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 http://www.downtoearthfinance.com..
executive chauffeured services Bradford .. Madison to Airport carFrugal living is more than a lifestyle. It's a passion.... Read More
Millions of people have a checking account and many people... Read More
What is finance and what do you need to know?... Read More
Are your financial muscles well toned and healthy or flabby... Read More
If you were to ask 100 women "What would you... Read More
Now that we are in the month of June I... Read More
Here are some tips that can help you save money... Read More
Most of us, especially those of us who have debtor's... Read More
There is a new bill that is being passes, it... 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
Whatever your reason for having a tight budget, the truth... Read More
It is crucial as an individual who is striving for... Read More
I've been sharing the following idea with people for a... Read More
Identity theft is a serious crime that continues to grow.... Read More
Can you really afford a house? If so, how much... Read More
If you've been thinking about filing for bankruptcy, your best... Read More
Vacations Made Easy: Buying a Florida Investment PropertyA relaxing beach... Read More
For most of us the process of getting out of... Read More
Developing and living by a household budget is by far... Read More
You have probably accomplished a great deal with your life.... Read More
Has anyone been to the gas pumps lately? Soon $3... Read More
Recent security breaches at several credit card companies continue to... Read More
When you received an energy (heating) bill last winter, were... Read More
If you want money you need to learn how to... Read More
O'Hare Chicago prom limo ..If you are the normal consumer, then you've probably experienced... Read More
Women have a love/hate relationship with money. Most of us... Read More
Women are charged more for dry cleaning services. Don't fume,... Read More
Predatory lending exists in the mortgage industry. It's typically when... Read More
Most consumers are aware of the importance of their credit... Read More
While 40% to 50% of us make New Year's resolutions... Read More
Just about everyone has a checking account. Checks present easy... Read More
Now that we are in the month of June I... Read More
Your food budget is the most flexible area of your... Read More
1. Lighting & Light Bulbs Install low energy light... Read More
For me, the most terrible time of each month is... Read More
Address labels are many things to many different people. If... Read More
Has anyone been to the gas pumps lately? Soon $3... Read More
Sorting out your personal finances can be a tricky and... Read More
With interest rates being at an all-time low, I can... Read More
Vacations Made Easy: Buying a Florida Investment PropertyA relaxing beach... Read More
Does it feel like you have to be Sherlock Holmes... Read More
Debt levels are at an all time high in the... Read More
You should thoroughly consider your business needs when selecting a... Read More
Good money management needn't be difficult. In fact, there a... Read More
It is widely written that you need 75% of your... Read More
Recently, many of these loyalty rewards programs have come to... 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
Many people spend their little income haphazardly without any planning... Read More
Personal Finance |