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Life as a Homeowner






 
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  • For more information about affordable loan programs and new home loans including Home Equity and Refinance call
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Module 5
Life as a Homeowner
Your Obligations as an Owner
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Understanding Your Loan and Preparing for Adjustments

Know the Rates and TermsAnother important step for being a successful homeowner is to fully understand the rates and terms of your home loan. Know when your payments are due and if your rates will change over time. If you have an adjustable-rate mortgage (ARM), your payments are very likely to change. Refer to your loan documents to find out how frequently and under what circumstances.

How to Relieve Payment DifficultiesIf your loan is adjustable, take steps to modify your budget so you can handle payment increases. If you think you will have difficulties making payments when your loan adjusts, contact your lender or servicer immediately. In addition to revising your budget to handle payment adjustments, you might consider refinancing to a fixed-rate loan. That way you won’t have to worry about payment adjustments. Be sure to understand any penalties you may incur for refinancing.

Create an Emergency Reserve FundContinue to follow your saving and spending plan and modify as necessary for changes. Also be sure to keep three to six months of living expenses in your emergency reserve fund. That fund could be the key to handling increases in home loan payments and to making sure you don’t lose your home to foreclosure.

Adequate Insurance Coverage

How to Determine if You Have EnoughHaving enough homeowner’s insurance is one of the most important things you can do to protect your home. Review the following questions to determine if you have appropriate coverage:

  • Have you made home improvements that increased the value of your home?

  • Have you renovated your home to increase its value?

  • Do you have inflation protection in place or have you increased your coverage to reflect your home’s current value?

  • Have you purchased personal property such as jewelry or computer equipment that requires extra insurance coverage?

  • Do you need additional coverage for things outside of your standard policy, such as earthquake or flood insurance?

Refer to Steps for Buying a Home for additional information about homeowners insurance.

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