with debt and a car. The same year, after four years of effort, she completed the master’s program in clinical psychology and marriage and family therapy at Azusa Pacific University.

Melanie and her ex-husband worked out joint custody of her three sons, an arrangement in which they live with her with her part of the week and every other weekend. She and her former husband had lived in a Garden Grove home they had purchased, but for her, divorce brought homelessness.

Providing for her sons Joshua, 16, Jonathan , 14, and Ethan, 10, meant driving to her father’s home in San Diego and staying some nights there.  Or staying with relatives in Carson or Azusa. Or getting a hotel room. As she struggled to acquire 3,000 hours of clinical training with little or no pay so that she could obtain her therapy license, there were times she would drop the boys off with their father in Garden Grove, and then sleep in her car. She made certain they always had a roof over their heads.

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Often, she says, she would need to begin driving the boys to Orange County at 4 a.m. so that they could attend school in Garden Grove. Breakfast was a meal at Denny’s, McDonald’s or Walmart.

“I’m an educated woman and no one would think you’d have to live like that,” she said.

 About two years after her divorce, she was able to rent a studio apartment, and then a one-bedroom place in Anaheim.   She worked odd jobs in gyms and such to earn enough money to pay bills.

And finally, after eight years of effort, in 2016 she received her California marriage and family therapy license.

“The divorce was brutal,” Melanie said. “It was a difficult journey. But I kept going. I needed that license to get my kids in a nice, stable environment.”

With her career now begun, she set her sights on homeownership.  

“I paid almost as much for rent as I pay now,” she said. “I wanted a home not only for me but for my kids. I wanted them to have something as a legacy, a legacy that they could have a home here.”

After she began working with a Realtor and meeting lenders, Melanie learned about NeighborWorks.

At the time, Melanie was working through another non-profit as well as Rommel Salazar, a Huntington Beach-based home mortgage consultant for Wells Fargo who specializes in helping first-time homebuyers. When it became clear that the other agency couldn’t help her, he recommended that she try NeighborWorks, which was also able to offer a financial package better suited to her needs. “My job is to make it happen for the client,” he said.

He sees Melanie has having come full circle, earning a master’s degree and putting herself in a position of being to help others.

“In my many years in this business,” Salazar said, “I couldn’t think of anyone more deserving of becoming a homeowner than she is.”

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 In August 2016 she took an eight-hour homeownership class, where she learned about money management, insurance and the responsibilities that come with owning a home.

“It was a tough journey to get to homeownership,” Melanie said. “ I saved and saved and saved and saved. “

Enough to make her own $7,000 deposit.

With her Realtor, Annalissa de Chavez Castillo, she looked at about seven or eight homes, but discovered that single-family houses in her price range often were located in neighborhoods that she considered unsafe. 

“I said, ‘God, can You please give us a home?’ And Ethan prayed, ‘Can You give us free stuff?’”

The 1,001-square-foot condominium that she purchased in Anaheim  answered  the family’s prayers.

“It was furnished,” Melanie said of the condo, built in 1974. “The way it was presented was beautiful. It was by Disneyland. It was close to their dad. And it was cozy for me. It’s somewhat gated.  I wanted a detached home but I liked that there are people around me.”

The two-story condo came with bunk beds in one upstairs room that the two younger boys share. A sofa bed on the first floor provided what Melanie calls “a bachelor pad” for Joshua. Upstairs were two bathrooms, while downstairs, near the entryway , was a half bath with toilet and sink.

She was sold on it.

“I wanted the boys close to their schools and close to their dad so we could share custody in an effective manner,” Melanie said.

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Collaborating with partners such as Luther Burbank Savings, the “Friendly Experts” at NeighborWorks Orange County put together a finance package that included forgivable down payment assistance for Melanie, considered low-income by federal standards that take into account family size and Orange County income levels. Escrow closed Oct. 25, 2016 on the $372,000 condo, and Melanie moved in the following weekend.

“When we got the keys, I wept,” Melanie said. “Finally my dream came true. We  have a home…And the miracle part of it is I prayed for a bunk bed. I prayed for a sofa bed. And a TV. And all the appliances. Everything was included.”

The family keeps the residence immaculately tidy.

“I believe that when someone comes into our home and is our guest, they need to see us at our best. And so I have high expectations that are fair for my children and I,” Melanie said.

She’s also grateful that she has a home to clean.

“Everything that people complain about, like the laundry or dishes, I’m thankful I can wash my dishes,” she said. “People say, ‘I hate cleaning the toilet.’ I say, ‘Thank God, I can clean this toilet, it’s my toilet. I think you see things differently.”

She began to see herself in a new light.

“I can go home to my home,” she said. “I’m not sharing. I’m not renting. There’s something about your identity when you’re a homeowner, when you can say, this is my home. These are my things, the children’s things. It’s my identity, absolutely.”

Ethan and Jonathan both say they like having a room to themselves, and plenty of bathroom space.

“It’s not cramped anymore,” Jonathan said.  

 

“I have a chance to be me, to discover my identity,” said Joshua, a high school performer who, following college, aspires to a career on Broadway. Having a home, he said, provides him a place to rehearse, to invite friends and even to sit and discuss college plans with his mother. He and his brothers, all musicians, have a place to practice.

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“I feel safe” he said. “I feel stability and there is hope. Seeing it from my mom’s perspective, I noticed that if you work hard, you will achieve what you want to achieve. That’s a life lesson that will take me through the rest of my life.”

Melanie said a sense of gratitude for her new home comes to her each day – thankfulness to her Christian faith, to her family, and to NeighborWorks. She sees her journey as spiritual, too.  

“Especially if you were down in the dumps, and you just saw death and darkness and despair,” Melanie said. “Now you see hope and light. It’s still tough, but you see hope and light and joy, joy, joy.

“There’s a scripture that says, ‘Weeping may endure for a night, but joy comes in the morning.’ …This is my morning time. This is my joy time.  This is my morning prayer, it’s beautiful. Every day, I kneel in the heart of my home, right there, and I say, ‘Thank you.’ It’s my beautiful home.”

Homeownership Transcends Generations (Video Blog)

With the knowledge she gained from NeighborWorks Orange County, Monique Ruelas put a roof over her head. Then another. And then another. “I would never be where I’m at if it wasn’t for that day when I went to that first NeighborWorks class,” she said. “ Monique came to NeighborWorks around 2002. At the time, she was a renter and single mom with two daughters. The path she followed transformed her from a renter to a homeowner, setting the stage for other family members to acquire their own houses.

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All You Need to Know About Low Income Housing in Orange County

Many families are turning to seek out low-income housing in Orange County due to skyrocketing home prices in Southern California. The challenges of limited housing are causing many families to seek out affordable housing and low-income alternatives. Unfortunately, the inventory on the market is few and far between. These days, affordable housing is hard to find. That goes for both rentals and units for purchase.

Should you find an affordable housing unit for purchase, here are several things to note before you proceed too far into the transaction.

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Eligibility

Each city will outline specific criteria to determine if a buyer is eligible to purchase the home. This will include income restrictions, mandatory minimums for a down payment, specific instructions on how to handle gift funds, specifications for the mortgage and more. The criteria will be very in-depth. 

It’s incredibly beneficial to work with a coach to ensure that you understand all of the terms and requirements of the property. It is also beneficial to work with one of our coaches when you apply for the unit. The required list of documents is substantial.

Another great way to become eligible for a home is to go and apply to first time home buyer classes. These classes typically take nine months to complete but they provide tremendous value. Furthermore, once you complete the classes you may be eligible for a grant that can help you with the down payment of a home.

Resale Restrictions 

There are several restrictions related to purchasing an affordable housing unit. The most notable limitation is the inability to resale at a price higher than what the current owner purchased the property for. This eliminates the ability to gain equity in the home. Inevitably, the property value will rise. In this event, the city will take out a second mortgage to cover the difference.

If the owner chooses to resale, they will need to notify the city for approval. The sale will be limited to a family who qualifies for affordable housing, which the city will most likely have a database of applicants to pull from.

First time home buyers in orange county

If you’re a first-time home-buyer then there are many options you can utilize. One of the best parts of being a first-time home buyer is that you can be eligible for a 3.5% down payment. If a house costs $500,000 then your down payment would only be $17,500.

With the proper home-buying classes, they will provide assistance on improving your savings as well as the opportunity to qualify for a grant. Let’s say you saved $10,000, you could probably qualify for a grant for the other $7,500 which would qualify you for the first home.

Financing

Financing will differ slightly from your traditional financing. First, the lender will want to know the restrictions on the property. Some lenders will not want to underwrite the loan given the limitations.

Should you default on the payments and they end up owning the home, the same restrictions will be applied when they turn around to sell it. Other times the terms state that the city has the first right of refusal, creating a situation where the lender doesn’t get to dictate what happens to the home they now own. Depending on the restrictions, it may be challenging to find a lender.

Is Low-Income housing in Orange County the Right Option for you?

If the owner chooses to resale, they will need to notify the city for approval. The sale will be limited to a family who qualifies for affordable housing, which the city will most likely have a database of applicants to pull from.

If you’re a first time home-buyer looking to build equity through property then affordable housing may not be the best option for you.

Benefits

Even with the restrictions, for some individuals it is still beneficial to invest in a low-income house. Homeowners still enjoy the tax write-off on the interest and will recoup the equity they put into the home. The flexibility that comes with owning your home also creates a more advantageous quality of life. 

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The Journey Toward Purchasing

If you currently find yourself looking toward affordable housing or low-income units, it may be worth broadening your scope. At NeighborWorks Orange County, we work with countless individuals and families every year to achieve homeownership. While this may come as a surprise, we actually rarely help with the transactions of affordable housing purchases. The reason is that our clients primarily leverage grants and first time homeowner programs to bypass low-income housing options and purchase their home outright. This means that they are able to gain equity in the home and have more options when it comes to financing. 

How Neighborworks bypasses low-income housing

While the path to purchasing may seem daunting, know that it is possible. We partner with families and individuals just like you every day. Over time, countless clients make that incredible finale into homeownership. 

If you’re ready to start planning out your future, connect with one of our free coaches today. They will help you assess your current situation and create a specific game plan to help you achieve your homeownership goals. As one of the most trusted housing nonprofits in the county, our coaches offer unbiased assistance.

It doesn’t matter where you are today. All that matters is you are committed to believing owning a home is possible.

Best Loans and Assistance Programs for First Time Buyers

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Making the jump from full-time renter to homeowner is no small feat, particularly in a housing market like California’s. Sometimes, scraping by with enough to make monthly payments seems like a modern miracle. Then you add the myth that you have to have 20% down to enter the market and many potential buyers feel that homeownership falls just outside their reach.

At NeighborWorks Orange County (NWOC), we are here to help you bridge the gap. 

The first step is to tackle the 20% myth. While a down payment is important, most of our clients work with programs and grants that accept a 3% down payment. Others are able to secure 100% financing for their mortgage.

 

Here’s how:

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Homebuyer Education Classes

Benjamin Franklin once stated that, “An investment in knowledge pays the best interest.” 

Particularly in a dynamic housing market like California, your first line of defense is educating yourself. That’s worth its weight in gold.

To put it bluntly, buying a house is a complicated process. Unfortunately, there are dozens of opportunities to take missteps or sign up for things that have bad consequences. For example, many families who suffered foreclosure shortly after the crash of 2008 had adjustable rate mortgages, not realizing that their rate would drastically change. When that happened, they were unable to make payments.

Protect yourself through education.

Taught in both Spanish and English, our Homebuyer Education class outlines every step, evaluates different loan types, reveals different assistance programs and covers often overlooked realities of homeownership, such as establishing insurance.

Learn more about the program here.

 

Down Payment Assistance Programs

As promised, you don’t have to put down 20% to jump into homeownership. With two of our most prominent down payment assistance programs, you only need to bring 3% to the table. Because of the way the programs work, this money can actually be applied to closing costs if you choose. That means your loan actually covers the entirety of the mortgage.   

The IDEA and WISH programs are grants that match the money homebuyers bring to purchasing a home at a 3:1 ratio, up to $15,000. That means if you save $2,000, the program will put in $6,000 toward the purchase. Funds are fully forgiven after five years.

Both programs work with families whose income is 80% or less of the median income level for that area. Many two-income families are surprised to learn that they qualify.

Learn more about these programs here.

 

Community Reinvestment Act Programs

For families that do not meet the income requirements for the WISH and IDEA program, we look next toward the Community Reinvestment Act (CRA) programs. Lenders who have the CRA program will write mortgages without private mortgage insurance (PMI) for families who only have a 3% down payment. This program also has more lenient requirements on gift funds applied toward the down payment.

When you work with one of our NWOC coaches, they evaluate each lender to find the best option for you. This means looking at all the terms and additional programs, such as closing cost assistance through the CRA.

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Your Unique Journey To Homeownership

No one’s situation is unique. Each family has different obstacles and circumstances that they are overcoming to pursue the dream of homeownership. That’s why we recommend connecting with one of our free homeownership coaches. They sit down with you to understand your specific scenario. Then they work to find the best, and most sustainable, route to homeownership for you and your family.

Schedule your appointment today.

Can You Find Affordable Real Estate in Orange County?

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We’ll admit that the housing prices in Orange County can be slightly daunting when you first encounter them. Despite the challenge, we remain resolute in our belief that you can find affordable housing options in the area and that the investment of buying a house is key to building wealth long term. 

At NeighborWorks Orange County, we help families with lower to moderate incomes navigate the challenge of buying in Southern California.

 

 

 

Defining Your Budget

It’s not uncommon for a bank to approve for a monthly payment that does not make sense for your family. Their algorithm doesn’t always account for your kid’s school costs or the budget to ensure you have food on the table every day. This means that you need to take the lead on defining what makes the most sense for your family. 

By working one-on-one with one of our housing coaches, a free service we provide to residents of Orange County and neighboring areas, we can help you establish a strong financial base and understanding of the exact payment amount that sets you up for long-term success. Additionally, we help qualifying families apply for down payment assistance programs. These programs help countless families meet the 3% minimum needed to purchase a home.

                                          

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Exploring Different Neighborhoods

It’s no secret which neighborhoods reach the peak of the market. Newport Beach, Beverly Hills and Lake Sherwood are some of the regions that continually garner the awe of countless industry news sites for their high prices. Unfortunately, less well known areas are more affordable. 

Yes, there are affordable areas in Orange County. We know because we help families on their journey to owning in these regions.

Many of the millennials we work with prefer turnkey properties with an HOA to take care of the exterior of the property. With time-intensive careers in full bloom, they want to focus on work and life, leaving the entire exterior housing maintenance to a property management company. For them, we look at condominiums in the Anaheim area. Near the Disneyland area, you can often find a two-bedroom place between $350,000 and $450,000.

Families look for different properties, typically your single-family residences. According to the MLS, cities in Orange County with the most reasonable single-family homes are Santa Ana, West Anaheim and Stanton neighborhoods. Prices range from $430,000 to $460,000. Additionally, we’ve had a lot of luck with families looking at the Inland Empire, Riverside and Perris regions.

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Getting Help

Luckily, we specialize in helping lower-income families on the path to affordable homeownership. Whether you are ready to buy today or are hoping in the future that you will be able to own, we help individuals and families gain financial stability, understand the home buying process, find homes that meet their needs and ultimately purchase their home.

Schedule a free session with one of our housing coaches today. Together, we can get you on the path toward affordable homeownership in Orange County.

NeighborWorks OC is proud to receive $100,000 from Wells Fargo's Priority Markets Grant!

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This $100,000 grant will jump-start a new program designed to leverage our HomeAgain capital funds.

The problem: Competing with cash investors has made it difficult, if not impossible, for hardworking families to access the affordable home inventory in OC.

Our solution: Our new program will enable NeighborWorks OC to act as the "cash buyer" on behalf of low- and moderate-income families. This pool of homes will be available to mortgage-ready families that are actively looking for opportunities to invest in their future.

We look forward to making many dreams of homeownership come true in 2017!

*To join our Homebuyers Club, click here and make an appointment with one of our Friendly Experts.

When is the Best Time to Refinance Your Mortgage?

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Current Rates Compared to Your Rate

There’s no need to refinance if your mortgage rate falls just a hair below current rates. In short, you won’t save enough money to make the effort and related costs worth it. A good rule of thumb is that if current rates are more than a half of a percent below your interest rate, connect with a loan provider to explore options. 

At NWOC, we are currently seeing rates around 3.2% for individuals with a good credit score.

Many families in Orange County are sitting with interest rates much higher than that. Prior to the housing market collapse, interest rates averaged around 6% and 7%. Individuals who stayed in their home with their original mortgage could save up to 3% or 4% if they take advantage of current low rates. 

That’s substantial savings.

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Evaluating Benefits

As mentioned, refinancing doesn’t make sense for everyone. When you work with the NWOC Loan Department, our specialists will go through what we call a “Net Tangible Benefit.”

While it sounds complex, it really comes down to comparing the savings against the costs. Closing costs for a refinance average between 1%-2% of the total amount borrowed. We evaluate that against your monthly savings over the amount of time you plan to stay in the home. If the amount of savings pays off the refinance costs in a reasonable time, you’ll be recommended to refinance.

Each scenario is different, which is why a loan provider can help you determine your overall savings based on your loan amount and qualifying interest rate. For example, families thinking about moving in the next year will most likely not save more than the closing costs before they move. In that scenario, a refinance wouldn’t make sense.

 

Additional Considerations

There are other considerations that factor into a family’s decision to refinance. Some families use a refinancing as an opportunity to consolidate other high interest debt. Homes in neighborhoods with rising values can often times qualify for better terms. The homeowners have equity built into the home that gives them additional options. 

Inversely, there are things to be mindful of as well. Homeowners need to watch out for repayment penalties or loans with special features that might adjust the interest rate.

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Partner With a Social Enterprise Model

At NWOC we are pioneering a new age in the nonprofit space and the mortgage industry through creating social enterprise arms of our organization. Both our real estate services and our lending department differ from the traditional commission based model. Instead, our team works on salaries provided by our nonprofit funding.

All commissions earned through services are reinvested back into our programs focused on sustainable homeownership and building community. You receive the best service, competitive rates, and help support important initiatives in your community.

We like to think of it as a home mortgage on a mission to do serious good. 

More importantly, our loan providers work to make sure that you are only pursuing options that are in your family’s best interest. The cornerstone of our organization hinges on helping individuals and families pursue sustainable housing options. We adamantly believe that this is a crucial component of building strong communities.

Connect with our loan department today to see if refinancing is right for you.

Buying or Renting: Which is Best for You

With housing prices on the rise, many renters will be asking themselves if it’s time to invest in a home of their own.  At NeighborWorks Orange County we believe that homeownership is an incredible investment. 

But it’s not right for everyone at this moment. Sometimes it takes time to become homeownership ready. At the end of the day, it all boils down to your specific situation.

If you’re itching to start moving toward homeownership, check out our suggested guidelines to determine if purchasing a home makes sense today.

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Down Payment

In order for a home purchase to be a good thing, you have to have some skin in the game. That means saving up for the down payment. Contrary to real estate folklore, you don’t have to put a full 20% when purchasing. While a strong down payment is always encouraged, reaching that high of a percentage in this area of the country is quite challenging. 

For most programs or loans, you have to bring a minimum of 3% to the table. Particularly for first time homebuyers, this is much more achievable.

Know that there are several programs designed to help first time homebuyers, such as the Down Payment Assistance Programs. See all the programs here.

 

Affordability

The next key factor comes down to affordability. Can you afford the mortgage payments? What types of properties can you afford payments on?

Many renters discover that a mortgage payment will be quite comparable to their current monthly rent. If you work with our counselors, they will actually encourage you to pursue homes that the mortgage is similar to what you currently pay for rent.

Despite what a mortgage broker might qualify you for, increased monthly bills causes payment shock. This could be very damaging for your family. Bottom line, you’re not used to allocating that much to housing each month. It negatively impacts other areas of your budget.

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Debt to Income Ratio

Loan providers have specific guidelines in evaluating your debt to income ratio. If a lender sees that your monthly debt payments represent too much of your monthly income, they don’t believe that you are in a good position to pay the loan back.

A typical percentage is to keep your debt to income ratio below 36% for the front end, and below 45% on the back end. 

The front end is your monthly debt payments not counting your mortgage divided by your income. For example, if you have $1,000 of debt payments each month and a $5,000 income, your front-end percentage is 20%. 

Then they run the calculation with the mortgage payment to create the backend. Add the $1,000 debt payments to a $1,5000 mortgage and then divide it by a $5,000 a month income. You get 50%.

While the front end is in the suggested percentages, the mortgage payment puts your debt to income ratio too high. Before purchasing, our counselors will work with you to pay down your other debts. This puts you in a better position to purchase.

 

Qualifying for a Mortgage

Prior to hitting the pavement touring the newest listings, we recommend getting pre-qualified for a mortgage. Too often home hunters fall in love with properties far outside what they can get a mortgage for.

That taints the entire home buying process.

Make sure you can qualify for a mortgage and good interest rate early on. In most cases, you will need a credit score above 620. While some individuals with a 580 can qualify, it depends on other factors such as job history at that point.

Working with our lending department not only gives you competitive rates, it’s also part of our unique social enterprise model. They can also help you explore programs and grants you qualify for.

 

Prepare for Homeownership

For unbiased help determining if buying or renting is better for you and your family, connect with one of our home ownership coaches. They will walk through all aspects of your situation to help you decide.   

Regardless of where you are today, at NeighborWorks Orange County we work with families and individuals to achieve sustainable homeownership. From improving credit to paying down debt to applying to the various first time homebuyer programs, we are with you every step of the way. 

If you’re not sure if you’re home ready today or want to understand the home buying process, join us at our Homebuyer Classes. This comprehensive class will walk you through the entire home buying process, answer all your questions and ensure you understand which options are best for you and your family.

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Your Guide to Affordable Homeownership in Orange County

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With housing prices seemingly on a never-ending upward spiral, the phrase affordable homeownership takes a more significant role in the real estate and housing industry. Similar trends across the country have even spurred democratic nominee Hilary Clintonto emphasize the need for more options for families. 

We’re here to let you know that there are options in Orange County for affordable and sustainable homeownership.

Many times, it involves buying smaller and then over time moving up in homes. Other times come down to purchasing in a more affordable area of town. Currently, single family residences in Santa Ana, West Anaheim, and Stanton range between $430,000 to $460,000.

Every day at NeighborWorks Orange County we partner with individuals and families just like you to make the dream of owning a home a reality. Affordable homeownership is possible.

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Assistance Programs

Perhaps the biggest opportunity individuals and families have when pursuing affordable homeownership is taking advantage of one of the many different assistance programs.  

Did you know there are down payment assistance programs, forgivable grants, and loan programs specifically designed to help first-time homebuyers bridge the gap to homeownership? Several of these programs have 3 to 1 matching programs, meaning that if you save a $1,000, the program will match $3,000 toward your closing costs.

These funds go a long way in helping families purchase their first home.

Eligibility is based on income. Don’t let that deter you. Many families qualify who think thought their income would disqualify them. For example, a family of four making $116,000 would qualify for several of the programs.

Additionally, at NWOC we have invested in creating more affordable housing opportunities in the area. We purchase foreclosed homes needing repair. Once fixed up, we limit the sale to individuals and families in our First-Time Homebuyers Club. These homes are priced to appeal to families looking for affordable options. Additionally, buyers can explore two different assistance programs set up specifically for these houses.

Check out the full guide to loans and programs available.

 

Biggest Misconceptions

The most common misconception is that you are only a “first-time homebuyer” once. In reality, you are reclassified as a first-time homebuyer after three years of not being on a property title. This means that many individuals who lost their home after the 2008 recession, underwent a foreclosure, or have not owned a home for several years can qualify for the assistance programs.

The other common misconception is that the buyer pays a realtor’s commission fee. This means many new buyers forego using a realtor in an attempt to do it on their own. This puts them at a disadvantage in the process. From determining fair market value to directing you to communities in your budget to negotiating terms to walking you through the buying process, realtors play an important role.

Sellers pay the realtor commissions following the sale of the property. There is no need to not utilize a realtor when home hunting.

 

 

Market Competition

It’s a seller’s market. In short, the current market offers fewer properties than interested buyers. Homes move a little quicker and often see multiple offers. For buyers, there will be less flexibility in negotiating a price or getting the seller to cover closing costs. Often times, you will see buyers offer more than the asking price.

That does not mean that it’s not a good time to buy.

Many buyers shy away from searching once they hear the news define current real estate conditions as a seller’s market. While market conditions do play a part in the availability of affordable housing, the most important aspect is if you are home-buying ready. Working with an experienced realtor, you can find properties in your budget. 

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Where to Start 

Know you aren’t alone in this process. At NWOC we provide free homebuyer coaching, affordable homebuyer education, assistance in applying for the various first-time buyer programs, experienced realtors to help with the home searching process, and a lending department offering competitive interest rates.

Not only can we help you become home-buying ready, we can help you find affordable options all across Orange County.

No matter where you are in the process, we are here to help. Contact us today to see what options are out there for you and your family.

Finding the Best Home Loan in Orange County

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Despite predictions that mortgage interest rates were set to rise over the course of 2016, we have actually seen rates hold steady below 5%. Initially, there was a climb to 4% this spring, but over the summer rates dipped back down to slightly below 3.5%.

This is a great sign for families considering purchasing a home.

Be warned: rates aren’t set in stone here forever. Predictions for 2017 paint a different picture. If your family is homebuyer ready, it’s time to take advantage of the long-term benefits of homeownership.

 

Rates, Loans, and Programs 

Loans aren’t cut and dry, one-size-fits-all types of products. Think of it more as a math equation with different variables. While industry trends may hover below 3.5%, you have to add in your unique variables to determine the final interest rate. A high credit score gives you a better chance at a low interest rate. If the ratio of the loan to value of your home is too high, that impacts the final interest rate as well.

This is why a loan provider will never be able to give you a specific answer on your interest rate until they run the numbers. All of the different variables matter.

Once the broker calculates the terms for the loan, you can explore different options within the loan. One that we are seeing right now is that buyers can buy a percentage of the interest rate, referred to as purchasing a point. For example, a family qualifying for a 4.25% interest rate on a $300,000 home has the option of purchasing a point. If they invest $3,000 upfront, they can shave the interest rate by .5%. In less than two years, they will have paid off the $3,000 in interest savings. 

To add even more options, many first-time homebuyers also qualify for assistance programs. These programs add in variables to writing the loan. We are seeing individuals who use assistance programs qualify for 3.5% interest, but they must have a down payment of at least 5% of the home.

Because loans can be so complicated and have so many moving pieces, we highly recommend that buyers work with a homebuyer coach. This free coaching service is your advocate throughout the entire process. 

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Refinancing 

New homebuyers aren’t the only ones benefitting from these low rates. Individuals who purchased their home at the peak of the market are refinancing, saving themselves thousands of dollars in interest payments over the lifetime of the loan. 

Much like qualifying for a home loan, refinancing terms take into consideration various different factors to determine the final terms. A straight refinance for a homeowner with good credit and equity in the home will come in at a lower rate. We’re seeing 3.5% common for those scenarios. 

When the loan amount to the value of the home doesn’t quite hit the desired percentage, the rate increases a little. Additionally, families asking for cash out will pay a price in interest rate. These rates range closer to 4.5%.

Thinking of refinancing? Learn when the best time to refinance your mortgage is.

 

Shop Around for a Loan Provider

Just as it’s important to interview three different realtors, it’s important to consult with three different lenders before committing to a loan. You want to partner with a mortgage broker who will work with you to place you in the best product for you and your family. Not all loan products are created equal. Additionally, some loans work better for individuals in different circumstances. 

Your provider should be a trusted advisor who can steer you in the direction of the best loan for you, not the best one for the bank.

 

Red Flags 

It’s hard to blame the public for being distrusting of the banking industry. When the country is finally healing from the crash of ’08, caused in part by bad banking practices, the Wells Fargo scandal emerges.

Bottom line: you need to be in the driver’s seat of your purchase and understand all of the terms you are signing up for. While most lending institutions have cleaned up their act, there are still lenders preying on homebuyers.

Be suspicious if closing costs exceed 3% or additional fees seem exorbitant. Any origination fees require a second look, as well as an annual percentage rate different than what you originally agreed to. 

If you’re looking for more ways to protect yourself throughout the entire homebuying process, join us for our Homebuyer Class.

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Rates Predicted to Climb at the Start of 2017

While predictions are never guaranteed, there are a lot of different signs pointing to rising interest rates with the New Year. In the aftermath of the election, we are anticipating some movement as the new administration takes over.

Just as we couldn’t predict who was going to win the presidency, we can’t say for sure what will happen with rates. What we can say with certainty is that rates hit a historic low in 2012. While they fluctuated through early 2015, they have primarily been climbing ever since.

 

Partner with a Social Enterprise for Your Mortgage 

Taking the mortgage industry by storm, at NeighborWorks Orange County we are giving homebuyers a mortgage loan option that protects them against predatory lending, ensures they have the loan best suited for their family, and offers competitive rates. In addition to writing your loan, our brokers are able to help you explore different assistance programs you qualify for, as well as work with Community Reinvestment Act Products.

As if that isn’t enough, our social enterprise model reinvests earnings back into the community. Since our brokers are paid on a salary, we use the commission to help fuel sustainable housing initiatives in Orange County. It’s a model that creates a positive cycle of change in every aspect of buying and owning a home. 

Connect with our loan department today to explore the best mortgage options for your family.

Orange County Social Enterprise Investing in Community, Creating Change

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Perhaps one of the best additions to the business arsenal, the social enterprise model currently sweeping the nation gives conscientious business owners the opportunity to create change like never before. Diners support youth initiatives. Clothing companies create ethical product lines. The list of change-driven businesses goes on and on.

Even more importantly, it gives nonprofits the ability to develop sustainable revenues to fuel their efforts. 

At NeighborWorks Orange County (NWOC), we are one of the progressive nonprofits adopting a blended model. Our enterprise and nonprofit work hand in hand to invest into community building, as well as offer quality services that help fund our efforts.

Over the next several years, you will start to see more and more nonprofits follow suit. With government funding on the decline and fundraising efforts not as robust as they used to be, savvy nonprofits need to adopt creative measures to help their constituents.

What Makes NWOC’s Social Enterprise Model Unique 

While we are not the first blended model in America, we are in a very unique industry. You don’t see many, if any, social enterprise models in the high-profit industries such as real estate or financing. To the best of our knowledge, we are the option in those industries where all the profits are reinvested into a nonprofit.

Our mission diverges from many nonprofits. NWOC advances the building of communities in Orange County through grassroots efforts, education, and helping community driven initiatives navigate working with their city systems to build infrastructure. This means our work takes many different shapes depending on the unique needs of a neighborhood.

 

The Challenge of Not Being Sexy 

Let’s tell it how it is. Building community isn’t as sexy as handing out a pair of shoes in a developing country. It’s not and it never will be.

To add to that challenge, our industry is more complex than fashion. People’s eyes glaze over when you talk financing. Unless you are currently in the midst of purchasing a home, few individuals actually want to understand the nuances of escrow or home appraisals. It’s much easier to see the direct impact of a one-for-one model.

Additionally, it’s safe to say that friends do not meet over lunch to discuss current interest rate trends or ARP. Word of mouth marketing doesn’t go as far in our industry. This means only a handful of residents realize the sale of their home or refinancing their loan fuel positive change in their neighborhood. It’s a shame since the commissions from these transactions can go a lot farther than the margins on a sweater.       

Phew! Glad we got the elephant out of the room. Now to discuss why this type of model should be more widespread and, perhaps, even cause for luncheon conversation with your friends.

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Sustainable Change 

Most social enterprises you’ll encounter do phenomenal work, but it is very isolated to one, perhaps, two issues. Sunglass companies that employ women in developing countries or cafes that develop programs for underserved kids only work within a narrow scope. Again, the work is powerful but limited in impact. The blended model gives the ability for our social enterprise to work with more complex range issues. It also means we can go deeper.

By homing in on deep-seeded challenges within a community, our impact grows to not only better enable this generation, but to create generations of change. We go into neighborhoods and work with community members to define the needs, allow them to mobilize to achieve them, and then offer support to help navigate political or economic roadblocks.

Through this process, we identify and train leaders in a neighborhood to help give the community a conduit for future change. 

We then pair these large-scale types of outreach with individual coaching, education, and support. By showing the woman recovering from domestic abuse how to take ownership in her finances or teaching the low-income family how to save for a home, we are giving individual families the foundation blocks to build toward a brighter future.

Working on both the big picture and equipping individuals directly, these types of efforts make powerful and long lasting changes for generations to come.

 

Our Work in Action

In the course of a year, our work can take on dozens of different forms. To help put an image to our work, we wanted to give examples of projects we are helping neighborhoods spearhead. 

Woodcrest expressed a need for a playground. Like many pockets in Orange County, they didn’t have designated spaces for their children to play freely. We are working with this community to put their requests in through the right channels in the city and spearhead fundraising. In Santa Ana, we are working with the neighborhood to promote more active forms of transportation, as well as focusing on creating a safe space for biking, walking, and residents being generally more active. 

Other examples include getting the city to introduce bike lanes so families can ride to school or work, helping create better after school programs, getting cross walks put in near residential areas, or even having stoplights installed to make the streets safer. These are often times things that the richer neighborhoods have in plenty, but are lacking in our less fortunate areas.

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Invest in Sustainable Change 

From refinancing to selling a home to purchasing a house, next time you need one of these services partner with the only social enterprise dedicated to long lasting community change in Orange County. Our highly qualified and skilled professionals ensure that you get the same, if not better, services you would get at a for profit company. The only difference is that at the end of the transaction, you will know that you helped invest into your community.

Contact us today to see how your home transaction can be used for good! 

Realizing Home Ownership Again: Short Sale v. Foreclosure

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Families who have gone through either a foreclosure or a short sale can testify that it is a daunting experience. In many ways, the two transactions result in similar frustrations and challenges to moving forward financially and realizing home ownership again. Each severely damages your credit and adds specific lengths of time before banks will lend to you again.

Unfortunately, in the last several years, too many families have had to face losing their home. There is a small glimmer of hope in the process. Recovering from a short sale or foreclosure can lead to homeownership again.

 

Difference Between Foreclosure and Short Sale

A foreclosure and a short sale are two options facing homeowners who are behind on their mortgages. These options surface after being several months behind and result in the homeowner parting with their home. 

A foreclosure occurs when the bank steps in and seizes the home, initiating the process of selling it. Typically the process involves the owner either vacating the property or being evicted. The bank focuses on securing a new buyer, which could be through the traditional selling process or in an auction. Once complete, a foreclosure stays on a person’s credit for seven years.

By comparison, the homeowner initiates a short sale to avoid a foreclosure. A short sale means the home is sold for less than the remaining balance on the mortgage. The homeowner secures a buyer for the home and then works to negotiate with the lender to accept the transaction.

A short sale is a complicated process that can take up to a year to be complete. While still damaging to credit, a short sale is less severe than a foreclosure. Both transactions stay on an individual’s credit for seven years, but after four years more options become available to families who went through a short sale.

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Reentering the Market

Individuals or families who have gone through a short sale or foreclosure can purchase again. They are called boomerang buyers.

Families must wait four years after a short sale and seven years after a foreclosure in order to qualify for a conventional mortgage. Once this time period passes, two important things happen. First, the short sale or foreclosure is removed from the credit report. Second, boomerang buyers are reclassified as first-time buyers. This means that they qualify for different assistant programs, such as down payment assistance.

For families looking to own again, it is important to use this time period to recover financially and emotionally from the experience as well as to prepare financially for homeownership. This includes items such as repairing credit and saving up a down payment.

Working with one of our counselors can help you through the recovery and moving toward home ownership again.

 

FHA Back to Work Program

One government program provides a silver lining to what can only be described as a devastating experience. For families that underwent a foreclosure or short sale due to a great financial loss, such as losing a family member or a job, the FHA Back to Work Program shortens the waiting period to purchase to twelve months.

In order to qualify, families must meet the extenuating circumstances criteria for losing their home and work with a HUD approved counselor one on one for six months prior to applying with a FHA approved lender. These families will then be able to purchase twelve months after their short sale or foreclosure.

 

You Aren’t Alone

No matter what phase of recovery you are in, rebuilding after a short sale or foreclosure is an in-depth process. Know that you aren’t alone in that endeavor. We have counselors here to walk with you to move past losing a home and move toward your future goals. Regardless if your goals include purchasing again or reside with renting, let us help you throughout your journey.

If you aren’t ready to work with our counselors today but want to learn more about your options for homeownership, join our Home Buyer Workshop. We give you the tools to understand the entire process as well as evaluate where you are on the journey.

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HomeOwnership the NeighborWorks Way

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Carlos Mancia and his wife Emelia became owners of their new house in Santa Ana on May 27, 2016.

A day later, they moved in – a day of powerful emotions marking the fulfillment of their hopes.

“I almost cried when I came into the house and I was moving my first stuff inside here,” Carlos said. “For me, it was a big moment. We are grateful.”

The day marked the end of a long, difficult road in the couple’s quest to become homeowners, a path to homeownership and new opportunity that they followed with the help of NeighborWorks Orange County.

The Mancias, both immigrants, met in Santa Ana. Both had been active at Immaculate Heart of Mary Church but met when Emelia stopped in to visit Carlos’s mother, who was a friend of hers.  They wed at the church, which they continue to attend.

After they got married, they decided to buy a house, settling in 2004 on a large, four-bedroom house in Corona that came with a swimming pool.

Both adults were working, but when the first of their two sons was born, Emelia became a stay-at-home mom. Carlos struggled to make the $2,700 a month house payment.  Acting on a tip from a co-worker, he decided to refinance. The deal involved his paying $800 every two weeks.  When they signed for the new loan, they didn’t realize that their payments, which didn’t even cover interest, would increase. They ended up owing nearly $500,000 after initially owing just $355,000.

“Huge mistake,” said Carlos, a forklift driver who graduated from Saddleback High School and attended Santa Ana College. “My brother looked at the paperwork and told me I got screwed from the get-go.”

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He looked into a loan modification, but saw that he’d just be getting into another cycle of house payments that would increase until they finally became unaffordable. In 2010, after even trying to rent out the house in an effort to keep it, the couple made the painful decision to let their house go through a short sale.

They ended up renting a one-bedroom apartment in Fountain Valley. Though initially, they paid $1,100 a month, they saw their rent increase to $1,375 a month – and even higher just before their move to their new Santa Ana home.

“The rents were going higher and higher every year,” Carlos said. “I feared they would reach something I couldn’t afford.”

Fortunately, they heard about a visit that Rep. Loretta Sanchez would make to their son Emmanuel’s school.  They decided to attend. A Sanchez staff member told parents about various programs that could help them in such areas as housing.  Carlos asked for more information, and learned about the work that NeighborWorks Orange County does, helping low-to-moderate income families become homeowners. He set up an appointment, making his first visit to NeighborWorks in 2012. By then the family had grown to include son Emmanuel, 11, and Edward, 7.

“I wanted space so that my kids can live better, have a place to do their homework and have a better quality of life,” Carlos said.

Carlos, once burned by the housing industry, said that NeighborWorks won his trust.

"There are people there that actually care about other people,” Carlos said.

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He met with three “Friendly Experts” at NeighborWorks, who told him that to buy a house he’d need to wait until at least three years had passed since the short sale.

 “They said that in order to get a house you need to be clean in every aspect,” he said. “Like credit. And you cannot get into debt. You need to save. They told me to come back the next year, take the homebuyer classes and we’ll go from there.”

Carlos and Emelia did just that. They enrolled in a homebuyer education class, as well as the 10-month IDEA program, in which they took classes and saved $5,000 so that they could qualify for a three-to-one down payment match, giving them a total of $20,000 through that program alone.  Carlos returned to NeighborWorks for a second homebuyer education class in 2015. The couple took advantage of the services that NeighborWorks provides in Spanish, and deepened their understanding of the home buying process.

“The NeighborWorks people opened their arms and said ‘This is the way it’s going to be, and this is reality versus fantasy.’ I guess the hardest thing for me was to be willing to listen,” Carlos said. “I was going with the mindset that I know everything, because I’ve already bought a house. At the same time, I was not humble enough to say I had already failed, and this time I will do things right.”

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The couple learned about living within budget, about the ins and outs of home maintenance, even how to save on utilities.

“They told me what I have to do,” Carlos said. “You have to keep yourself with the program and you have to keep yourself positive. Save. Increase your credit score. Have no debt.” With a laugh, he added, “And pray to God.”

Through the Neighborhood Stabilization Program, aimed at protecting neighborhoods and their home values, NeighborWorks in July 2015 acquired a house on 12th Street in Santa Ana’s Artesia-Pilar neighborhood that had been in foreclosure. The nonprofit bought it for $288,000, and invested in important renovations, including new windows, flooring and doors, opening up the kitchen and living room spaces, installing energy-efficient appliances, remodeling the bathroom, installing new flooring, removing lead and asbestos, adding new air conditioning and upgrading the electrical system. It sits on a tidy street near Santa Ana College.

NeighborWorks, working with other community partners, put together a specialized loan package for the family’s very-low income bracket that resulted in a house payment lower than the rent on their one-bedroom apartment.  

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Emelia, who immigrated at age 21 from Acapulco, Mexico likes the natural light that floods the house through its windows. Carlos, whose family came to Santa Ana from El Salvador when he was 12, likes the ocean breeze that cools the house during the afternoon. The boys ride their bikes on a make-shift dirt track in the far reaches of their back yards.

“I like the house because it’s not so big,” said Emelia, who appreciates having a washer and dryer in her own home.  “With a big house, everyone has their own little world. Here, we’re cozy. Everything is new.”

Carlos, who appreciates having a place to park, is widening the driveway, and as the boys get older, plans to add another bedroom and bathroom. The house, built in 1951, covers 903 square feet, and sits on a 6.098-square-foot lot.

“In truth NeighborWorks and its supporters gave us a huge opportunity to have a house,” Emelia said. “And I hope they help other people in need to get their own house.”

The family has made the house their own. Wedding pictures hang from the walls of the living room. A cabinet is filled with religious icons, including statues of St. Jude Thaddeus, St. Michael and an image of Mary venerated in Oaxaca that’s known as the Virgin of Juquila.

“It’s not just a structure or a building, it’s happiness,” Carlos said. “It’s a castle to come here. As a family we are growing and becoming better people. We are not taking for granted what we have. We have to treasure it.”

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Mortgage Rates in California: What You Need to Know

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Mortgage interest rates have been a hot topic in the nation since 2008. We have seen the lowest ever recorded interest rates, which transpired in November of 2012. As the market has strengthened this year, mortgage rates have ever so slightly increased. 

This has led to some anxiousness about the real estate market, even deterring some from buying.

At NeighborWorks Orange County we would like to put mortgage interest rates into perspective. Over the last four decades, we’ve seen a wide variety of different interest rates. The 1980s brought the highest rates in history, with homeowners seeing rates above 15%. Some accounts even depict rates coming in right below 18%. 

In the last six months, interest rates have increased anywhere from a half a percent to a percent. We are still in a market below 4%. Compared to the near 18% thirty years ago, interest rates are at the bottom of the spectrum.

The most important factor in buying a home is determining if you are ready. That’s why we focus so diligently on our homebuyer classes.

Interest rates are part of the home-buying equation. More importantly, it comes down to deciding which loan type is best for you. There are two main types of loans with variable options within each classification. Each loan creates different circumstances, terms, and adjustments for interest rates during the duration of the loan.

Fixed Rate Mortgages

Fixed rate mortgages are fully amortized loans. This means that the borrower will have the same interest rate throughout the loan term, aka “fixed.” This fixed cost approach gives homeowners the same payment every month, making long-term budgeting and planning easier.

Typical fixed rate mortgages come in 10-year fixed, 15-year fixed, or 30-year fixed terms.

 

Advantages 

Fixed rate mortgages are best for individuals and families planning to stay in their home for a long time. By locking in the interest rate, they eliminate the risk of their interest rate rising later on in the loan term. Should interest rates drastically drop in the future, homeowners can look into refinancing options.

 

Disadvantages

Traditionally interest rates on a fixed mortgage are typically slightly higher than other loan options. That is because the buyer is locking in the current interest rate from the bank. If interest rates drastically increase down the road, the bank will still honor the agreed upon interest rate. To offset that, the bank writes fixed-rate mortgages at a slightly higher rate. The difference in rates between loan types varies depending on the current interest rate climate.

 

Common Misconceptions 

Clients typically believe they will keep their same loan for the full duration of their loan. This means they aren’t inclined to evaluate other loan options. In truth, the majority of clients actually end up either selling their home or refinancing during the initial term. Reasons for refinancing include adjusting to a lower rate or to cash out value for home improvement, addressing an emergency, or to pay for college.

 

Adjustable Rate Mortgages

The other main option is an adjustable rate mortgage (ARM). These loans are not fully amortized, which means that the interest rate will adjust during the term of the loan. The amount that it can adjust is determined by the “index.” For the first part of the loan, the interest rate is fixed.

These caps control all subsequent adjustments:

  • Initial adjustment cap: Determines maximum amount the loan can increase the first time after the fixed rate period.
  • Subsequent adjustment cap: Outlines the amount a loan can increase in the following adjustments.
  • Lifetime adjustment cap: Sets the maximum the loan can increase throughout the lifetime of the loan.

The most common types are 3/1 ARMs, 5/1 ARMs, 7/1 ARMs, or 10/1 ARMs. The first number, such as the 3 in 3/1 ARMs, outlines the length of the initial fixed period. The amount adjusted is set by the index, which is a neutral party that evaluates the market and publishes a fair interest rate. In certain market situations, the rate can actually go down.

 

Advantages

ARM loans work best for families or individuals not planning on staying in the home for very long or are anticipating a positive change in income or financial situation. For example, if a homeowner will have a better job in two years or if they are anticipating being moved for work, they would benefit from a lower payment during the initial fixed period.

 

Disadvantages 

Should the owner decide to stay in the property longer, there is more risk that the interest rate will go up. This creates changes to the monthly payment over time.

We advise all clients considering an ARM loan to request the lender calculate the highest payment possible on the loan in question. This gives the borrower the opportunity to evaluate the loan on both the best terms and if the market changes drastically.

 

Common Misconceptions

In this low-interest market, adjustable rate mortgages are viewed as “bad” loans. It’s not a matter of if the loan is good or bad, but rather what is best for your unique situation.

Additionally, ARM loans are perceived as having unlimited ability to increase the rate. That is not accurate. ARM loans have limits, or caps, on how much the interest rate can fluctuate. This protects the loan holder from having their loan interest rate increase too far.

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Being Prepared for the Borrowing Process

Applying for and selecting the best loan for you and your family can be overwhelming. That’s why we at NeighborWorks Orange County encourage all homebuyers to attend our Homebuyer Classes. Here we outline everything you need to know about buying a home.

This is the best advantage you can give yourself when approaching purchasing a home. After going through the class, you will have a strong understanding of all the different loan options available, as well as which one is the best route for you.

Should you have any questions throughout the process, partner with one of our counselors. They walk with you to give you suggestions on the best path forward on your unique journey to homeownership. Their priceless experience and unbiased answers are a powerful asset to anyone planning on purchasing a home. 

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First-Time Home Buyers: Why You Need Homeownership Coaching

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Most families believe that the first step to purchasing a home hinges on finding a quality realtor. We firmly believe working with a realtor is an important step of the process. It’s not your starting point, though.  

What if we told you there was an overlooked step, one that increased your chances of successful homeownership drastically?

The most successful first step toward homeownership is undergoing homeownership coaching.

It’s likely you’ve never heard of this step.

If you have heard of it, it might be because Democratic presidential nominee Hillary Clinton recently highlighted Homeownership Coaching as one of the areas we need to emphasize in our journey toward sustainable homeownership, and subsequently to help revitalize the economy and our communities.

If we were really bold, which we are, we would add in a second step prior to finding a realtor: securing financing. That’s a topic you’ll dive into during your coaching.

If you can’t tell, we’re on a mission to shake up the traditional first-time homebuyer process. We want to truly put the purchasing power back with the consumer. The key to developing this power shift rests on homebuyer education through coaching.  

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Power of Homebuyer Education

Policy creators on Clinton’s team understand the power of education when approaching buying a home. It changes the equation in favor of the homebuyer, shifting the power away from banks, lenders, financing and an overly complicated system.

After 2008, we all saw the repercussions of a system that didn’t have the buyer’s best interest at heart.

At NeighborWorks Orange County, we’ve seen this education magic in action. First-time buyers who invest time into learning the process make better decisions. They see through the complex system, honing in on the path that is best for them, not the large banks. 

They purchase the right home for them at the right time for their family, not when it’s right for the big institutions or other providers.

It’s true that following homebuyer coaching, many first time buyers put off purchasing a home for one to two years. Don’t discount this. These families emerge two years later in a stronger financial position, ready to purchase. Long term, buyers who take advantage of homeownership coaching own their home longer or position themselves to move up in home faster.

This is a powerful shift in the world of homeownership. That’s sustainable homeownership.

It’s also why policy makers underscore the importance of homeownership coaching.

Unfortunately, we’ve also seen the other side. Shortly after the economic crash in 2008, our Foreclosure Coaching classes were filled with families in jeopardy of losing their homes. After dozens of courses, we never had a single attendee currently facing a foreclosure who had taken advantage of homeownership coaching prior to their purchase.

We are not saying that first-time buyers who don’t utilize coaching end up in foreclosure. Many will thrive in homeownership. We’re only highlighting that never once during the entire housing collapse did we have a family facing foreclosure that had completed homeownership coaching before buying.

That’s something to consider.

 

Can’t a Realtor Help Me Through the Process?

At the end of the day, a realtor’s job is to help you purchase a home. There are fantastic realtors out there who go above and beyond to make sure clients make a smart purchase. We should know. We have an entire real estate team dedicated to doing just that.

Outside of our unique social enterprise realtor model, most realtors have a lot on their plate trying to help clients view homes around Orange County. It’s a big job all on its own. They need to tailor their search to your preferred home styles, find options in your budget, evaluate fair market value, guide you through negotiations and cue you into possible pitfalls of a specific home. On top of all of that, they only get paid when the sale closes.

Relying solely on a realtor to help you evaluate financing terms, understand options for closing costs, or give you insights on what you can afford leaves you at risk. You are also at risk when depending solely on someone who is selling you a loan.

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Your Free Advocate

Advocating for your best interests isn’t the job for your realtor, lender or cousin who “knows” about buying a house. While many will have good advice, or in the case of many family and friends, think they have good advice, their job isn’t to educate you on all of your options.

That’s the role of a qualified homeownership coach.

Our coaches are your advocates throughout this process.  Their specific job is to educate you on how to understand loan terms, explore assistance programs, evaluate your financial position and build a roadmap to achieving your dreams. When you have questions, they are a neutral party with years of experience addressing that specific issue. 

They don’t get paid when you close on a home or sign into a contract. In fact, their salary is completely independent of your transaction. Homeownership coaching is FREE to families living in Orange Country, regardless of income. These programs are made possible through our nonprofit and corresponding social enterprise model.

It’s all part of our mission to empower homeowners.

If you are looking to shift the tide of power back into your favor when purchasing a home, then sign up for our free homeowner coaching today. No matter where you are in the process, we can help you determine the best steps for you to move forward. 

How Purchasing Your Home Gives Back to the Community

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Purchasing a home marks a huge step in your life. It’s exciting and slightly terrifying, all wrapped into a roller coaster of a journey leading to a brand new set of keys in your hand.

What if this milestone could not only mark a pivotal moment in your life, but also give back to your community?

It’s a radical thought.

It’s even more drastic given the rocky road that the housing market has traveled the last decade. Individuals approach home buying in fear of being taken advantage of by a structure gamed against them. At every corner, they are heavily marketed to. The main advisors have a financial stake in the advice they give, sometimes trying to corner buyers into loans, terms, or houses that don’t serve their best interests. This structure built the foundation for our collapse in 2008, leaving countless families reveling in the aftermath.

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We want to challenge this model. It’s time to not only empower families purchasing a house, but to also rebuild the communities they call home. 

 

At NeighborWorks Orange Country, we adamantly believe that the idea behind “home” extends far beyond the welcome pack, spreading to neighbors, local business, and ultimately forming this idea of community.

That is why we have launched out social enterprise real estate model. 

The trifecta of positive impact in the real estate world, this new approach empowers communities at every turn: 

1-    Giving consumers a socially responsible marketplace;

2-    Empowering all buyers through homeownership coaching and counseling;

3-    Reinvesting profits to help low to moderate-income families on their journey toward sustainable homeownership.

 

How it Works

Homebuyers or sellers partner with our realtors. Since our realtors earn a base salary, the commissions from the sale bolsters our community programs, including our homebuyer coaching and counseling efforts run by our nonprofit arm. Families that go through our coaching programs typically return later to work with our realtors, thus perpetuating a cycle of change.

We also offer specialized home loans through the same social enterprise model. All commissions earned on writing loans go back into supporting our nonprofit programs. 

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Education Empowers  

Homeowner education changes the tide of power back in favor of families and individuals looking to purchase a house. Too long has the market been dominated by disingenuous lending practices, inflated costs, and poor policies.

We are empowering families through education. 

Our coaching programs expose the pitfalls in an overly complicated process. When you understand all the elements to your loan, how much home you can afford, the associated costs of homeownership, and the other key aspects of this process, your home purchase enhances your life.

That is sustainable homeownership. 

Coaching benefits families of all income ranges or education levels. This is the information you should have learned in school but didn’t have the chance to. More importantly, our coaching is 100% free, regardless of income level.

In fact, this tactic is so essential that Democratic presidential nominee Hillary Clinton recently highlighted homebuyer counseling as a necessary platform for sustainable homeownership.

We take counseling one step further by reinvesting into the community. As you can see, this model empowers, educates, reinvests into community programs, focuses on sustainable homeownership, seeks to rebuild the idea of community, and creates a cycle of positive change.

Trifecta doesn’t fully cover the scope of the social impact, but you get the picture. This social enterprise model does a lot of good.

 

Superior Service and Competitive Rates

The success of any social enterprise hinges on providing superior service. Businesses failing to provide a good service will never succeed no matter how valiant their mission, 

Bottom line: our model wouldn’t work if we didn’t offer incredible service combined with competitive rates.

Rather than accepting a lesser service in exchange for a social impact, we believe that you receive a better service while supporting community initiatives. You partner with seasoned experts at every step of the way.

Our realtors are specially trained to walk with buyers in a manner that positions them for long-term homeownership success. It goes far beyond asking how much you are pre-qualified to borrow. Many of our team members receive far more certifications and pursue more continuing education than traditional realtors.

By opting to go through our free coaching, you’ll better position yourself for thriving in homeownership. Qualified buyers will be connected to various assistance programs. If you select one of our mortgage options, you’ll enjoy a competitive rate.

There’s no other option offering services so focused on your best interests. 

If you’re in the market for more than just a home, also seeking to make a lasting impact in your community, it’s time to check out how to partner with our social enterprise. We invite buyers and sellers alike to leverage the sale of their home to work towards a bigger mission.

 

Connect with our team today!

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NeighborWorks Orange County announces boost in affordable housing funds

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The pool of funds available for affordable housing in Orange County has grown by $500,000 as a result of an investment by Banc of California in NeighborWorks Orange County.

Under a program called California Organized Investment Network (COIN), Banc of California in return will receive a $100,000 tax credit. COIN aims to promote investment in low-income communities.

To qualify for the tax credit, administered by the state Department of Insurance, insurance companies, banks and other entities must invest a minimum $50,000 with a certified Community Development Financial Institution such as NeighborWorks for at least five years at 0 percent interest. The 20 percent tax credit is allocated in the first year.

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Glenn Hayes, president and CEO of NeighborWorks Orange County, said that the $500,000 investment is the largest that his organization has received under the COIN program, which launched in 1997. He said that the Banc of California investment would push the level of such funding his nonprofit agency has received to more than $1 million.

“We will invest 100 percent of the money into affordable rental housing,” Hayes said. “All of it will benefit low- and moderate-income individuals and families.”

The investment could enable the agency to provide as much as $1 million in low-cost loans for affordable housing development.

That is crucial in a County where workers often find it difficult to afford a decent place to live.

“This is making possible affordable housing, either getting additional affordable housing or maintaining affordable housing,” Hayes said.

By the end of 2015, the average apartment rent in Orange County had reached $1,834, according to the Orange County Economic Indicators Dashboard. Meanwhile, the median price of an Orange County home recently reached $625,000, The Orange County Register reported in April.

The tax credit was announced recently by California Insurance Commissioner Dave Jones. The department allocates $10 million in tax credits each year to support $50 million in community development investments.

Banc of California is represented on the NeighborWorks Orange County board of directors by Gary Dunn, senior vice president of the bank. Dunn chairs the NeighborWorks board.

Such partnerships are crucial, Hayes said.

“The community really benefits because we get to use those capital dollars for home loans or purchasing or rehabilitating properties, Hayes said.

The mission of NeighborWorks Orange County, with offices in Orange, is to strengthen communities and enhance the quality of life of residents “by promoting housing opportunities, financial responsibility and civic engagement.” It offers first-time homebuyer education and counseling, provides realty services, loans funds to develop quality affordable housing and seeks to build stronger neighborhoods through community-building programs. The nonprofit also owns more than 100 affordable housing units in Orange County.

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Foreclosure, Your Credit & Buying Again

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Foreclosure is a devastating process, but it doesn’t mean that you can never own again. If your goal is to return to homeownership, know it is possible. It takes commitment and an action plan to improve your credit score, heal from the recovery, and build up strong financial habits, but the reward is worth the effort.

At NeighborWorks Orange County, we are here to help you realize your housing goals. Not everyone who comes out of a foreclosure desires to own again. That’s okay. We can help you through the process of foreclosure and work to put it behind you. Other families want to work to achieve purchasing a home again. We work with those individuals on a long-term plan to become ready to purchase a home. 

If you are facing a foreclosure, here are four steps to moving forward.

 

Finalize the Foreclosure

The most important step is for families to finalize the foreclosure. Each month that passes adds another harmful ding to your credit score. Some families or individuals look for ways to extend the process or even inhibit the lender from being able to move forward with the proceedings. This includes actions such as clouding the title or filing for bankruptcy.

While these may give families more time to determine their next move, long term they create additional challenges for a family looking to own again.

The goal should be to get out of the situation with the least amount of damage possible. Working with a foreclosure counselor can help to outline steps to try and limit the damage of the impending foreclosure. They can also suggest different programs or resources to help your family in the intermediate.

 

Recovery, Healing, and Adjustments

An important step in the recovery process is determining which factors led to the foreclosure. Situations that can lead to this include death in the family, losing a job, a financial hardship, or purchasing too much home to begin with. Before charting out a path to return to homeownership, first families need to have a very serious evaluation of the series of events that led them to a foreclosure.

Once digging into the causes, families need to adjust to the new circumstances and put measures in place try to prevent a similar situation in the future. While not all circumstances can be prevented, there are measures to try and limit the impact. This can include strong financial health and increased savings.

Adjusting to a new living situation and life after foreclosure will be a process. It’s important to surround yourself with a support network and organizations designed to help you. If you are unsure of where to start, connect with one of our counselors today. They can help you locate services, nonprofits, and other programs to help facilitate your recovery.

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Reestablishing Credit

A foreclosure is one of the worst things an individual can do to their credit. Fortunately, it only stays on the credit report for seven years. Once they are able, anyone who has gone through a foreclosure needs to work on ways to rebuild credit.

At first, the options will be limited. Banks and other traditional lenders will not be inclined to loan to you. Check with your bank about getting a secured card to start building trust again. Here you put money into an account and then cannot spend more than the initial amount. Since it is very similar to a pre-paid card and there is very little risk for the bank, it allows even a high-risk borrower to utilize it.

Once you are able to add other lines of credit, it’s good to have about three credit cards or lines of credit in good standing. It’s imperative that you always pay on time. A single late payment will make a much bigger impact on your credit now as compared to before the foreclosure. Start small and only use lines of credit you can pay back on time.

Also, be mindful of paying utilities and rent on time.

 

Purchasing Again

After the seven-year mark, and with a pristine recent payment period, you can purchase again. In order to do so, you will need to work with an HUD-approved housing counselor. They work with you to ensure you are purchasing a good size home for your financial situation, that you understand all the components of homeownership, and are prepared for the responsibilities.

At NeighborWorks Orange County, we have a team of HUD certificated counselors at the ready to help you. It doesn’t matter if you are just starting the foreclosure process or are past the seven-year mark. We walk with you throughout the entire process. Our team is skilled at meeting individuals and families wherever they are on the journey to homeownership. From there we help to chart ways to move forward.

 

Connect with one of our counselors today to put you and your family on the road to homeownership again.

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Loans & Programs Available to First-Time Home Buyers in Orange County

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It’s an exciting day when you finally receive the keys to your new home. The rush of freedom kicks in once you slip the key into the lock of your new abode. Walking around the dining room, you envisioning your family growing up around your table. Looking at your backyard you imagine a play space for your children.

To say it’s overwhelming enthusiasm might be an understatement.

It’s the dream so many of us are working for. Yet, for those who have never claimed the title of homeowner, taking that first step might feel like a giant leap. There are a thousand little steps that get you to that moment. This is particularly true if you live in Orange County. Our slice of paradise isn’t known for affordable living.

Homeownership is achievable.

Even more, you’re not alone in the process. We have counselors at the ready to walk with you throughout every phase. In fact, there are several unique programs designed specifically to help you experience that rush when you unlock the door to your new home.

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Terminology: AMI

Before digging into the specifics of these programs, there is one term you need to be familiar with. AMI is the area median income. This is an income guideline used by the U.S. Department of Housing and Urban Development (HUD) to determine eligibility for government programs. The AMI of every region is recalculated each year. A separate AMI is factored for each family size, noting that the median income of a family of four differs from a single individual.

Most of the programs we work with require an AMI of 80% or less. This means you make a minimum of 20% less than the medium income levels in your area. For example, if the AMI for a family of four is an income of $97,500, then 80% is an income of $78,000.

Our counselors can help shed light on where your income for your household sizes falls on the AMI scale.  Most families are surprised that they qualify with their incomes.

Here are four programs that our counselors at NeighborWorks Orange County can help you see if you qualify for. 

WISH Program

This down payment assistance program matches funds that you raise toward your down payment three-to-one. If you bring $1,000 to the table, the WISH Program will bring $3,000. They will match up to $5,000 of your money. Three to one of $5,000 is $15,000, giving you $20,000 to put toward your new home. 

The WISH Program is a grant program. This means that if you receive funds from this program, everything will be fully forgiven after living in the home for five years. Should you and your family need to move before that, the remaining balance is due at a prorated term.

Qualifying applicants are at 80% or less of AMI and have attended a First-Time Homebuyer Workshop.

IDEA

The IDEA program is very similar to the Wish program. The difference is that the IDEA program works with you if you haven’t prepared to save the $5,000 today. To help facilitate saving up the funds, IDEA places you in a ten-month program. You meet with your counselor every month to review how things are going and submit funds to your initial investment. The minimum monthly investment is $25 and the maximum is $500.

If you max out your investment each month, you have the full $5,000 at the end of the program. The IDEA program then matches three to one, just like the WISH program. IDEA also has the same restrictions on living in the home for five years, the property being the primary residence and 80% or less of AMI. 

After five years, IDEA will also fully forgive all the funds.

CALHome Loan

CALHome is a 30-year term gap loan for up to $57,000. When you take out a CALHome loan to help with closing costs or a down payment, all payments are deferred for up to 30 years. Over that time, it will accrue 3% simple interest. No monthly payments are due until that 30-year gap passes.

This program is first come first served, so it is recommended you work with one of our counselors sooner than later.

To qualify, recipients must be a first-time homebuyer, have attended the workshop, and be at 80% AMI or less.

NSP

At Neighborworks Orange County, we were awarded redevelopment funding through the Department of Housing and Urban Development Neighborhood Stabilization Program (NSP). This program is solely designed to create more affordable housing opportunities in our community for low-to-moderate income families. 

Through this program, we purchase and rejuvenate foreclosed homes. Once they are fully renovated, we limit the sale exclusively to individuals and families in our First-Time Homebuyers Club.

There are two separate NSP programs. 

NSP 1 funded projects require that eligible buyers receive financial assistance to purchase the home. The maximum mortgage loan is $80,000 with the minimum $3,000. The buyer must bring 3% of the total sale price for the purchase. The applicant’s income must not exceed 120% AMI. All NSP1 loans are forgiven after the recipient stays in the home for 15 years.

NSP 2 funded projects have many similar stipulations to the NSP 1 projects, such as the minimum and maximum mortgage loans, qualifying AMI and the 3% down payment. The main difference is that NSP 2 has a 30-year mortgage that is not forgivable. 

Learn more about the NSP program here.

 Steps 

All of the mentioned programs require attending a HUD-approved First-Time Homebuyer Workshop. Not only is this required, this in-depth course gives you all the information you need to successfully purchase a home.

You can sign up for the course here.

Following the course, it’s important to work with a counselor to fully evaluate your situation and eligibility to determine if you are home-ready today. If you aren’t prepared to purchase now, our counselors will help you chart the path to achieving your dream.

If you are ready, they will help you apply for the program you qualify for, as well as navigate the other necessary steps.

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Requalifying After a Foreclosure or Short Sale 

While the programs highlight first-time homebuyers, that classification isn’t as cut and dry as you would expect. If you went through a foreclosure, short sale or for whatever reason haven’t owned a home for more than three years, you reclassify as a first-time homebuyer.

For families that went through a short sale or foreclosure, you will need to wait four years and seven years respectively to purchase again. This is when those transactions fall off of your credit report allowing you to qualify for a mortgage.

Your Guide for the Entire Home-Buying Process 

Hopefully, this excites you about the possibilities of owning your own home! Our goal is to empower you. That’s why we provide so many resources to assist you. Homeownership is possible. 

If you have a lot of enthusiasm to move forward but aren’t quite sure what to do next, start with our first-time homebuyer workshop. This deep dive into all aspects of purchasing a home equips you with the most powerful information to move ahead on your journey. Even better, the $25 per person fee is refundable after you enter into escrow.

Once you complete the class, schedule a free one-on-one meeting with one of our dedicated counselors. They sit down with you, reviewing tax returns and bank statements and really work to understand everything about your unique situation. Then, they chart out the best path for you to move toward achieving homeownership.

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How to Buy a Home in Orange County

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For California buyers, it can be daunting to watch the news constantly report on rising home prices. We are all familiar with the cost of living in our Golden State. It’s old news.

The news media always forgets to mention though is that we live in paradise! With perfect year-round temperatures, access to the beach and to the mountains, you know you wouldn’t live anywhere else in the world.

Orange County is home.

The challenge of purchasing a home in Orange County is worth it. Additionally, you get to invest in the best state. While the real estate market is volatile at times, investing in California real estate is a good investment.

So if you are curious if you will ever be able to enjoy the sweet victory of owning your own home in our glorious region, you will. Here’s how:

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Attend a Homebuyer Class

Buying a home will be one of the most complicated transactions you will undergo. From qualifying for a mortgage to understanding loan options to navigating real estate disclosures to working with an inspector and more, purchasing a home is a complex ordeal. It will also represent the largest purchase you have ever made. According to the CBS Money Watch, Orange County is one of the “10 most expensive places to live in the U.S.” 

Homeownership is possible here, but it’s essential to be a smart buyer. Which is why you need to be equipped with the most powerful tool possible going in: knowledge.

The more you know about the process, the more successful you will be. We have all met homeowners with buyer’s remorse. Oftentimes it results from the fact that they weren’t ready to purchase or they bought too much house. You don’t want to follow in those footsteps.

Instead, attend our Homebuyer Workshop.

This eight-hour, in-depth course fully prepares you for every decision you will need to make throughout the process. We will cover:

  • Credit
  • Budgeting
  • Lending
  • Down Payment
  • Home Insurance
  • And More

We leave no stone unturned. When you leave this course, you’ll know how many credit cards you need to have, different loan options, what the process looks like from start to finish and the responsibilities that come with home ownership.

 

Meet with a Homebuyer Coach

Working with a homebuyer coach is probably the most underutilized resources in the real estate world. To prove our point, there is a large possibility you have never even heard of a homebuyer coach. 

We believe it is the most important step. That’s why we provide free coaching for first-time homebuyers.

All first-time homebuyers have a lot of questions about determining how to best move forward. You’ll likely be asking:

  • What is my credit score?
  • Do I qualify for any assistance or first-time homebuyer programs?
  • Am I ready to purchase today?
  • How much house can I afford?
  • What type of interest rate or loan type is best for my situation?
  • Where do I fall on the AMI (Average Medium Income) scale?

Our coaches work with you one on one to understand if you are mortgage ready today. If you aren’t there today, they outline specific steps to get you there.

This isn’t your traditional coaching. Our team members are your accountability partners for the entire journey. We want you to succeed. That’s why we will regularly check in with you to see your progress, answer questions, and help you navigate any challenges that come up in the process.

Whether you are ready to buy today or if it takes you three years to achieve this goal, you’re never alone in the process. Schedule your coaching session today.

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Prepare for Homeownership

Our clients fall into two categories: mortgage ready or not ready today. 

If you are not ready today, after working with our coaches you will have a step-by-step plan to address any specifics. Typically this includes paying down debt, increasing a credit score, or saving for a down payment.

Clients who are mortgage ready today typically own a home in six months. Clients working toward home ownership typically achieve the goal in two to three years of working with us.

 

Select a Home Style and Neighborhood 

The median home price in Orange County is $645,000 according to a recent CoreLogic report. The closer you head toward the coast, the more likely the home price will hit $725,000 as it has in Huntington Beach. Moving toward Santa Ana, Aliso Viejo or Buena Park will put you closer to $500,000 for a single-family home.

The most important decision you will make throughout this entire process is choosing a neighborhood and home size that fits your budget.

Orange County home prices vary in different neighborhoods. It’s essential to choose an area that fits your budget. If your family’s income is $70,000 a year, you will not be able to afford Fullerton. Instead, you can find great options in other areas such as Anaheim.

After choosing a neighborhood in your price bracket, it’s time to have a heart-to-heart about home type. Most families purchasing for the first time will need to explore condominium options. The key to purchasing in Orange County is to start small. Get your foot in the door by purchasing a condo. Then after several years of investing into your own home and saving, you can move up in home. It’s not uncommon to have families move up two to three times to achieve their ideal home. 

The key is to start with what you can afford. 

Many communities in the region are starting to build affordable housing options for families who are below 80% AMI. San Juan Capistrano, Irvine, Anaheim and Huntington Beach are just some of the areas. 

You can own a home in Orange County. It all comes down to being a smart buyer and exploring different options around the county.

 

Work With a Realtor

You don’t have to navigate the different communities on your own. Partnering with an experienced Realtor will help you identify the areas best suited to your lifestyle and budget. Especially in Orange County, it’s essential to work with a realtor who understands the different areas, is knowledge about finding affordable options, is up to date on current trends, and wants the best for you and your family.

We break this down to three essentials:

  • Experienced
  • Knowledgeable
  • Passionate

This isn’t a job for your co-worker’s cousin’s former girlfriend you met once. A serious life decision merits working with a professional.

We recommend interviewing three different realtors to determine who is the best fit for you. Hopefully you will consider interviewing our heart-centered realtor with over 26 years experience. We guarantee she hits all three essentials.

A high-caliber realtor will walk you through neighborhood selection, discovering a home, and the purchasing process.

Get to Know the Neighborhood

Once you close in escrow, install new locks on your home (you never know who had a key before you), and submit your mail forward, it’s time to get to know your neighbors. The idea of home doesn’t end at your doormat. Instead, it extends to the entire community.

Knowing your neighbors is an important step of “moving into” your new home. You want to build a community. It’s not just good for neighborhood BBQs. These are also the individuals you will rely on to keep an eye out on your home while you are enjoying a weekend in Big Bear.

While you are at it, you should extend that community invitation to your local police station and fire department. Introducing yourself here helps keep you in the know about anything that happens in your neighborhood.

 

Start Today

You may or may not be ready to buy a home today. The important thing is to start working toward achieving homeownership. Attending our Homebuyer Workshop and meeting with our coaches is the best place to start.

In six to 36 months, you could be settling into your new Orange County home. With a dream like that, it’s hard to not get excited. 

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