|
Author: Galia Gichon Article source: http://www.zeromillion.com/. Used with author's permission.
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.
Leadership Defined
All too often, CEO's have been looking out for No. 1 at great expense to shareholders and the country. The time has come for us to examine what type of people ...
Your First Dressage Competition
You have finally found your perfect horse, but riding around at home has started to get a bit boring. You have had a couple of dressage lessons and it seems to...
Potty Training Guide
Toilet training (herein referred to as "potty training") is an exciting time for parents and children, as the child takes the next step to becoming a "big" girl...
Are You a Right-Fighter?
Do you find yourself struggling to "win" arguments? Do people ask you why you always have to be right? Does conflict you engage in typically end with you having...
Foods That Help Burn Fat
When combined with a regular cardio workout, certain foods can actually help you burn fat. Try adding these vittles to your diet and experience the rewards.
Top 20 Dog Quotations
Get to know your beloved dog better with these insightful quotations all about your best four-legged friend...
Chords or Melody First... Which is Best?
Looks at the issue of whether to start a composition with the melody or harmony.
Have a Ball With Stability Ball Exercise
Whether you call them a stability ball, swiss ball, or exercise ball, there are so many great benefits to exercising with a stability ball in your home workouts...
Write Your Way To A Better Brain
Have you ever noticed what happens to an idea once you express it? Just talking about it or writing it down causes you to clarify it in your own mind. That's wh...
Internet Gambling
Gambling has a very important role is almost everything we do. Gambling is basically about someone staking something that already has to win more.
Top 7 Writers Sites for 2005
If you're looking for sites to help you market better and faster in 2005, these sites will help you.
Youth People Obsessed With Sunless Tanning
Darker-complexioned teens will always seek a tanning bed or booth. Because they want a perfect and perpetual tan. Younger, healthier, sexier, thinner Many teena...
What is Tax-Deferred Exchange?
Under Section 1031 of the Internal Revenue Code, owners of real estate held for investment or use in a trade or business can swap their property tax-free for "l...
Set Yourself up for Trade Show Success
Of the many mistakes small business owners make, a big one is participating in trade shows and business expos without a strategy for turning those marketing opp...
Fishing for Fortunes. Scam!
Spelt phishing, but pronounced as above, this despicable act is an effort to batter your bankroll or commandeer your cash
It Pays For Single Christians To Date Other Like-Minded People
Don't date the wrong people ever again. One-stop-shop relationship portal just for Christians. Hundreds of pages on dating, love and marriage. Start building yo...
Bananas - Your Source of eBay Packing Materials!
Do you want bubble wrap to pack your items with, then just look towards the bananas in your supermarket.
Making Money on eBay is Really Easy
Let me tell you my story... After having tried many other ways of making money online and failed, I was left with no other option but to try the "ebay selling"...
How to Get the Best Deal on Your SEO Project
If you own or manage a business Website, chances are you are at least somewhat familiar with the concept of search engine optimization (SEO). You may have read ...
How To Get Your Baby into Baby Modeling?
Does your baby have what it takes to be a baby model? Get your baby started in a baby modeling career today. This article will tell you how.
Publish Your Novel on the First Try
Rejection. This scary word plagues virtually every writer this side of John Grisham. It stops many writers in their tracks and often leads them to a new line ...
The Wages of Science
In the United States, Congress approved, last month, increases in the 2003 budgets of both the National Institutes of Health and National Science Foundation. Am...
Spouse Improvement: Influence Your Partner to Change in Just 7 Steps
Everyone has something they'd like to change in their spouse. Here is a 7-step process to create a change in your partner. The key to the success of this proces...
10 Top Considerations For Those Buying Property Abroad
10 Financial, Legal and Taxation Considerations for Those Thinking Of Buying Property Abroad
|
Print this page