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? ˇ Shop around for interest rates. ˇ Start with the bank that currently holds your mortgage. It may give you a good deal just to keep your business. ˇ 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. ˇ 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? ˇ You can use your investments or securities as collateral for buying a home. ˇ 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. ˇ Also, check out these government agencies: ˇ Freddie Mac www.freddiemac.com. ˇ Fannie Mae www.fanniemae.com. ˇ www.hud.gov/fha.

16) OTHER MORTGAGE OPTIONS: ˇ Bi-weekly mortgages, ˇ Customized mortgages ? usually offered by local banks, ˇ 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.

In The News:

pen paper and inkwell


cat break through


Eight Ways To Sink Yourself Financially

1. Don't focus on your finances.The reason most people get... Read More

Healthy Eating On A Budget

It is possible to eat a healthy, balanced diet without... Read More

10 Tips To Save Money When Dining Out

Here are some tips that can help you save money... Read More

Money Matters - Really!

One of the biggest challenges facing black RELATIONSHIPS today are... Read More

How To Free-Up 10% to 15% of Your Income

Would you be interested in freeing up 10% to 15%... Read More

Personal Finance ? Why You Should Compare, not Despair

Sorting out your personal finances can be a tricky and... Read More

How to Balance Your Checkbook ? Get a Calculator and Pencil and You are Ready To Go!

Despite how easy it is to balance a checkbook, very... Read More

Budgeting Tips to Save Real Money

Sticking to a budget can be difficult, but with so... Read More

Reduce College Debt with Scholarships

Six Scholarship judges were sitting around an oval table. Forms... Read More

Tips To Save Money At The Supermarket

Are you interested in saving money off your grocery bills?... Read More

The Origins of Check Writing

People haven't always written checks to buy goods and services.... Read More

UK Parents Inactivity Harming Their Children?s Future University and Mortgage Savings

The British government at the beginning of this year officially... Read More

The Wright Place - Finances

Women have a love/hate relationship with money. Most of us... Read More

Succession Planning

Have you ever thought about what you are going to... Read More

One Income Source Is Not Enough!

My personal opinion is that in today's new economy, it... Read More

Want Your Savings to Earn a Higher Rate of Return? Try Internet Banking

Doesn't it seem like the only impressive numbers we've seen... Read More

Estate Planning Basics

You have probably accomplished a great deal with your life.... Read More

Grocery Savings - Your Kitchen is a Goldmine!

Your food budget is the most flexible area of your... Read More

Make or Break Your Retirement!

The Prudential has dubbed those who refuse to leave home... Read More

Debt Management ? Watch Out for Bank Fees!

During the last twenty years, banks have offered a number... Read More

Risky Business: You May Not be as Daring as You Think

I thought I was through with exams when I finished... Read More

Understanding Your Finances Can Give You Power And Choice

What is finance and what do you need to know?... Read More

Banks Are More Than Just A Place To Park Your Money

If you've been to a shopping mall lately, you've probably... Read More

Financial Fitness - Are You Exercising the Right Muscles to become Financially Fit?

Are your financial muscles well toned and healthy or flabby... Read More

UK Graduates Looking Short-Term At Their Long-Term Financial Responsibilities

With almost two thirds of university entrants from England and... Read More

How to Save for A Down Payment

Saving for a Down Payment is hard work, so it's... Read More

How Electronic Checks Work ? Will Paper Checks Eventually Go Away?

Traditional checks probably won't disappear anytime soon, but processing checks... Read More

Know Thy Finances

The first step to financial success lies in knowing your... Read More

Accessing Funds You Never Knew You Had- Household Utilities and Mortgage Expense Reduction Plan

For most of us the process of getting out of... Read More

Vacations Made Easy: Buying a Florida Investment Property

Vacations Made Easy: Buying a Florida Investment PropertyA relaxing beach... Read More

Planning Ahead with Your Finances

If you, like most people, have not seriously considered what... Read More

Do You Know What Tomorrow Will Bring?

I've been sharing the following idea with people for a... Read More

Top 10+ Ways to Jumpstart your New Year?s Finances!

Of course, these don't have to be done in any... Read More