Dangerously Unprepared

Buying a home without Home Stretch

Even after all of the news about the dangers associated with purchasing a home without being fully prepared, it appears as though the message still isn’t getting out to potential homebuyers. According to a newly-released survey from Zillow Mortgage Marketplace, a surprisingly high number of people don't understand the home buying process, especially the information about obtaining a mortgage, and may be making poor financial decisions as a result.

Those surveyed answered basic questions about mortgage information and terminology wrong almost half of the time. Forty-four percent of buyers admitted that they are not confident in their knowledge of mortgages or the mortgage process!


Other findings include:

• About 77% of prospective homebuyers did not clearly understand what factors are involved in determining a mortgage interest rate, believing that annual income is an important determinant.
• More than one-third (34%) of the respondents did not understand that lender fees are negotiable and that they vary by lender. They believe lenders are required by law to charge the same fees for credit reports and appraisals.
• More than one-third (37%) of prospective home buyers who were polled believe that pre-qualifying for a loan means they have secured financing. The reality is that "pre-qualification" is used to describe an earlier step in the process when a lender or Homeownership Advisor approximates how much you can afford, but does not pull your full credit report or request any sort of documentation to verify the information you provide. A pre-qualification is NOT a pre-approval.

Before you start the process of making what may be the LARGEST PURCHASE IN YOUR LIFE, we highly recommend that you participate in a Home Stretch workshop. This is a class for potential homebuyers that is recognized nationally as a proven tool for preparing Minnesotans to be successful homeowners. There is an entire section of the Home Stretch workshop dedicated to fully understanding mortgage loan terminology, how to shop for a loan, how credit affects loan payments and how to avoid being taken advantage of when choosing a loan.

Year after year, Home Stretch participants report that help with understanding mortgages and the loan process was the MOST HELPFUL part of the workshop. In fact, NINETY-FIVE PERCENT of Home Stretch participants report that their participation in Home Stretch will help in the process of buying a home, and 98% would recommend the workshop to someone else. (For more information about consumer satisfaction with Home Stretch, view the most recent report here).


Are you thinking of purchasing a home in Minnesota? You can learn more about the mortgage loan process - - and the entire home buying process by taking a Home Stretch workshop. For more information, click here.

Shopping For A Mortgage

According to a LendingTree/Harris Interactive survey released on December 14th, about 40% of recent home buyers obtained JUST ONE mortgage loan quote before purchasing their home.

According to the survey of just over 1,300 buyers, 70 percent of borrowers find shopping for a mortgage frustrating, citing the complexity of the terms as the number one reason people choose not to 'mortgage shop'.

The survey also reveals that although buyers recognize that their mortgage choice is a decision that will affect them financially for the next 15 – 30 years (or more!), nearly three-quarters (72 percent) of homeowners spent less than eight hours shopping for their home loan. Even more shocking? One in ten spent less than TWO MINUTES shopping for their loan.

In Minnesota... buyers have the opportunity to take a Home Stretch workshop, the homebuyer workshop recognized nationally as a proven tool to prepare homebuyers to be successful homeowners.  There is an entire section of the Home Stretch workshop dedicated to fully understanding mortgage loan terminology, how to shop for a loan, how credit affects loan payments and how to avoid being taken advantage of when choosing a loan.

In a forthcoming report from the MN Home Ownership Center, Home Stretch participants reported that help with understanding mortgages and the loan process was the MOST HELPFUL part of the workshop.  One more fact (just in case you're not convinced yet)... NINETY-FIVE PERCENT of Home Stretch participants reported that their participation in Home Stretch will help in the process of buying a home.

Are you thinking of purchasing a home in Minnesota?  You can learn more about the mortgage loan process - - and the entire home buying process by taking a Home Stretch workshop.  For more information, click here.

Are HAMP Improvements Possible?

On Wednesday, November 17th, MN Senator Franken joined 17 other Senators in sending a letter to Treasury Secretary Timothy Geithner asking for immediate changes to the HAMP program to help homeowners facing foreclosure. 

The complete letter is here. (PDF Document)

Here are some of the key steps the Senator(s) recommend implementing in order to improve the HAMP program:

• The creation of the Office of the Homeowner Advocate. This office would focus on assisting homeowners who believe their mortgage servicer is breaking the rules;
• Provisions that would hold servicers accountable;
• Automatically extend permanent mortgage modifications if trial modifications are completed successfully;
• Revise eligibility requirements;
• Ensure that servicers provide homeowners with necessary documentation; and
• Provide homeowners with information as to why they have been denied HAMP modification.

The Minnesota Home Ownership Center applauds any and all efforts to assist struggling homeowners... and welcomes your comments as well!

• Will Senator Franken's suggestions improve the HAMP program?
• What improvements would YOU suggest to improve the HAMP program?
• Do you have other suggestions for helping struggling MN homeowners?

Use the comments section to post your suggestions.

Vote Again!

No... the Minnesota Home Ownership Center is not advocating voter fraud!  :-)

We want you to vote on the consumer handout that we plan to produce for our Look Before You Leap campaign.

“Look Before You Leap” is a statewide public education campaign seeking to raise public awareness about the booming foreclosure rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and to connect struggling home owners with the Center’s network of FREE and trustworthy foreclosure counselors.

The piece we are designing will be used in mailings, handouts, counter displays, etc... and we hope to make the piece as attractive as possible so that struggling homeowners see the piece and respond.

Here are the two options:

(Click To Enlarge)


Would you take please take 30 seconds to respond to a quick on-line survey about the piece?  4 questions... 30 seconds... SURVEY HERE  

You can also leave feedback in the comments!  We'll be compiling this information through Friday, November 5th.  THANKS!

New Survey Shows Loan Mod Problems

A new consumer survey of households accross the country that have received, or tried to receive, a loan modification from their bank or servicer shows that banks routinely make errors or blatently break the rules established by the federal Making Home Affordable program.

The survey, by ProPublica, gives empirical evidence to what many of the MN Home Ownership Center's network of Foreclosure Counselors have been hearing for the past year: trying to work with servicers to obtain a loan modification can be an EXTREMELY frustrating undertaking.

Here are some of the results from the survey:

• On average, homeowners had been seeking a modification for more than 14 months.
• Homeowners seeking modifications reported having to send the same documents nearly six times on average.
• 175 homeowners say they were advised, incorrectly, to fall behind on their mortgage in order to qualify for a modification.
• Nearly half of the homeowners reported spending more than 10 hours per month (collecting documents, waiting on the phone, etc.). Most said they call, fax or mail once a week or more.

Most frustrating for those surveyed was that many times the servicers themselves made mistakes that resulted in a denial, and many times homeowners found the reason for denial unclear.


If you've thought about seeking a loan modification with your lender, there are ways to simplify  the process (although it's NEVER easy) and you want to be EXTREMELY careful that any modification they offer is really in your LONG-TERM best interest. The Center's network of Foreclosure Counselors are ready, willing and able to work with you on applying for a modification and help you decide if it will work for you.  In addition... there may be other ways to avoid foreclosure too.  Your counselor can help.

ALSO... we couldn't post about loan modifications without warning Minnesota Home Owners AGAIN, to make sure that they DO NOT PAY for any third-party loan modification service. Deal directly with your lender yourself, or with one of our free, non-profit Foreclosure Counselors. For additional information about preventing foreclosure in Minnesota, click here.

Why Buy a home?

One of the first steps in a Home Stretch workshop is to explain to potential home buyers the advantages and disadvantages of homeownership.  The workshop actually starts by having people think through some of the reasons WHY they'd like to be homeowners.

Fannie Mae's 2010 National Housing Survey asked that same question of thousands of people across the country... "What led you to purchase your first home?"  (Translation: Why'd you become a homeowner?).  The results are shown here:

(Click Image to Embiggen)

Family changes (getting married, more kids) are, apparently, the top reasons people choose to become homeowners.


PARTICIPATE IN OUR NEW SURVEY:  Knowing the possible disadvantages of homeownership (depreciation, expense, yard work, maintenance)... We'd like to know what led YOU, or, if you haven't purchased a home yet, what MIGHT LEAD you to purchase your first home.  You can answer our survey question (Just 1) here.

As a follow-up to the question we asked earlier in the week... "Why did you choose your first home (what characteristic about the home lead you to choose THAT specific property)... Our completely non-scientific online survey shows that Minnesotan's reasons for choosing their homes differ slightly from the national survey:

(Click Image to Embiggen)

Are you currently considering purchasing your first home? There are LOTS of factors to consider - there are both advantages and disadvantages to homeownership! Make sure you're fully informed about how to be a SUCCESSFUL homeowner by speaking with a Housing Counselor or by taking a Home Stretch workshop first. For more information on buying your first home in Minnesota, click here.

Survey: Reasons For Buying a Home

Fannie Mae has released its 2010 "National Housing Survey"!

The Survey, conducted in December 2009 and January 2010 (so the data is fairly recent)... surveyed consumer perspectives on a range of related issues, including: current attitudes toward the economy and housing; present conditions for homeownership; owning versus renting; the present climate for borrowing; current mortgage satisfaction; the impact of being "underwater" on borrowers; and attitudes toward defaulting. In some instances, data are compared to a 2003 study on housing by Fannie Mae.

Over the next few weeks... we'll be highlighting some of the findings of the survey.

Here's the first highlight: Reasons for Buying a Home:

Nearly two-thirds (65 percent) of survey respondents prefer owning to renting, citing non-financial reasons such as safety (43 percent) and quality of local schools (33 percent) as driving factors in wanting to own a home. 

Here's the breakdown of responses:

(Click Image to Enlarge)

One of the interesting points of that question, is that only 11% of respondents listed "Energy Efficiency" as a reason to choose a home to purchase. 11%. There seems to be a large disconnect between the push for "Green Building" and what consumers really want. (Comments are welcome in the comment section! No flame wars, please).

Care to share with us the factors that are/were important to YOU when you purchase (or purchased) YOUR first home.  Take our non-scientific survey/poll here.

Are you currently considering purchasing your first home?  There are LOTS of factors to consider... as you can see from the Survey Results above.  Make sure you're fully informed about how to be a SUCCESSFUL homeowner by speaking with a Housing Counselor or by taking a Home Stretch workshop first.  For more information on buying your first home in Minnesota, click here.