The girl: Katie
Age: 24
Job: government contractor
Where she calls home: the Midwest
The place she wants: $127,000
Her sitch: Katie wants to buy a home, and she has her eye on one in particular: a foreclosed two-bedroom condo in a neighborhood she describes as "absolutely perfect."
Asking price: $127,000.
"Eventually I'd like to buy a townhome," she says, "but I see this as a great starting point".
Her finances: Katie makes about $38,000 a year doing government contract work, but her job isn't permanent and she has no health benefits -- she's still on her parents' insurance for now. She has about $40,000 in student loans, and sends $475 a month toward the balance. She also has about $20,000 in cash, and her parents would likely help her out with a down payment, if necessary. She rents an apartment for about $650 a month, not including utilities, and she's saving $700 a month toward an eventual down payment.
The expert's take: It might be a good time for Katie to take the home ownership plunge, says Boston financial planner Cheryl Costa. "She can probably more than afford this home," Costa says. But there are a few things she should keep in mind before plunking down her hard-earned savings. For one thing, Katie may not meet certain bank requirements. When you're purchasing a home, banks like to see that all of your home-related expenses (principal, interest, taxes and insurance) don't exceed 28 percent of your gross monthly income. And they typically require that all of your long-term debts (including the house) don't exceed 36 percent either.
If Katie picks up a 30-year mortgage for $127,000 at 5 percent, she'll owe $682 a month. Assuming about $150 a month for property taxes and homeowner's insurance, the house would cost less than $887, or 28 percent of her monthly pay. If she puts down a 10 percent down payment (or more), she'll have even more breathing room. The problem is her student loans: The additional $475 a month puts Katie's total debt over the 36 percent that some banks require.
How She Can Get in the Door: Get prequalified. Many banks buy into the 36 percent number, but not all. "Sometimes there's a lot of leeway on that," Costa says. But Katie won't know either way until she picks a bank and goes through prequalification. The bank will do a detailed analysis (including a credit check) and tell her how much she's approved to borrow -- or if she's approved at all. "You'll find out in advance whether they think the student loan thing is a deal-breaker," Costa says.
Extend her student loan terms. Katie's student loans are currently on a 10-year term, but if she extends them to 25 years, her monthly payments drop to $288 a month -- which would probably get her in under the 36 percent mark. If prequalification reveals that she needs to do that, it's a smart move. Then -- and here's the secret -- she can keep paying it off at the 10-year rate to nix the debt sooner. (So long as she can swing it.)
Put down as much as possible. "Nowadays, banks like you to have at least 10 percent and even 20 percent for a down payment," Costa says. Twenty percent for this condo is $25,400, which is more than Katie has in the bank, but if her parents can help her make up the difference, she should take them up on it. A down payment of that size could keep her from having to pay PMI, or private mortgage insurance.
But don't put down everything. Katie has $20,000 in savings, but that doesn't mean she should clean out her bank account. Home ownership comes with surprises, and it's wise to have some cash on hand, just in case. "They could raise condo fees," Costa says. "Or any number of unexpected things could happen that she might need some padding for." Consider a new gig. Katie's job now is contract work, meaning she has no guarantee that she'll still be employed when the contract ends. "If she were to lose her job, she's kind of screwed," Costa says. "If she really senses that her job is uncertain, I'd encourage her to be looking for a new job before she commits herself to a mortgage that she may or may not be able to afford."
Wednesday, April 28, 2010
Wednesday, March 3, 2010
I want to buy a home and dont know where to start?!
Here is a simple list of key things that you need to do in order to make the process of buying a new home simple and easy. The process can be complicated, but with a little guidence the process can be fun and exciting. Read the below for a step-by-step process that will guide you through the process and make everything much simpliar.
1. Find a mortgage professional who you trust. Provide your financial information and get pre-qualified for a home purchase. A good mortgage person will help you determine not only what you can afford (or tell you what price range to search to stay within a specific monthly budget), but they will also help you ensure that you get the best interest rates. They may make recommendations on how you could easily lower your debt to income ratio or raise your credit score so that you get the best mortgage rates available.
2. Decide on what you want in your perfect home. Besides the obvious questions like # of bedrooms, consider some of these questions as you determine the right home for you: How far away do you want to be from work or family? How long do you plan to live in your next home?
3. Find a Realtor that you feel comfortable with and that you can trust. Work with them on your specific wants/needs. Your agent will provide advice throughout the process as well as send you home choices to view and tour properties with you. They will also assist you with negotiations, inspections, and attend closing with you. Don't ever pay a Realtor to represent you as a buyer - the sellers pay the real estate commission for the transaction.
4. Begin your home search. Start on-line with the help of your Realtor. Then view the homes that interest you. Once you find the right home, your Realtor will provide you with comparable sales data for that neighborhood and help you prepare your offer. Your agent will also help you through negotiations.
5. Once you are under contract to purchase your home, your Realtor will assist you with home inspections, selection of a home warranty company, and may help you with utilities, moving companies, and home owner insurance.
6. Your agent should be there with you throughout the entire transaction to help make sure that your move goes smoothly. After you complete and "close" the transaction you will receive your keys to your new home.
Of course there are other minor things that go on during the process and every situation has a unique circumstance, though with the right consultanting and the right realtor you will be please with your new home and a set of NEW KEYS!
1. Find a mortgage professional who you trust. Provide your financial information and get pre-qualified for a home purchase. A good mortgage person will help you determine not only what you can afford (or tell you what price range to search to stay within a specific monthly budget), but they will also help you ensure that you get the best interest rates. They may make recommendations on how you could easily lower your debt to income ratio or raise your credit score so that you get the best mortgage rates available.
2. Decide on what you want in your perfect home. Besides the obvious questions like # of bedrooms, consider some of these questions as you determine the right home for you: How far away do you want to be from work or family? How long do you plan to live in your next home?
3. Find a Realtor that you feel comfortable with and that you can trust. Work with them on your specific wants/needs. Your agent will provide advice throughout the process as well as send you home choices to view and tour properties with you. They will also assist you with negotiations, inspections, and attend closing with you. Don't ever pay a Realtor to represent you as a buyer - the sellers pay the real estate commission for the transaction.
4. Begin your home search. Start on-line with the help of your Realtor. Then view the homes that interest you. Once you find the right home, your Realtor will provide you with comparable sales data for that neighborhood and help you prepare your offer. Your agent will also help you through negotiations.
5. Once you are under contract to purchase your home, your Realtor will assist you with home inspections, selection of a home warranty company, and may help you with utilities, moving companies, and home owner insurance.
6. Your agent should be there with you throughout the entire transaction to help make sure that your move goes smoothly. After you complete and "close" the transaction you will receive your keys to your new home.
Of course there are other minor things that go on during the process and every situation has a unique circumstance, though with the right consultanting and the right realtor you will be please with your new home and a set of NEW KEYS!
Friday, February 26, 2010
MONEY 101 FOR TEENS
CONSIDER THESE WAYS TO TEACH THEM FINANCIAL MANAGEMENT
1. Model good money management. If you're mired in credit card, debt, your teen will notice.
2. Encourage your teen to get a job. This will provide disposable income and an opportunity to learn about the value of time and hard work
3. Show your teen how to bargain-hunt. You can often find same items at target, or simply checking internet sites like FROOGLE.com or other cost-comparisons sites
4. Require your teen to contribute to big purchases, such as car insurance
5. Avoid credit cards at least until your teen has demonstrated a high level of responsibillity. Plastic tends to add a sense of unreality about money.
6. Manage those cellphones provide a unique opportunity to teach your child about-obeying limits and the high costs of exceeding them.
7. Open an IRA for your child and contribute a percentage of each paycheck by offering to match the contributions
Just some ideas to get our teens in the right mind set about money. Who knows how much the government is going to be able to support them when they become our age!
CONSIDER THESE WAYS TO TEACH THEM FINANCIAL MANAGEMENT
1. Model good money management. If you're mired in credit card, debt, your teen will notice.
2. Encourage your teen to get a job. This will provide disposable income and an opportunity to learn about the value of time and hard work
3. Show your teen how to bargain-hunt. You can often find same items at target, or simply checking internet sites like FROOGLE.com or other cost-comparisons sites
4. Require your teen to contribute to big purchases, such as car insurance
5. Avoid credit cards at least until your teen has demonstrated a high level of responsibillity. Plastic tends to add a sense of unreality about money.
6. Manage those cellphones provide a unique opportunity to teach your child about-obeying limits and the high costs of exceeding them.
7. Open an IRA for your child and contribute a percentage of each paycheck by offering to match the contributions
Just some ideas to get our teens in the right mind set about money. Who knows how much the government is going to be able to support them when they become our age!
Friday, December 11, 2009
Interest Rates...and NO PAYMENTS FOR A YEAR
Have you ever seen interest rates at low as 4%! I have NOT!
With the market the way it is, the interest rates as low as 4%-and the government giving away enough money to cover mortage payments for the next 6 months OR MORE...ask yourself one question:
Why would I NOT buy today?
Think about it. Did you hear what I said, "the government is giving you enough money to cover the first 6 months of payments OR MORE". I know that sounds wrong and not what they are saying, but let me explain.
If you purchase a house up to $250,000; the total payment (principal and interest) will be approx. $1305 a month. * The government is giving $8000 CASH, not tax credit, to all new home buyers- or people who have not owned a home in the past 3 years. $1305 a month times 6 months is only $7800.. still less than what they are giving you- simply for purchasing a house and increasing the economy.
Of course if you purchase a house for $80,000; with the current interest (4.75% for 30 years) your monthly payment (principal and interest) is $420. With $8000 that is enough money to cover payments for OVER 18 MONTHS!
I might as well be saying.. NO PAYMENTS FOR THE NEXT YEAR!
*(payments calculated on current interest rates of 4.75% for 30 years. Payments do not include taxes, which vary from city to city)
With the market the way it is, the interest rates as low as 4%-and the government giving away enough money to cover mortage payments for the next 6 months OR MORE...ask yourself one question:
Why would I NOT buy today?
Think about it. Did you hear what I said, "the government is giving you enough money to cover the first 6 months of payments OR MORE". I know that sounds wrong and not what they are saying, but let me explain.
If you purchase a house up to $250,000; the total payment (principal and interest) will be approx. $1305 a month. * The government is giving $8000 CASH, not tax credit, to all new home buyers- or people who have not owned a home in the past 3 years. $1305 a month times 6 months is only $7800.. still less than what they are giving you- simply for purchasing a house and increasing the economy.
Of course if you purchase a house for $80,000; with the current interest (4.75% for 30 years) your monthly payment (principal and interest) is $420. With $8000 that is enough money to cover payments for OVER 18 MONTHS!
I might as well be saying.. NO PAYMENTS FOR THE NEXT YEAR!
*(payments calculated on current interest rates of 4.75% for 30 years. Payments do not include taxes, which vary from city to city)
Monday, December 7, 2009
Dallas-Fort Worth preowned home sales skyrocket as homebuyers take advatnage of tax credit
The North Texas housing market came roaring back in NOVEMBER.
Pre-owned home sales rose by 31% last month from a year ago -- one of the biggest such increases on record.
And Median home sales price were up 5%.
The big jump in residential transactions came as large numbers of homebuyers rushed to take advantage of the federal home buying tax credit, which has been extended.
Real Estate agents in October sol almost 5, 500 preowned home through their MLS, according to statistices relesased MOnday by the NOrth Texasd Residential Information Systems and the Real Estate Center at TX A&M University.
November's robust sales activity is the latest in a string of recent indicatiors, which show the atht North Texas home mareket has bottomed out and is turning the corner.
November was the second consecutive month that Dallas-Fort Worth area home sales rose from the previous year -- ending more than a year of consecutive declines.
Sales in North Dallas neighborhoods rose 48%.
By Steve Brown...Dallas Morning NEWS
Pre-owned home sales rose by 31% last month from a year ago -- one of the biggest such increases on record.
And Median home sales price were up 5%.
The big jump in residential transactions came as large numbers of homebuyers rushed to take advantage of the federal home buying tax credit, which has been extended.
Real Estate agents in October sol almost 5, 500 preowned home through their MLS, according to statistices relesased MOnday by the NOrth Texasd Residential Information Systems and the Real Estate Center at TX A&M University.
November's robust sales activity is the latest in a string of recent indicatiors, which show the atht North Texas home mareket has bottomed out and is turning the corner.
November was the second consecutive month that Dallas-Fort Worth area home sales rose from the previous year -- ending more than a year of consecutive declines.
Sales in North Dallas neighborhoods rose 48%.
By Steve Brown...Dallas Morning NEWS
Monday, November 9, 2009
ITS OFFICIAL
Check out this website for all the UP to DATE Real Estate News...
Today we celebrate.. another great feat for not only our President, our country, but for the Real Estate Market. We will survive this market and the smart ones WILL take advantage of this FREE money!
Click the link below for all the details, but in summary all you need to know is...
CALL ME! lol
http://newsletter.rismedia.com/newsletters/preview/2032/59729/1038001
Today we celebrate.. another great feat for not only our President, our country, but for the Real Estate Market. We will survive this market and the smart ones WILL take advantage of this FREE money!
Click the link below for all the details, but in summary all you need to know is...
CALL ME! lol
http://newsletter.rismedia.com/newsletters/preview/2032/59729/1038001
Thursday, November 5, 2009
Senate votes to renew tax credit for first-time home buyers
The Senate voted Wednesday to renew the government's $8,000 tax credit for first-time home buyers through the first six months of next year as part of a broader bill designed to extend unemployment benefits.
For the first time, the tax credit program would also enable many homeowners who buy a new primary residence to receive a $6,500 refund.
The bill, which passed 98 to 0, should reach the House floor by Thursday, House Majority Leader Steny H. Hoyer (D-Md.) said in a statement. His office said the legislation would then go to the White House for the president's signature.
The Obama administration has previously supported extending the $8,000 tax credit, and without congressional action the program would end Nov. 30.
Under the bill, first-time home buyers would receive the $8,000 tax credit if they sign a contract by April 30 and close on it by June 30. The plan would also make those who buy a new primary residence eligible for the $6,500 credit if they owned their current home for at least five consecutive years in the previous eight years.
In the Senate's measure, taxpayers would be able to claim the credit on their 2009 income tax return for purchases made in 2010.
The Senate voted Wednesday to renew the government's $8,000 tax credit for first-time home buyers through the first six months of next year as part of a broader bill designed to extend unemployment benefits.
For the first time, the tax credit program would also enable many homeowners who buy a new primary residence to receive a $6,500 refund.
The bill, which passed 98 to 0, should reach the House floor by Thursday, House Majority Leader Steny H. Hoyer (D-Md.) said in a statement. His office said the legislation would then go to the White House for the president's signature.
The Obama administration has previously supported extending the $8,000 tax credit, and without congressional action the program would end Nov. 30.
Under the bill, first-time home buyers would receive the $8,000 tax credit if they sign a contract by April 30 and close on it by June 30. The plan would also make those who buy a new primary residence eligible for the $6,500 credit if they owned their current home for at least five consecutive years in the previous eight years.
In the Senate's measure, taxpayers would be able to claim the credit on their 2009 income tax return for purchases made in 2010.
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