Personal Finance Information

I Want to Buy a Home - Now What?


If you were to ask 100 women "What would you like to achieve financially?" Buying a home or apartment is usually one of the answers. Some women think that they can never own a home - which is not true! In fact, there are so many success stories of home buyers who never thought they would get there. In addition, homeowners tend to have greater financial success in the other areas of their finances life. I've seen it over and over.

The benefits of owning a home include: building equity, saving money on taxes and an integral step towards building wealth. With interest rates so low, this is a great environment to buy a home. This article is a checklist with tips and guidelines to buying a home. If you already own a home, some of these tips will be helpful for refinancing your home. Real estate is not a substitute for stocks but it plays a big part in your financial fitness.

1) CHECK YOUR CREDIT. Get a recent a copy of your credit report, especially your FICO score (the score lenders use to determine your interest rate). Check out www.myfico.com.

2) HOW MUCH HOME CAN YOU AFFORD? Start with your monthly payment and plug it into a mortgage calculator. (Great one on www.eloan.com: Affordability Calculator). This site tells you how much home you can afford assuming certain numbers. For example, if you make $6,000 per month before taxes, you can afford anywhere from $125,000 to $345,000 assuming $25,000 as a down payment. There are different choices with the actual monthly payments. If you don't have enough saved for a down payment, create a separate savings account and come up with a savings schedule. Only borrow what you can afford!!!

3) ORGANIZE YOUR DOCUMENTS. Get together the following documentation: past 3 years of tax returns, recent paychecks, bank statements, investment statements and all other financial statements.

4) WHICH MORTGAGE IS THE BEST FOR YOU? Understand the different mortgage options. Most are based on a 30-year amortization cycle: fixed-rate, adjustable and a hybrid. Hybrids are very popular now; fixed rate for a certain amount of time and then they adjust annually. Consider a 15- or 20-year fixed rate mortgage. The payments will be a bit higher, but you will end up paying much less interest over the course of the mortgage and be debt-free much sooner!

5) SHOULD YOU PAY POINTS? A point is equal to 1% of your loan amount. You pay a point to receive a lower interest rate on your loan. If you get a low enough rate, paying points can be worth it.

6) SHOP AROUND. Work with a mortgage broker or check out a few mortgage websites: www.e-loan.com, www.bankrate.com

7) PRE-APPROVAL 6 MONTHS BEFORE BUYING A HOME. Get pre-approved for a loan from the bank or your mortgage broker. It gets the process going faster and in a competitive market, it gives you the edge.

8) MINIMIZE YOUR DEBT. Avoid big-ticket purchases so not to add to your debt load.

9) SAVE MONEY ON TAXES. Points paid for a first-time home (not for refinancing) can be deducted in the year your home was closed.

10) BE CAREFUL OF COSTS. Don't ignore transaction costs and watch closing costs very carefully. There are also many hidden costs of home buying: moving, minor renovations (especially if you are buying an older home). Make sure you are prepared.

11) DIVERSIFY, DIVERSIFY, DIVERSIFY. Don't tie up all your assets in your home.

12) PAY YOUR MORTGAGE AUTOMATICALLY. Get it taken from bank account automatically every month. You don't ruin your credit and don't forget to pay every month on time.

13) REFINANCING?· Shop around for interest rates.· Start with the bank that currently holds your mortgage. It may give you a good deal just to keep your business.· Avoid paying points. When you refinance, you can deduct only a portion of the points each year, so it's usually not a good deal.· Don't try to outsmart the market and wait for interest rates to hit their low point. If the numbers make sense for you, go for it.

14) PMI INSURANCE. You will have to pay monthly PMI insurance if you put down a down-payment less than 20%. Once you are paying your mortgage for more than a year, ask your lender to reconsider.

15) BAD CREDIT? DON'T HAVE ENOUGH FOR A DOWN-PAYMENT?· You can use your investments or securities as collateral for buying a home.· Consider a low-documentation, no documentation or sub-prime mortgage. You will pay a higher interest rate but it will help build your credit and equity.· Also, check out these government agencies:· Freddie Mac www.freddiemac.com.· Fannie Mae www.fanniemae.com.· www.hud.gov/fha.

16) OTHER MORTGAGE OPTIONS:· Bi-weekly mortgages,· Customized mortgages - usually offered by local banks,· Use investment portfolio as collateral and a smaller cash down-payment.

17) HOME INSPECTION. Have an inspection done by someone with accreditation (www.nahi.org).

18) REMODELING? If you remodel, be diligent about keeping records. The right improvements can decrease your taxable gains when you sell.

19) CAN'T AFFORD TO BUY NOW? But want to get into real estate? Check out REIT stocks or REIT mutual funds, www.investinreits.com.

Galia Gichon is the Founder of Down-to-Earth Finance, which offers Unbiased Financial Education. She has worked with thousands of people, has an MBA in Finance and over 13 years financial experience. Please visit http://www.downtoearthfinance.com. You can subscribe to her bi-monthly e-mail newsletter for tips to add fun to your finances, spending smarter and understanding investing at DownToEarthFinance-on@zines.webvalence.


MORE RESOURCES:

03/26/2024
New Robinhood Credit Card Will Earn 3% Back on Most Purchases - NerdWallet
The Robinhood Gold Card won't have an annual fee, but to get the card you must be a Robinhood Gold member, which costs $5 a month as of this writing.


more info


03/26/2024
3 Ways AI Could Transform Your Insurance Policy - NerdWallet
As insurers use artificial intelligence to make better predictions, AI technology could spur major changes for insurance customers. Learn more about what to expect.


more info


03/26/2024
Taryn Phaneuf, Lead Writer - NerdWallet
Taryn Phaneuf is a lead writer at NerdWallet. She previously spent more than a decade reporting on business, education and public policy for local news outlets.


more info


03/26/2024
Financial News - NerdWallet
NerdWallet reporters bring you the latest in financial news, with a focus on what it means for your wallet.


more info


03/26/2024
Lottery Pool? Take These Precautions Before Diving In - NerdWallet
A lottery pool can be a thrilling way to socialize with coworkers. But if luck strikes, the stakes can be a lot higher. Here's how to avoid legal tangles.


more info


03/26/2024
Latest FAFSA Error Affects Aid for 200K, Offers for Everyone Else - NerdWallet
The Education Department miscalculated the financial need of roughly 200,000 dependent students who submitted FAFSAs before March 21 — nearly 15% of processed forms. Those students could get less aid than they expect, and everyone else might face further delays.


more info


03/26/2024
What’s at Stake as the Supreme Court Hears an Abortion Pill Case? - NerdWallet
The U.S. Supreme Court is hearing oral arguments in FDA v. Alliance for Hippocratic Medicine, a case that could limit access to mifepristone.


more info


03/26/2024
Best Balance Transfer Credit Cards of March 2024 - NerdWallet
Save money while getting out of debt by doing a balance transfer: Moving debt to a card with a 0% introductory interest rate and low fees.


more info


03/26/2024
Best 0% APR and Low Interest Credit Cards of March 2024 - NerdWallet
Using a credit card with an introductory 0% APR period can save you big money when financing a major purchase. See all of our expert recommendations.


more info


03/26/2024
Best Cash Back Credit Cards of March 2024 - NerdWallet
Cash back is the most flexible credit card reward, since you can use it for anything. Our list will help you find the perfect card for the way you spend.


more info


03/26/2024
New Breeze Airways Credit Card Takes Flight With Up to 10X Back - NerdWallet
Airline also launches Breezy Rewards, the airline’s loyalty program, which supercharges rewards earned with the credit card.


more info


03/25/2024
Buying Life Insurance if You're Transgender - NerdWallet
Your gender identity doesn’t impact your eligibility for life insurance, but there are a few things to be aware of when you apply. Learn more now.


more info


03/25/2024
Egg and Chocolate Prices Are Hopping — Just in Time for Easter - NerdWallet
Bad weather and disease are straining the supply of cocoa. Meanwhile, another outbreak of bird flu is pushing up egg prices again.


more info


03/24/2024
Jae Bratton, Lead Writer - NerdWallet
Jae Bratton is a writer on the credit cards team at NerdWallet.


more info


03/24/2024
Mega Millions, Powerball Jackpots Near Combined $2 Billion - NerdWallet
The Mega Millions jackpot is now $1.1 billion, while Powerball has grown to $865 million. Mega Millions will be drawn on Tuesday night; Powerball on Wednesday.


more info


03/23/2024
Government Shutdown Threat Finally Put to Rest — For Now - NerdWallet
Congress missed its midnight deadline, but shortly thereafter approved the final set of appropriations in a $1.2 trillion spending package. The last-minute deal prevents a government shutdown that would have furloughed government workers.


more info


03/22/2024
Alaska Access: The New Subscription Service from Alaska Airlines - NerdWallet
Like its existing Flight Pass subscription, Alaska Access could be a good deal for frequent Alaska flyers looking to get the best deals with the airline.


more info


03/20/2024
American Airlines To Add Streaming and Free Wi-Fi - NerdWallet
American Airlines says it will be the first airline to offer video streaming capabilities on its entire mainline fleet. It is also offering free Wi-Fi with ads.


more info


03/20/2024
Fed Chair Powell: Rate Cut Risks Are ‘Two-Sided’ - NerdWallet
For the fifth time in a row, the Federal Reserve paused the federal funds rate at 5.25%-5.50% as Americans continue to wait for lower rates to cut costs on mortgages, credit cards and other loans.


more info


03/20/2024
Tailpipe Emission Rules Give Automakers More Time to Ramp Up EVs - NerdWallet
New stricter rules for vehicle emissions are expected to roll out more slowly than initially proposed last year, which gives automakers more time to beef up electric vehicle stock.


more info


03/20/2024
Powerball Hits $750M as Mega Million Jackpot Nears $1B - NerdWallet
The estimated Mega Millions jackpot is $977 million, while Powerball has grown to $750 million. Drawings are Friday and Saturday respectively.


more info


03/18/2024
How Is the Economy Doing? - NerdWallet
The state of the economy is generally strong and inflation is slowing down, but still remains elevated. The Federal Reserve is looking at key economic indicators to signal it’s time to cut rates.


more info


03/18/2024
Caitlin Mims, Content Mangement Specialist - NerdWallet
Caitlin Mims is a content management specialist on the credit cards team at NerdWallet. She has covered credit cards, credit scores and retirement planning.


more info


03/15/2024
What the Big Realtors Settlement Means for Home Buyers and Sellers - NerdWallet
A landmark legal settlement between home sellers and the real estate industry could complicate negotiations, let home sellers keep more of the sales proceeds, and require buyers to negotiate how their agents would be paid.


more info


03/15/2024
Biden’s Battle Against Junk Fees Turns to Colleges, Student Loans - NerdWallet
The Biden administration, in its efforts to curb junk fees, is proposing eliminating origination fees for federal student loans in addition to other fees that college students pay.


more info



home | site map | contact us