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For Immediate Release

September 18, 2006
Contact: NeighborWorks America, Douglas Robinson, 202-220-2360, drobinson@nw.org

NeighborWorks® America Says Slowing Housing Market
Gives First-Time Buyers More Time to Prepare
Three Questions to Ask

(Washington, D.C.) – By nearly every measure, the housing market in the United States has slowed considerably from the frenetic pace of the past few years. As a result, first-time homebuyers have more opportunities to find and finance the best home for their needs, says Marietta Rodriguez, interim director of the NeighborWorks Campaign for Home Ownership.

“Twelve months ago, many homebuyers worried about missing out on the home that they wanted and might have made decisions without thinking the process completely through,” said Rodriguez. “NeighborWorks organizations around the country and especially the 93 NeighborWorks HomeOwnership Centers stand ready to help homebuyers navigate through the complex process of buying a home.”

In recent months, news articles have pointed out that many homeowners were unaware of the details within many of the adjustable-rate and option-type mortgages that they took on in 2004 and 2005. Some homebuyers are headed for significant payment shocks as these loans adjust to higher interest rates and monthly payments.

“NeighborWorks network members are in more than 4,400 communities around the country,” explained Rodriguez. “If a homeowner is unsure about what kind of loan they have and want help, NeighborWorks members are in your area and can assist.”

Meanwhile, the Office of Federal Housing Enterprise Oversight, the regulator for mortgage investors Fannie Mae and Freddie Mac, reported that home prices climbed just 1.17 percent in the first quarter of the year. Such a small decline lets first-time homebuyers take more thoughtful approaches about home buying, because the fear of being priced out of their market if too much time is spent house hunting has faded.

NeighborWorks America suggests first-time homebuyers and refinancing borrowers get answers to these three questions before signing on the dotted line for a new mortgage.

1. “Is this payment fixed for the full term of the mortgage?”

A borrower may be signing onto a mortgage with a short or medium-term fixed rate period that can adjust much higher. Being clear on the exact term of the mortgage helps a borrower better understand his or her current and future mortgage obligations.

2. “Can you tell me about all of the fees I will have to pay?”

All mortgages come with fees. A mortgage lender who is not willing to take as much time as a homebuyer needs to explain the fees may not be the best lender for that homebuyer.

3. “Is there a penalty if I decide to prepay the mortgage?”

Over the past few years, the number of mortgages with prepayment penalties has increased. Typically a borrower receives a lower rate if he or she agrees to not pay the mortgage off before a specified period, usually three to five years. Borrowers should ask how much money they are saving by accepting a mortgage with prepayment restrictions.

“Home buyers, especially first-time home buyers, should not be afraid to ask questions. A home is a big investment and the benefits from homeownership can be substantial,” said Rodriguez.

About NeighborWorks America
NeighborWorks America provides financial support, technical assistance and training for communities across the nation, including the NeighborWorks network – a nationwide network of more than 240 community development organizations working in more than 4,400 urban, suburban and rural communities across America. These organizations engage in revitalization strategies that strengthen communities and transform lives. In the last five years alone, NeighborWorks organizations have generated more than $10 billion in reinvestment and helped more than 780,000 families of modest means purchase or improve their homes or secure safe, decent rental or mutual housing.