Whether you’re a first-time home buyer or not, you’ll probably have a bunch of questions. Here’s a few you might be interested in:
Am I Ready to Buy a Home?
Over the past several decades, the federal government has promoted initiatives to increase homeownership and help more people attain the American dream. However, as beneficial as homeownership can be, it may not be the right choice for everyone. Homeownership can offer many advantages including tax benefits, financial security, and the pride that comes with taking care of your own place. But is it for you? Here are 10 questions to help you decide whether you are ready to stake your claim on your dream home.
As all first-time homeowners quickly discover, the costs of owning a home go well beyond the monthly mortgage payment. Most of these costs are predictable and, with research and careful planning, you can be sure to buy a home you can truly afford—even with all the extra expenses.
Is a newly built home right for you? Do you want a home that you’ve helped design and that offers the latest in energy efficiency and design? Or do you have your heart set on moving to a specific neighborhood in the city or a close-in suburb, where newly constructed houses are rare or not available? These are baseline questions that confront many home shoppers early in the process. Your own answers are likely to depend on your lifestyle preferences, financing needs and the priorities you put on features like high energy efficiency, functional arrangements of interior living spaces and your desire, budget and aptitude when it comes to repairs and capital improvements.
How can you choose the right neighborhood? Figure out what you’re looking for, do research and find a community that fits your description. Ask yourself if the neighborhood matches your taste in a living environment — and if it meets your criteria. Just because it’s a nice neighborhood doesn’t mean it’s the one for you. If the neighborhood meets your list but still feels wrong, search out another area. Trust your gut feeling — after all, you’re the one who has to live there.
You need to know what is happening in the market right at the time you plan to sell. News media is always saying this and that about the trends in the overall market, but this is often far from what is happening in your local area.
If you’re like most people, you want to get the lowest interest rate that you can find on your mortgage loan. But how is your interest rate determined? That can be difficult to figure out for even the savviest of mortgage shoppers. Your lender knows how your interest rate gets determined, and we think you should, too. Armed with information, you can have confident conversations with lenders and ask questions to make sure you get a good deal. There are seven key factors that affect your interest rate that you should know.
Most lenders use some variation of the “28/36 Rule.” This means that PITI (principal, interest, taxes and insurance) cannot exceed 28 percent of gross monthly income and PITI, plus all outstanding consumer debt (such as car loans and credit card payments), cannot exceed 36 percent of gross income.
When you enter into a credit agreement with a lender for a loan or credit card, you are entering into a contract. With that comes legal rights and responsibilities for both you and the lender. Knowing your rights and responsibilities can vastly help you improve your credit. Following your statements and credit reports in a timely manner can help if you have to dispute them. Be sure to keep all documentation pertaining to your credit because you may need it in the future.
There are several different types of credit scores, with FICO scores most widely used. FICO scores are made up of five major factors: Payment history, amount of debt, length of credit history, new credit applications, and credit variation. First, it’s important to understand that there are a variety of different ways of scoring credit. However, the most commonly used types of credit score is your FICO score, which is produced by the Fair Isaac Company, based in San Jose, California. Under the most recent version of FICO, there are five broad factors, which determine your credit score. Because FICO’s scoring formula is confidential, no one knows exactly how your score is calculated, but understanding what goes into deciding your credit score, will be very helpful.
Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score.
Keep balances low on credit cards and other “revolving credit.” High outstanding debt can affect a credit score.
Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix. It probably won’t improve your credit score.
Pay off debt rather than moving it around. Also, don’t close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.
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