5 Essential Home-Buying Considerations

5 Essential Home-Buying Considerations

RECBL - Real Estate News

(TNS)-Buying a house is a life-changing process that requires lots of upfront financial planning.

When looking for a home, keep certain factors in mind, including your financial situation, types of available loans, your credit score, the price of the house and your down payment so you can navigate the process smoothly.

Your Financial Situation
Before you buy a house, make sure that your monthly budget can handle such a large expense.

Unless you’re one of the few people who can pay cash for a home, you’ll likely be paying it off for 15 or 30 years, depending on the length of your loan.

In addition to the mortgage payment, you’ll want to factor in expenses like property taxes, homeowners insurance and routine maintenance.

Types of Mortgages
When buying a home, you have a few options for the type of loan you want to use. Two of the most common mortgage types are fixed-rate and adjustable-rate mortgages.

The interest rate on a fixed-rate mortgage stays the same over the life of the loan, with payments divided up into equal amounts that you pay on a monthly basis. The longer the loan term, the less you have to pay each month; however, you’ll likely pay more in interest than you would with a shorter-term loan.

An adjustable-rate mortgage, or ARM, has a fixed interest rate for an initial period, followed by a period when the lender may periodically adjust the interest rate. For example, a 5/1 ARM has an introductory rate of five years. After that five-year period, the interest rate can change annually. With an ARM, you need to consider how much your monthly payment could increase and your ability to pay if it does go up.

Your Credit Score
You also need to review your credit score before buying a house. Your credit score helps creditors determine your creditworthiness. Borrowers with credit scores of 740 or higher generally qualify for the best mortgage deals.

It’s still possible to buy a house if you have bad credit. You likely will have to accept a higher interest rate on your mortgage, which could cost you hundreds of dollars extra per month.

If your credit score drops too low, though, you might not qualify for a mortgage at all. Consider improving your credit score first before trying to buy a house.

The Price of the Home
The higher the price of the house you want to buy, the more you can expect to pay on a monthly basis. When looking at houses, consider your budget and how much you can afford to spend.

Remember to consider your needs, too. Do you have a new addition to the family and need the room? Have your kids moved out and you want a smaller home?

Also, take a look at the price range of the houses available in the area where you want to buy. Compare the prices you find to your budget and determine what home you can afford.

The Down Payment
A large down payment represents one way to reduce the monthly cost of your mortgage. As a matter of fact, a down payment of 20 percent gives you access to better interest rates and prevents you from having to pay private mortgage insurance. So, in addition to lowering the amount you owe initially, a down payment also can get you a lower interest rate, making a house more affordable. There are also mortgages that require no down payment or a small one.

(C)2017 Bankrate.com
Distributed by Tribune Content Agency, LLC




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The ABCs of FICO

The ABCs of FICO

RECBL - Real Estate News

Most people don’t think too much about their FICO scores until they want to get a loan. No matter the type of loan you want-mortgage, new car-the higher your FICO score, the more likely you’ll be approved.

Understanding the five factors that make up your scores can be the first step toward improving them. Financial experts at the Motley Fool break down where your scores come from and suggest a few ways to improve them.

Know Where Your FICO Score Comes From

Payment History - Thirty-five percent of your score is determined by whether you pay your bills on time every month.

Credit Utilization Ratio - Thirty percent reflects your credit utilization ratio-the percentage of available credit you’re using. Using less than 30 percent of your available credit can help your credit score.

Length of Credit History - Fifteen percent reflects the length of your credit history. Paying bills consistently over time can definitely work in your favor.

New Accounts - Ten percent of your score is based on the number of accounts you open. Opening too many new accounts simultaneously suggests you’re highly reliant on borrowing to keep up with your expenses.

Credit Mix - Ten percent reflects the types of accounts you have. Credit bureaus make a distinction between your credit card accounts versus student loans, car loans, and mortgages.

Three Ways to Improve Your FICO

Pay off a chunk of your balance. If you carry a balance, pay off as much as you can, even if it means you must work a second job or sell off stuff you no longer need or use.

Ask for a raise in credit limit. If you’ve paid your bills consistently, this may not be difficult to get-and since your credit utilization ratio carries significant weight, that should help to improve your overall score.

Correct reporting errors. It’s estimated that 20 percent of credit reports contain errors. If you spot one on yours-such as an error in the amount you owe or a paid-off account not shown-getting it corrected will almost certainly boost your score. Review your FICO score for free once each year to make sure it’s accurate.

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CONSUMERS KEEP CONFIDENT ABOUT CREDIT

Consumers Keep Confident About Credit

Cash Buyers Lists News​​

Consumers are more confident about credit accessibility, with more not only expecting to be able to obtain financing now, but also in a year from now, according to the results of the Federal Reserve Bank of New Yorks Survey of Consumer Expectations (SCE) for December 2016. Approximately 23 percent of those surveyed expect to be able to obtain financing in the future-a proportion last seen two years prior, in December 2014.

Less consumers, in turn, expect to miss a debt payment in the next three months: 14.3 percent, down from 14.9 percent in November.

More consumers also expect their household incomes to increase, a reversal of trend at 2.8 percent, and expect to increase their household spending, as well, at 3.7 percent, according to the survey.

Consumers, in addition, expect home prices to change-a sentiment rising to 3.3 percent in December and concentrated among higher-educated, under-60 and wealthier respondents.

Consumer expectations about the job market also improved, with the "perceived probability" of finding a job and losing a job increasing and decreasing to 55.6 percent and 15.8 percent, respectively. Expectations in terms of inflation over both the next year and the next three years increased to 2.8 percent.

Source: Federal Reserve Bank of New York

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5 FINANCIAL RESOLUTIONS FOR THE NEW YEAR

5 Financial Resolutions For The New Year

Cash Buyers Lists News​​

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When it comes to making resolutions, many Americans hope to stash away more cash. Below are several easy financial resolutions you can make to bolster your bank account.

Open a separate savings account to force yourself to build an emergency savings fund. Make it separate from your main financial institution, with no ATM card, so you will be forced to go into a branch to withdraw money.

Educate yourself. Check out some books on personal finance or subscribe to a magazine or personal finance blog. 

Pull your credit score and report. A good way to start the year is to find out exactly where you stand financially. Download your credit report (one free each year from each of the three main reporting bureaus) at www.annualcreditreport.com.

Plan ahead. Get in the habit each night of preparing for the next day: Packing lunches, prepping breakfast and dinner.  That way you will not be tempted to buy convenience food on the run, because you are rushed.

Unsubscribe. Remove the temptation of impulse buying online by unsubscribing from retail email.  This can take some time, but, ultimately, you will save time and money by not being bombarded with emails "deals", tempting you to buy.

Source: www.greenpath.org

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