first home http://www.wisebread.com/taxonomy/term/16824/all en-US Buying Your First Home: What to Do and When to Do It http://www.wisebread.com/buying-your-first-home-what-to-do-and-when-to-do-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/buying-your-first-home-what-to-do-and-when-to-do-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/7994384406_440fce4785_z_0.jpg" alt="family" title="family" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Buying your first home is a beautiful thing. Actually, scratch that. Moving in to your first home is the beautiful part. Most of the stuff that comes before that is demanding, difficult, and often downright stressful. After all, for most people, that home purchase is the most money they&rsquo;ll ever spend in one shot and the biggest loan they&rsquo;ll ever ask for. But before you run screaming for the closest rental property, there is some good news &mdash; much of the stress associated with home buying can be mitigated through preparation and organization. (See also: <a href="http://www.wisebread.com/9-costly-things-new-homeowners-dont-prepare-for">9 Costly Things New Homeowners Don't Prepare For</a>)</p> <p>Is a new home on your horizon? Here&rsquo;s what you should be doing before, during, and after the big purchase.</p> <h3>As Soon as You Start Thinking About Homeownership...</h3> <p>The desire to own a home often starts with the idea that you&rsquo;d like a yard, a better neighborhood, or just to move out of a rental you can&rsquo;t learn to love. That&rsquo;s all daydreaming though. What you really need to start thinking about is money. So whether you think you want to move this year, next year, or at some unspecified time down the road, now&rsquo;s the time to start thinking about the following.</p> <p><strong>1. Your Credit</strong></p> <p>It&rsquo;s possible to get a mortgage with poor credit and sometimes even with rather awful credit, but it isn&rsquo;t a good idea. Those who go this route will pay considerably more in interest, which can increase the final cost of your home by tens &mdash; or even hundreds &mdash; of thousands of dollars over the life of the loan. Plus, the worse your credit, the fewer options you&rsquo;ll have in terms of lenders, which will reduce your ability to shop around and negotiate the best deal. If you want to be a homeowner soon &ndash; or even someday - start working on good financial habits that&rsquo;ll improve your credit score now.</p> <p><strong>2. Your Down Payment</strong></p> <p>It&rsquo;s also possible to get into a new home with little or no down payment, but just like buying a home with a poor credit score, this one isn&rsquo;t a good idea either. In fact, the more you save, the more you&rsquo;ll...well, save.</p> <p>FHA loans require only 3% down &mdash; sometimes less, but most experts recommend 10 to 20% of the purchase price of the home (or more!). If you buy a $300,000 house with no down payment, you&rsquo;ll pay more than $213,000 in interest on a 30-year loan (assuming a 4% interest rate). Put 10% down ($30,000), and you&rsquo;ll cut that by more than $20,000. By paying upfront you&rsquo;ll pay a lot less, so make saving for a down payment a priority.</p> <p><strong>3. Decide If You&rsquo;re Ready</strong></p> <p>Most experts say that <a href="http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home">you shouldn&rsquo;t buy a home</a> unless you think you can hang on to it for at least five years. Having a longer time frame in mind can help reduce the risk that you&rsquo;ll sell at a loss when you do decide to move and will allow you to build some equity before having to spend on closing costs and other fees again. If you want to buy a house, think about where you want to live and work before you start looking. That way when you do buy, you&rsquo;ll be more likely to be able to stay put and reap the benefits of your purchase.</p> <h3>Up to Three Months Before You Start Shopping...</h3> <p>Before you start shopping for a house, you should do a few key things.</p> <p><strong>1. Shop Around</strong></p> <p>There is no shortage of mortgage lenders offering a range of rates, features, and services. So shop around to ensure you get the best possible mortgage at the best rate.</p> <p><strong>2. Get Prequalified</strong></p> <p>Many people start shopping for a home based on what they want. In reality, you need to focus on what you can afford. The last thing you need is to start looking at listings for homes out of your price range. Start by getting a pre-approval. That way, you can start browsing homes that could actually become yours.</p> <p><strong>3. Narrow Down Neighborhoods</strong></p> <p>Where you live has a huge impact on how you live, so think about what you want out of the neighborhood you live in. Maybe it&rsquo;s proximity to work, certain amenities, or a great walking path. Whatever it is, find the neighborhoods that fit your criteria and throw out the rest.</p> <p><strong>4. Think About the Home Itself</strong></p> <p>Another thing that can save time and frustration when it comes time to view homes for sale is to decide on what features are important to you. Want a garden in the backyard? A south-facing yard may be important. Do you plan on holding big family dinners? In that case, the kitchen and dining room may be key factors in your decision. Whatever those deal breakers are for you, decide what they are before you start house hunting. That way, you&rsquo;ll be able to rule out the houses that aren&rsquo;t a good fit and focus on the ones that have real potential.</p> <h3>Up to One Month Before...</h3> <p>Start getting ready with these action items.</p> <p><strong>1. Seek Out Professionals</strong></p> <p>If you plan on <a href="http://www.wisebread.com/how-to-choose-a-real-estate-agent">using a real estate agent</a> (and I know that people have very strong feelings on this one way or the other!) start seeking referrals among your friends and coworkers to find someone you&rsquo;re comfortable working with. The same goes for other professionals you may use, such as a lawyer and even an inspection company.</p> <p><strong>2. Mobilize Your Money</strong></p> <p>When you buy a home, you need to be able to mobilize money fairly quickly when it comes time to make an offer. Besides your down payment, you will need a deposit (generally a few thousand dollars) and money for closing costs (about 2-3% of the cost of the home), as well as money for an inspection. Plan for these expenses before you start shopping and move them to an account where they&rsquo;ll be accessible fairly quickly.</p> <h3>While You&rsquo;re Shopping...</h3> <p>Looking at houses can be stressful. Keep calm, and follow this advice.</p> <p><strong>1. Ask Questions</strong></p> <p>Not sure if that crack in the ceiling is bad news or not? Wondering how possession works? Curious about the neighborhood? Ask, ask, ask. A house is a big purchase, so if you have questions, find someone who can answer them. That might be a realtor, an inspector a lawyer, or even a friend or family member. Whoever you ask, take the time to get answers that satisfy you. The last thing you want is to find out the answer isn&rsquo;t what you&rsquo;d hoped when it&rsquo;s already too late.</p> <p><strong>2. Take Notes</strong></p> <p>When you&rsquo;re viewing a lot of properties, it can be easy to get them mixed up. As you&rsquo;re viewing, take notes about the homes you see. You can also use this to list out what you like and don&rsquo;t like, and to write down any concerns or questions you want to address.</p> <p><strong>3. Consider Going Back</strong></p> <p>If you think you&rsquo;ve found the winning home, consider going back for a second look to make sure before making an offer. It can&rsquo;t hurt to be really sure this is the house you want to spend your money on.</p> <p><strong>4. Get an Inspection</strong></p> <p>Inspections cost money, but a good inspector should be able to uncover all kinds of things that homebuyers can miss. Unknown problems in a home can lead buyers to pay too much for it based on its condition or, in a worst-case scenario, to buy a lemon that&rsquo;s more trouble than it&rsquo;s worth. If you put an offer on a house, make an inspection a condition of purchase.</p> <p><strong>5. Be Reasonable</strong></p> <p>When you make an offer, there&rsquo;s nothing wrong with trying to get a better deal (and you should!). Just don&rsquo;t get carried away. Why? Because there is a seller in this agreement too. The idea is to get a fair price on a home you like. Unless there&rsquo;s something seriously wrong with the seller&rsquo;s judgment, that&rsquo;s all he or she&rsquo;s going to accept. If you try to run them to rock bottom, you might end up with no deal at all.</p> <h3>After the Deal Closes...</h3> <p>Congratulations! But your financial journey isn't over yet. Here are some things to keep in mind.</p> <p><strong>1. Set a Budget</strong></p> <p>A home&rsquo;s expenses don&rsquo;t start and end with the purchase price. Once you&rsquo;re responsible for a home, anything can happen; the roof can leak, the furnace can break, or a baseball could fly through the picture window. Those things cost money. Once you buy your house, make a budget that&rsquo;ll allow you to make your mortgage payments and save for contingencies.</p> <p><strong>2. Pay Down That Mortgage</strong></p> <p><a href="http://www.wisebread.com/6-great-reasons-for-paying-off-the-mortgage-on-your-home">Making extra payments on your mortgage</a> is the best way to reduce how much you end up paying for your home. If you get a raise, a bonus, or a big, fat tax return, consider funneling it into your loan. The faster you pay it off the more you&rsquo;ll save, and the sooner you can start enjoying the freedom of being debt-free.</p> <p><strong>3. Forget About the Market</strong></p> <p>Once you move in, enjoy your home whether the market goes up, down, or sideways. A house can be an investment, but as long as you plan on living in it, what the market does really doesn&rsquo;t matter.</p> <p>Buying a house isn&rsquo;t easy, but it doesn&rsquo;t have to be hard either. Stop the stress by getting informed and being prepared and organized. Once you turn the key in your new home, the rest will be smooth sailing.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tara-struyk">Tara Struyk</a> of <a href="http://www.wisebread.com/buying-your-first-home-what-to-do-and-when-to-do-it">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-the-right-mortgage-loan-15-or-30-years">Choosing the Right Mortgage Loan: 15 or 30 Years?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-reduce-mortgage-closing-costs">8 Ways to Reduce Mortgage Closing Costs</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/low-interest-rates-do-not-make-homes-affordable">Low Interest Rates Do Not Make Homes Affordable</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/buying-a-home-without-a-20-down-payment">Buying a Home Without the Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home">Quiz: Am I Really Ready to Buy a Home?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a home first home first time home buyer mortgage Tue, 02 Apr 2013 09:36:40 +0000 Tara Struyk 969717 at http://www.wisebread.com Quiz: Am I Really Ready to Buy a Home? http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/quiz-am-i-really-ready-to-buy-a-home" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6037999486_531d422d5d_z.jpg" alt="couple on a car" title="couple on a car" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Home prices are on the uptick for the first time in several years, which means that you may have a limited window of opportunity to become a homeowner before prices shoot through the proverbial roof again.</p> <p>I don&rsquo;t have to tell you that buying a home is serious business, a major milestone, a huge responsibility, and probably the largest purchase you&rsquo;ll ever make, but are you asking yourself the right questions to make sure that you&rsquo;re prepared for all the amazing and not-so-amazing aspects of home ownership? (See also: <a href="http://www.wisebread.com/9-costly-things-new-homeowners-dont-prepare-for">9 Costly Things New Homeowners Don't Prepare For</a>)</p> <p>To help you decide whether you&rsquo;re ready or not, I&rsquo;ve designed this quick quiz. Answers are below. No cheating!</p> <p><strong>1. When contemplating the decision to buy a home, what&rsquo;s the first thing you should do?</strong></p> <ol type="A"> <li>Contact a loan officer</li> <li>Take a good look at your finances</li> <li>Call a real estate agent</li> <li>Attend a few open houses</li> </ol> <p><strong>2. When you start looking for the perfect home, what should you have?</strong></p> <ol type="A"> <li>Cash for a down payment</li> <li>A good credit score</li> <li>A steady source of income</li> <li>All of the above</li> </ol> <p><strong>3. What&rsquo;s the best way to calculate the price range in which you should be shopping for a home?</strong></p> <ol type="A"> <li>Your anticipated monthly payment is 30% of your income, to include your mortgage, taxes, and insurance fees</li> <li>Add up all your assets, and work with 50% of the sum</li> <li>Multiply your current rent by three</li> <li>Multiply your annual salary by 30, then divide it by two</li> </ol> <p><strong>4. How much cash should you save for a down payment?</strong></p> <ol type="A"> <li>7% of the purchase price</li> <li>10% of the purchase price</li> <li>17% of the purchase price</li> <li>20% of the purchase price</li> </ol> <p><strong>5. To secure the best mortgage rate, what&rsquo;s the minimum FICO credit score you must have?</strong></p> <ol type="A"> <li>560</li> <li>660</li> <li>760</li> <li>860</li> </ol> <p><strong>6. How much money should you set aside for closing costs?</strong></p> <ol type="A"> <li>1% to 2% of the purchase price</li> <li>3% to 6% of the purchase price</li> <li>7% to 9% of the purchase price</li> <li>10% to 12% of the purchase price</li> </ol> <p><strong>7. If you don&rsquo;t have the cash for closing costs, you should put your dream of owning a home on hold.</strong></p> <ol type="A"> <li>True</li> <li>False</li> </ol> <p><strong>8. The bank has approved you for a loan that exceeds the budget you set for yourself by $50,000. You should:</strong></p> <ol type="A"> <li>Accept it. Now you can get a house with a pool.</li> <li>Politely decline and tell the loan officer where to stick it.</li> <li>Use the extra $50,000 to buy a new car.</li> <li>Reexamine your budget to see if you can afford it.</li> </ol> <p><strong>&nbsp;9. How long should you plan to live in your new home for it to make good financial sense to buy?</strong></p> <ol type="A"> <li>3 years</li> <li>5 years</li> <li>7 years</li> <li>10 years</li> </ol> <h2>ANSWERS</h2> <h3>1. B</h3> <p>Before you can start the home-buying process, you need to examine your budget so you know where you&rsquo;re at with your finances and to find out how much you can afford to spend on a home. Using your existing budget, it&rsquo;s not a bad idea to create an anticipatory budget too, which should include your monthly mortgage payment, insurance, property taxes, and other <a href="http://www.wisebread.com/what-it-really-costs-to-own-a-home">associated costs of home ownership</a>. This will help you determine if your budget can handle these expenses.</p> <h3>2. D</h3> <p>In this economy, cash for a down payment is important to a lender &mdash; it lets them know you&rsquo;re a serious buyer and that you&rsquo;re responsible &mdash; and a good credit score will help you lock in a low interest rate. Of course, to save for a down payment and establish a good credit score, you&rsquo;ll need a reliable, steady source of income in the form of a full-time job.</p> <h3>3. A</h3> <p>Financial experts suggest that the percentage of your monthly income that you should use to establish a budget for home buying should be from 25% to 33%, which makes 30% a safe compromise.</p> <h3>4. D</h3> <p>If you don&rsquo;t want to pay for private mortgage insurance, 20% of the purchase price is the sweet spot that you should aim for when saving for your down payment. Anything less will require you to purchase private mortgage insurance so the lender is protected from default on the loan. However, it doesn&rsquo;t hurt to save even more than 20% to put toward the down payment so you can ensure that you get the lowest interest rate possible.</p> <h3>5. C</h3> <p>A FICO score of 760 or higher will help you lock in the best mortgage rates. If your <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score">score is lower than 760</a>, you&rsquo;ll still be able to purchase a home, but you&rsquo;ll pay for it in the long run with a higher mortgage rate.</p> <h3>6. B</h3> <p>Between 3% and 6% of the purchase price of the home is the ideal margin of savings you should have for closing costs. These costs usually consist of loan origination fees, title insurance, attorneys&rsquo; fees, property taxes, transfer taxes, and other fees.</p> <h3>7. B</h3> <p>You don&rsquo;t necessarily have to give up your dream of owning a home if you&rsquo;re short on the closing costs. While it&rsquo;s ideal to have that cash on hand to avoid a high monthly payment because you had to finance the closing costs, you can also ask the seller to cover closing costs, especially if the place is a fixer-upper.</p> <h3>8. D</h3> <p>Remember when the government bailed out the banks a few years ago? That was largely due to large loans given to homeowners who couldn't afford them, resulting in the inability of the homeowners to pay them. To avoid the trap if the bank approves you for a loan more than you think you can afford, re-crunch your numbers to see what makes sense. Just because more money is available doesn&rsquo;t mean you have to take it &mdash; because eventually you will have to pay it back.</p> <h3>9. B</h3> <p>It takes about five years to build up equity in a home, the amount of which increases as you make payments toward the mortgage loan. If you don&rsquo;t plan to stay in your new home for at least half a decade, <a href="http://www.wisebread.com/when-you-should-and-shouldnt-rent">it may not be a good decision to buy</a>.</p> <p>Buying a home is a big decision and one that will change your life &mdash; most of the time for the better &mdash; but it&rsquo;s important to ensure that you&rsquo;re financially secure before embarking on this milestone. While home ownership comes with plenty of perks, it also comes with lots of problems &mdash; problems that you have to fix, and fixing them will usually cost money. Use this quiz as a guideline to help you make the initial decision on whether or not to start the home-buying process, but ultimately it&rsquo;s your own common sense that will dictate if you&rsquo;re ready to take the plunge yet.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-it-really-costs-to-own-a-home">What It Really Costs to Own a Home</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-evaluate-a-neighborhood-before-you-buy">How to Evaluate a Neighborhood Before You Buy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/buying-your-first-home-what-to-do-and-when-to-do-it">Buying Your First Home: What to Do and When to Do It</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/buy-a-home-you-can-afford-with-the-mortgage-suitcase-trick">Buy a Home You Can Afford With the Mortgage Suitcase Trick</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-shouldn-t-buy-a-home-if">You Shouldn’t Buy a Home If…</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Real Estate and Housing buying a house down payment first home first time home buyer Tue, 20 Nov 2012 10:24:32 +0000 Mikey Rox 955350 at http://www.wisebread.com