ABOUT THIS MANUAL

This manual is a guide to "creative home financing." It is intended to help you learn some of the basic concepts needed in shopping for a home loan. While you'll find many plans described in these pages, we have not attempted to outline every financing technique on the market. New financing alternatives are frequently being introduced, and this manual does not recommend any particular plan over the others. Shop and compare the options to decide which plan is best for you.

GETTING STARTED

If you've been thinking about buying a home, you may wonder how to select the right financing for your budget and needs. Many types of mortgages are now available, and new plans are continually being introduced. With all these choices, you may wonder what to look for.

Some of the mortgages now available are traditional plans, with interest rates and payments that remain constant throughout the loan and pay off your debt over a long period. Others represent a departure from the older plans: they can involve more risk for the buyer and are frequently tied to changes in the market. But they also can make home buying possible and may offer lower interest rates.

So if you want to purchase a home, you can still find the right mortgage for your needs. But to make sure you understand the choices, you should educate yourself first.

This guide will introduce you to some of the many plans available. Other sources of information include your state, county, or city consumer affairs office; local realtors, home builders, and lenders; bookstores; and the real estate section of your newspaper. You may also want to buy a book of mortgage payment tables to help you calculate whether you can afford a specific loan.

Above all, shop carefully. And, as you read through this booklet, keep in mind the following:

• Don't use yesterday's assumptions about today's real estate market.
• The key is affordability. Consider your total housing costs including loan payments (now and in the future), maintenance, property taxes, and your anticipated income changes.
• Look into several sources of financing. You may be able tocombine two or more mortgages.
• Ask questions. For example, an enthusiastic seller may not be familiar with the fine points of the financing arrangement.
• Negotiate with the seller or lender. Better terms may be available than those initially offered.
• Consider getting an attorney or a real estate broker to represent you. This could be the largest investment of your life.
• Study all available materials about your mortgage costs. With loans from institutional lenders, the creditor is required to give you a statement of your loan costs and terms before you sign the agreement. This information will include the "annual percentage rate" (APR) which measures your total credit costs, including interest, points, and mortgage insurance.

Finally, if you're thinking about refinancing your current home mortgage, you may also find this guide helpful. When you refinance, you are actually signing a new mortgage and paying off your present one. So, you might save money by switching to a different type of mortgage. Ask several lenders what terms and types of mortgages are available, and bargain for the deal that best suits your needs.