How to Buy a Home
Purchasing your first home can be quite an adventure. As with any adventure, it also comes with pitfalls and confusion. Not only do you have to find the perfect house for your family, you also want to insure it fits your budget. Even a low priced fixer-upper can be too expensive when the repairs you need to do are major. You may be able to afford the house payment, but the constant expense of repairs could break your budget.
How Much House Can You Afford?
Before you open the first magazine with all the homes in your area or embark on any home buying venture, you need to decide what you can afford. Your mortgage will be part of your total debt, which should be no more than 36 percent of your income. In order to get the best rate, you should have at least a 20 percent downpayment. Not only do the rates increase the lower your downpayment, but you may have to pay PMI---private mortgage insurance. Don't forget to factor in all unusual payments you have to make monthly, such as child support or child care. While these aren't debts, they do greatly affect your spendable income.
Get a Friendly Lender
Before you consider looking for a home, first see how much you can borrow. If you've done your homework, you already know what your monthly budget can afford, but you also need to combine that information with your credit worthiness to see how much a financial institution will lend you. If your credit score is at 740 or above and you have 20 percent for a downpayment, you're most likely eligible for the best interest rate available. Those with a lower credit scores may still get traditional financing or look to alternative ones such as government backed programs like FHA or VA.
The amount of downpayment you have also affects your rate and the amount you'll be able to afford. When your downpayment is less than 20 percent, you may be subject to PMI payments, which add to the amount you pay out every month, but don't reduce the balance you owe. These can greatly affect the price of the home you can afford. Since purchasing a home and a mortgage often has additional costs, make sure you understand these before you choose a lender. Closing costs can vary greatly from lender to lender.
Finding a Realtor
Some people have no problem estimating what they can afford or are unsure whether they qualify for a loan, but they still need guidance when it comes to finding the best house. Choosing the right realtor can be one of the most important decisions you make. Realtors not only help you navigate through all the paperwork involved in home buying, they also help you find the best home for your needs at the best price.
If you've started the home buying process without doing any of the preliminaries, such as securing financing or even estimating how much home you can afford, many realtors can guide you through the process. They work with many different lenders and vendors involved in the process. Most realtors know the reputation of different lenders and can guide you to several who may be perfect for your situation. They also have a list of people who play an important role in the process, such as those who do inspections or estimates. They also know the individuals at the title company.
A good realtor knows the approximate cost of homes in your area and can help you get the best deal. They do all the negotiations for you and can show you price comparisons of recently sold homes. Real estate agents will also keep you informed of changes to a neighborhood or other factors that could affect the value of your home.
Before You Make an Offer, Ask for Help
If you know a contractor who you trust, or have a good friend who's knowledgeable about construction, a second opinion doesn't hurt. Many younger people ask parents to see the home before they make an offer or have a contractor inspect the home, looking for problems that may exist. While your lender will require a home inspection, septic and a termite inspection in many states, getting an opinion before you make an offer can save you time and money. If you don't know anyone, ask your realtor for the name of a contractor she trusts. This type of service normally comes with a cost, but it's well worth it.
Friday, November 28, 2014
Wednesday, November 26, 2014
5 Ways to Improve Your Credit Score
5 Ways to Improve Your Credit Score
In the housing boom that occurred during the early years of the 21st century, easy loans for those with a poor credit history weren’t uncommon, these days they are quite rare. If you want to buy a home in today’s market, lenders will check your credit carefully and rarely will they approve a loan for someone who has a poor credit score. Your credit history not only affects your ability to get loans and credit cards, but the interest rates that you pay on them as well. A poor credit score can even cause a raise in your insurance premiums and in some cases it can tip the balance one way or another when applying for certain jobs.
Fortunately, a less than perfect credit score is repairable, but it will take some time, discipline, and diligence on your part. When it comes to your credit score, some things make more of a difference than others and there are some things that you can do to help raise your credit score so that you can get a loan for that house you’ve been dreaming of.
1.Be Prompt When Paying Bills- Your history of bill payment makes up just around 35% of your total credit score. It includes payment of utility bills, auto loans, credit cards, and mortgages. Late payments made in recent history will impact your credit score the most so if you’ve had late payments in the past, be sure to avoid any new instances of this costly occurrence. One way to avoid this is to inquire with credit card companies and banks about email reminders about payment due dates.
2.Review Your Credit Report on A Regular Basis- Credit companies make mistakes too. Since these can severely damage your credit score, be sure to quickly identify and correct any mistakes that have been made.
3.Don’t Close Your Old Lines of Credit- It is commonly believed that closing old credit lines can improve your score. It may actually be of more benefit to keep these lines open because even if you have late payments in the past, a long credit history is to your benefit. This is particularly true if your have a large amount of available credit. Using older cards occasionally and paying them promptly can actually improve your score.
4.Open New Lines of Credit With Care- Considering that the higher your credit line, the better, many people think that opening new lines of credit is beneficial to their score. The exact opposite is true because having several recently opened lines of credit may negatively affect your score. New credit lines don’t clean the slate and fixing problems with established credit lines is always preferable to opening new ones.
5.Mix Your Credit Lines (carefully)- The mixture of different lines of credit can account for around 10% of your total credit score. For example, a mixture of loans, credit cards, and other types of credit can impact your credit score positively if you use them wisely and don’t overextend yourself.
While these things can help you to repair a bad credit score, the easiest way to avoid these problems is to prevent them. Do whatever you can to ensure that bills are paid in a timely manner and it will go a long way toward improving and maintaining a good credit score. Having a payment that is a few days late may not seem important at the time, but when it’s time to go to the bank for that home loan, it can make all the difference in the world.
In the housing boom that occurred during the early years of the 21st century, easy loans for those with a poor credit history weren’t uncommon, these days they are quite rare. If you want to buy a home in today’s market, lenders will check your credit carefully and rarely will they approve a loan for someone who has a poor credit score. Your credit history not only affects your ability to get loans and credit cards, but the interest rates that you pay on them as well. A poor credit score can even cause a raise in your insurance premiums and in some cases it can tip the balance one way or another when applying for certain jobs.
Fortunately, a less than perfect credit score is repairable, but it will take some time, discipline, and diligence on your part. When it comes to your credit score, some things make more of a difference than others and there are some things that you can do to help raise your credit score so that you can get a loan for that house you’ve been dreaming of.
1.Be Prompt When Paying Bills- Your history of bill payment makes up just around 35% of your total credit score. It includes payment of utility bills, auto loans, credit cards, and mortgages. Late payments made in recent history will impact your credit score the most so if you’ve had late payments in the past, be sure to avoid any new instances of this costly occurrence. One way to avoid this is to inquire with credit card companies and banks about email reminders about payment due dates.
2.Review Your Credit Report on A Regular Basis- Credit companies make mistakes too. Since these can severely damage your credit score, be sure to quickly identify and correct any mistakes that have been made.
3.Don’t Close Your Old Lines of Credit- It is commonly believed that closing old credit lines can improve your score. It may actually be of more benefit to keep these lines open because even if you have late payments in the past, a long credit history is to your benefit. This is particularly true if your have a large amount of available credit. Using older cards occasionally and paying them promptly can actually improve your score.
4.Open New Lines of Credit With Care- Considering that the higher your credit line, the better, many people think that opening new lines of credit is beneficial to their score. The exact opposite is true because having several recently opened lines of credit may negatively affect your score. New credit lines don’t clean the slate and fixing problems with established credit lines is always preferable to opening new ones.
5.Mix Your Credit Lines (carefully)- The mixture of different lines of credit can account for around 10% of your total credit score. For example, a mixture of loans, credit cards, and other types of credit can impact your credit score positively if you use them wisely and don’t overextend yourself.
While these things can help you to repair a bad credit score, the easiest way to avoid these problems is to prevent them. Do whatever you can to ensure that bills are paid in a timely manner and it will go a long way toward improving and maintaining a good credit score. Having a payment that is a few days late may not seem important at the time, but when it’s time to go to the bank for that home loan, it can make all the difference in the world.
Saturday, November 15, 2014
7 Reason to Buy a Home
7 Reasons to Buy a Home
Considering buying a home? Following are 7 practical reasons to do so, especially if you're currently renting, want to invest in something viable and more.
1. Purchasing a Home is an Investment
When you rent an apartment or a home, every time you pay the rent it’s money that you'll never see again for something you don't own; talk about throwing money away. Most people are surprised to discover that the money they shell out for rent ends up being about the same if not more than a monthly mortgage payment would be (you will need to add in maintenance costs). This reason alone makes buying a home a great idea from a financial standpoint. In addition, as your home's value increases, it becomes an even more worthwhile investment.
2. Low Interest rates
It's a great time to buy a home with the current low interest rates, rental rates going through the roof, home prices below their peaks, employment on the rise. Bottom line, if you're considering buying, now is the time to move forward.
3. Tax Benefits
When you own a home and make monthly mortgage payments, you'll benefit from tax deductions. For instance, you'll be able to deduct the interest from your home loan on federal and in most cases, State taxes. Property taxes also come into play can make a good annual deduction for you. The tax benefits of owning a home will add up over time.
4. Home Equity
Home equity is your share of the home's value. As you repay your mortgage home loan, your home equity increases and over time, more and more goes towards your loan balance, which increases your home equity interest. Basically, owning a home gives you the ability to build equity in the home, turning it into a financially savvy savings plan, especially if you hang onto it for the long term. With home equity, your home will be an important asset when used as collateral for a home equity loan should you need one.
5. Home Equity - Line of Credit
If you own a home and have good credit, you can also apply for a line of credit. A home equity line of credit involves a lender agreeing to lend a maximal amount inside of an agreed period, and the borrower's home is the collateral (similar to a second mortgage). Since a home is usually a person's most valuable asset, most homeowners only use their home equity credit lines for major purchases, including home improvements, medical bills and education. While home equity lines of credit present you with the flexibility to use it at any time (up to 10 years) for any kind of expense, this flexibility typically includes a variable interest rate.
6. Predictability
In contrast to rent, fixed mortgage payments don't go up over the years and in fact, housing costs, in many cases, have the potential of going down. Insurance costs and property taxes will increase, but you'll still be in a better position financially if you own vs. rent your home.
7. Freedom and Stability
When you own a home, it can become a creative expression of you and/or your family's personality and you'll benefit from your investment for as long as you own the home. You'll also experience more peace in your personal space. If you live in your community for several years, you and/or your family will have the opportunity to establish friendships and enjoy community activities.
Visit www.stonemountaingeorgiahomes.com
Considering buying a home? Following are 7 practical reasons to do so, especially if you're currently renting, want to invest in something viable and more.
1. Purchasing a Home is an Investment
When you rent an apartment or a home, every time you pay the rent it’s money that you'll never see again for something you don't own; talk about throwing money away. Most people are surprised to discover that the money they shell out for rent ends up being about the same if not more than a monthly mortgage payment would be (you will need to add in maintenance costs). This reason alone makes buying a home a great idea from a financial standpoint. In addition, as your home's value increases, it becomes an even more worthwhile investment.
2. Low Interest rates
It's a great time to buy a home with the current low interest rates, rental rates going through the roof, home prices below their peaks, employment on the rise. Bottom line, if you're considering buying, now is the time to move forward.
3. Tax Benefits
When you own a home and make monthly mortgage payments, you'll benefit from tax deductions. For instance, you'll be able to deduct the interest from your home loan on federal and in most cases, State taxes. Property taxes also come into play can make a good annual deduction for you. The tax benefits of owning a home will add up over time.
4. Home Equity
Home equity is your share of the home's value. As you repay your mortgage home loan, your home equity increases and over time, more and more goes towards your loan balance, which increases your home equity interest. Basically, owning a home gives you the ability to build equity in the home, turning it into a financially savvy savings plan, especially if you hang onto it for the long term. With home equity, your home will be an important asset when used as collateral for a home equity loan should you need one.
5. Home Equity - Line of Credit
If you own a home and have good credit, you can also apply for a line of credit. A home equity line of credit involves a lender agreeing to lend a maximal amount inside of an agreed period, and the borrower's home is the collateral (similar to a second mortgage). Since a home is usually a person's most valuable asset, most homeowners only use their home equity credit lines for major purchases, including home improvements, medical bills and education. While home equity lines of credit present you with the flexibility to use it at any time (up to 10 years) for any kind of expense, this flexibility typically includes a variable interest rate.
6. Predictability
In contrast to rent, fixed mortgage payments don't go up over the years and in fact, housing costs, in many cases, have the potential of going down. Insurance costs and property taxes will increase, but you'll still be in a better position financially if you own vs. rent your home.
7. Freedom and Stability
When you own a home, it can become a creative expression of you and/or your family's personality and you'll benefit from your investment for as long as you own the home. You'll also experience more peace in your personal space. If you live in your community for several years, you and/or your family will have the opportunity to establish friendships and enjoy community activities.
Visit www.stonemountaingeorgiahomes.com
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