Full Page Organization - Freddie Mac

1 Home ow ner Benefitsand Res pon si bi lit iesAboutFreddieMacFre dd ieMac is astock ho lder -o wn ed co rporationcharter ed by Congressin 1970 to create aco ntinuousflow of fundsto mo rt gage lender s in supp ort of homeo wnershipand rental ho us ing . FreddieMac purchas es mo rtgag es fromlen de rs an dpa cka ge sth em into secu rities that are so ldto nc eits cre ation, FreddieMac has hel pe dfina nceon e in six Ame ri ca n hom AsianCre di tSmar t As ian is a mu ltilingu al ser ies to guide Asian Americ an consumerson how to buil d and ma inta in bette rcre dit, un der st an d the steps to buying a home and ho w to prote ct thei r inv eci al thank stothe follow ing org ani za tio ns fortheir collaborationin the dev elo pment of the CreditSmart As ian :AsianAm er ican s for Equ al ity, Boa t Peo pl e SOS, ChhayaCDC, Filipino s for Aff irmativeAct ion, KoreanChu rch es forCo mmu nity Dev elop me nt, Nak at omi & Associates,Nation al Coalitionfo r Asian PacificAmer ican Co mmu nityDe ve lopment(Nat ional CAPACD),Nation alCong ress ofVietn amese Ame rica ns, Natio nal Korea nAmeric an Serv ice &Ed uc ati on Conso rt ium , Inc.

2 , and Quo n Des AAssiiaann:: HHoommeeoowwnneerr BBeenneeffiittss aanndd RReessppoonnssiibbiilliittiieessWel com e .. 2 Und ers tan di ng The Res ponsi bil itie s .. 3Of Ho meowne rsh ipRefi nancin g You r M or tga ge .. 8 Borr ow in g Ag ain st Your Ho me Equ ity .. 12 Avoid ing Fi nan ci al Tr aps .. 17Pr eventin g F or ec los ure .. 19Ma inta inin g, Re pa iri ng an d Imp ro vin g You r Hom e .. 23 Home Saf ety an d E merge nc y P rep ar edn es s .. 31 Gett ing I nvo lve d In You r Co mmuni ty .. 34 Tab le O f Co ntents1We lcom e,s a n ew home owne r, y ou v e made an important i nv est me nt in yo ur h av e a plac e th at y ou and you r f ami ly can cal l your very own. Be ing ahom eowner bri ng s tre me ndo us sati sfact io n, but it al so co mes with gr eatre sp on sib il itie y ou embark o n t his e xc it in g pe rio d i n yo ur li fe, F reddie Mac is pleased topr ovid e y ou with thi s i nf ormati on to h el p yo u maintain yo ur home, pr ot ect andinc re ase its v alu e, an d e nsu re your succes s as a ho me owne gu id ebo ok, homeowner Benefits and Responsibilities, pr ovi des informationab ou t h ow t o tak e care of you r h ome and prot ect yo ur investment.

3 I t exp lain s t hefin ancia l o bl ig atio ns of homeown ersh ip, as we ll as t he i mportance ofhom eownersh ip, in cludi ng recordk eepi ng, maintenance, and emergen cypr ep are dne ss. If you h ave no t ye t pu rc ha sed a home or if you need information abo ut how toes ta blish or improve you r credit histo ry, pl ease read our companion g uideb ooks ,The Importance of Good Creditand Steps to Homeownership. To get her, th esebooks p rovide a ro ad map t o ans we r t he questions you may have as you pu rsu eyou r d re am o f h ome a ll o f u s at F reddie Ma c, we wis h yo u g reat success. With pro per plannin g,tim e, an d ha rd work, we ar e c on fiden t yo u wi ll enj oy al l the benefits ofhom eownersh ip. 2 CCrreeddiittSSmmaarrtt AAssiiaann:: HHoommeeoowwnneerr BBeenneeffiittss aanndd RReessppoonnssiibbiilliittiieessCred itSmartAsian: Home own er Benefits and ResponsibilitiesThes e books providea roa d map t o an sw erthe questions youmay hav e as youpursue your dream of ho AAssiiaann:: HHoommeeoowwnneerr BBeenneeffiittss aanndd RReessppoonnssiibbiilliittiieesson grat ula tions !

4 Now that y ou ha vepu rch ased a h om e, y ou ha veac hieve d a n import ant lifetimemi lesto ne. Being a homeowner offersma ny be nef its, including: Shelt er Secu rit y for you r fa mily A so ur ce of pr ide for you and yourfa mily A saf e investm ent t ha t will mostlik ely g row over time ( buildingequ ity ) The abilit y to make y our ownim pr ove me nt s an d dec orat ingch oices The f ree dom to plant a garde n andla nd scap e your y ard Tax be nef itsHo we ver , b ein g a homeowner is v erydif fere nt fr om being a r ente r. B eing aho me own er car rie s r es po ns ibilit ie s inma ny of t he same ways that being apa rent demands res ponsibilities. Home Repair s an d MaintenanceThe re s n o longer a landlord to fixthin gs if th ey st op working. Re pairs ar eyo ur responsibility . If a light bulb goesout , the toilet is b roken, or the roof islea king, you must ta ke ca re of ityo ur self or pay som eone to do an d Un ex pe cted Exp en sesNe w h omeo wn er s mu st pa y ma ny newexp en ses.

5 T he se e xp enses includeyou r mo nth ly mor tgag e pa ymen t;prop ert y t axe s an d h ous e in sura nce,wh ic h may be in clu de d i n y ou rmor tg age pa yme nt as pa rt o f a n e scr ow ac co unt ; and the cos ts ofany h ome re pair s a nd improve me nts ,such a s repl acin g a b ro ke n wa terheat er o r ins ta llin g n ew wi ndo w bl in ing a h ome c an be a n expe nsiveprop ositio n with ma ny hidde n orunexpe cted co sts. Pl us, if you a re l ateor d elinqu ent in making the sepaym ents (e spec ia lly you r mo rtgagepaym ent) , yo u c ou ld hu rt y ou r credithis tor y o r e ve n lo se yo ur home making i t mu ch more dif fic ult andexp en sive to bu y a noth er h ome or ge ta loa n f or an y pur pose i n t he f utu kin g yo ur mo rtgage pa yme nt ontime e ve ry mo nth sh ou ld be yo ur fir stprior ta ndin g th e Responsi bilit ies of Ho meo wn ershi pBeing a ho me owne rcarri es respon sibili tiesin m any o f the sam eways th at bei ng apare nt de man dsresp onsibi lit Wo rk an d L an dscap in gUnle ss y ou o wn a c ondominiu m, youar e r es pons ible f or ma in tai nin g you rya rd b y m owi ng th e la wn, tr imminghe dges , t ak ing care of th elan dsc apin g, r ak ing l ea ve s, and evensh ov elin g s now i n wi nte r, de pe ndi ngon whe re you live.

6 Y ar d work a ndlan dsc apin g c an be a s igni fic antam ou nt of wo rk , but manyhom eowners a ls o fi nd t he se activit ie sfu lf illin g. P lan tin g f lowers, v egetabl es,sh rubs , a nd tre es c an be r elaxin g andma ke y our home mo re e nj oyable foryou .Co mmu ni ty C om mit me nt sHomeown er s ten d to beco me pa rt of acom munit y, us uall y t aki ng on mor ere sp on sib il itie s in the ir n ei gh bor hoodan d th e la rg er c ommunity. Th is cou ldme an th ey h el p th eir e lder ly neig hbo rsbu y grocer ie s ea ch we ek, jo in th evolu nte er fire de par tme nt , serve o n theboa rd of a lo cal co mmunit y g ro up, orev en r un f or e le cte d off ic e. Wha teve rth e for m, g ettin g in volv ed i s are war din g wa y t o ma ke a dif fer ence ,for y ou a nd the wh ole community4 CCrreeddiittSSmmaarrtt AAssiiaann:: HHoommeeoowwnneerr BBeenneeffiittss aanndd RReessppoonnssiibbiilliittiieessFi na nc ia l Re sp onsi bi li tyNow th at you ar e a home ow ner, youmu st ke ep your fin ances in or der.

7 He reare some g uide lines to fol lo w:Kee p goo d re co rd me owne rshipcome s wi th a l ot of pa pe rwor k. T o g etyou r t ax be nefit s, y ou l l need recordsof you r h ou sing-re late d expe nses. I fyou ev er e xpe rie nce da ma ge t o y ou rhome ca used by an eme rgenc y o rdi saster suc h as a f ire , you l l n eed yourins uranc e pol ic y a lon g wi th co pie s o fpu rc hase rec eipts an d ph ot ogra phs o fyou r po sse ssio ns. If you r n ewref rige rator br eaks, you l l nee d th ewa rra nty. To fin d th ese a nd o the rdoc ume nts whe n yo u n eed t hem ,you l l wa nt to s et up a system for fili ngyou r h omeo wn ership rec ords as so onas po ss ible . No t havi ng an or gan ize dsyst em c oul d be costly in th e lon g a f ire pr oo f fil ing c abi ne t o r b ox , orren t a saf ety de pos it box at you r l oc alba nk to s tor e h ou sehold r eco rds andleg al doc ume nt s.

8 Now that you are ahom eowner, youmus t keep yourfinances in AAssiiaann:: HHoommeeoowwnneerr BBeenneeffiittss aanndd RReessppoonnssiibbiilliittiieessMa intain ade qu ate insura ncecove ra au se le nde rs ge nera llyreq uire yo u to h av e h ome own er sin sur anc e in o rder to ge t a mo rtg ag e,you r po li cy is pro ba bl y a de qu or e y ou e xpe rie nce a ny l os s,howe ve r, re vi ew y ou r po licy to ma kesure yo u u nde rs ta nd y ou r co ver age .Id eally, you wan t to ensure that y ouhave en oug h in su ran ce to cover th ecost o f rebu ildi ng y our home at curr entcon st ru ctio n co sts, not in clu di ng th ecost o f the la nd. Be s ure to l oo k atyou r po li cy a t le as t on ce a y ear wh en i tis re newe d to ma ke s ure that you rcove rag e g oes u p wi th a ny i ncre ase inyou r ho me s v alu ximize your tax dedu cti on rre nt t ax la ws permit you to deductthe inter est you p ay on your mortga gean d the r eal e stat e ta xes you pay onyo ur ho me major expensesasso ci ate d wit h h ome owners hip fro m yo ur t axab le in come.

9 The sede duct io ns may red uce the fe dera lan d, in m ost cases, st at e inc om e t axesyo u have to p ay. It s wise t o c he ck witha tax account ant to help you withthese t ax pay y our can s av emo ney in in te rest p aid over t he life ofyo ur mo rtgage by inc luding some e xtramo ney w ith your re gula r mortgagepa yments. Tell you r s erv ice r to a pplythis ext ra mon ey d ire ct ly to theprin cipal t o re du ce y our outst andinglo an b alance. This is c alled p repa yment. Pr ep ay ment reducesyo ur loan t erm and lowers t he t ota linte res t o wed over the life of the loa st ad din g an e xtr a $50 a month toyo ur mo nt hly payment on a $100,000,30-year loa n at 7 % interes t wouldre du ce your loan term by more tha nfive yea rs a nd save you around$32 ,000 in tot al in ter es t paid over thelif e of th e loan. If y ou ar e intere st ed inpre pay ing your mortgage, conta ct y ourmo rt gag e se rvice r to find out thepro pe r p rocedur es for doing so.

10 Besu re to f ind out if your mortgage hasan y pre payment pe na ltie s wise to checkwith a tax acc oun ta ntto h el p you withthe se t ax iss ues .6 CCrreeddiittSSmmaarrtt AAssiiaann:: HHoommeeoowwnneerr BBeenneeffiittss aanndd RReessppoonnssiibbiilliittiieessNot all insur anc e c over age is th e sam e Imp or tan ce of H om eowne r s In sura nc eHomeown er s in su ra nce , a lth oug h a si zable expense, is vi tal ly impo en y ou purc has ed you r ho me , y ou r lender requi red you to carry pro pertyins uran ce. You mu st ke ep this pol icy in go od st andi ng not o nly because yourmor tgage le nde r re quir es i t, bu t be cause it pr ot ects yo ur valuableinv est me nt. E ve n th e most ba sic coverage is ben efi ci al in the event o f lo ss orda mage t o yo ur h p in m in d, howe ve r, tha t n ot all insu rance coverage i s t he same.