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.
With interest rates being at an all-time low, I can... Read More
Before buying personal or business checks you should inform yourself... Read More
For most of us the process of getting out of... Read More
Have you ever stopped to think about how your "mood"... Read More
Recent security breaches at several credit card companies continue to... Read More
Now there are ways to save money in the grocery... Read More
The Check 21 Law is the new federal law for... Read More
To save on food, be an opportunist. Buy what you... Read More
With the A-level results coming out, the long wait for... Read More
Creating a budget can be a very difficult task. Although... Read More
I'm still amazed every time someone comes to me complaining... Read More
I've been going through and interesting growth period lately that... Read More
Your food budget is the most flexible area of your... Read More
Shopping for groceries is an inevitable fact of our ever... Read More
If you've been to a shopping mall lately, you've probably... Read More
Budgeting. It's a word we're all familiar with. Everyone knows... Read More
When people speak about the increasing age expectancies, they generally... Read More
You've analyzed your past expenses, put them into spreadsheets, loaded... Read More
Just about everyone has a checking account. Checks present easy... Read More
For me, the most terrible time of each month is... Read More
For months, we were trigger-swipe happy, putting our groceries, clothes,... Read More
As the saying goes: "Buyer Beware". If you see ads... Read More
One of the simplest ways to improve your professional image... Read More
Frugal living is more than a lifestyle. It's a passion.... Read More
Your boss has just informed you that your department is... Read More
It is crucial as an individual who is striving for... Read More
Investing is a subject a lot of people don't want... Read More
With almost two thirds of university entrants from England and... Read More
The lists of bank and savings accounts that are available... Read More
Reducing the clothing budget was a serious challenge for me.... Read More
Despite how easy it is to balance a checkbook, very... Read More
Gas prices have soared to unimaginable heights of late. Since... Read More
Identity theft is a serious crime that continues to grow.... Read More
The judge had to ask the question, and we had... Read More
Each of us knows how to spend money, but do... Read More
You have probably accomplished a great deal with your life.... Read More
You've decided you want a bigger, better and more desirable... Read More
Super-mumsIt seems that the proof of maternal efforts is no... Read More
The first step to financial success lies in knowing your... Read More
Between 15 - 20% of people in our country (UK)... Read More
My personal opinion is that in today's new economy, it... Read More
One of the simplest ways to improve your professional image... Read More
Despite how easy it is to balance a checkbook, very... Read More
Saving money is not easy and is made more difficult... Read More
With interest rates being at an all-time low, I can... Read More
Most consumers are aware of the importance of their credit... Read More
One of the biggest challenges facing black RELATIONSHIPS today are... Read More
Six Scholarship judges were sitting around an oval table. Forms... Read More
1. If you have your haircut every 3 weeks, try... Read More
Are your financial muscles well toned and healthy or flabby... Read More
The Check 21 Law is the new federal law for... Read More
Reducing the clothing budget was a serious challenge for me.... Read More
Many don't realize that our basic utility bills provide the... Read More
The price of gas continues to climb, and with continued... Read More
Here are some tips that can help you save money... Read More
Single Mother's in need of Financial GuidanceBudgeting is key to... Read More
Here are ten steps you can follow to help improve... Read More
As the saying goes: "Buyer Beware". If you see ads... Read More
Debt levels are at an all time high in the... Read More
If you have a 401(k) account, it can be very... Read More
One universal of humanity, no matter who you are or... Read More
Your boss has just informed you that your department is... Read More
Are you interested in saving money off your grocery bills?... Read More
I've been going through and interesting growth period lately that... Read More
Ben Stein has a book called How to Ruin Your... Read More
People haven't always written checks to buy goods and services.... Read More
Personal Finance |