Buying A Home

Home Buying Basics

Buyers this is a short video from DIY (Do It Yourself Network) just showing you what to do before and during the buying process.

http://wms.scripps.com/library/DIY_Network/64084.wmv?site=hgtv&source=DIY

Buying A Home With A Partner....

Living Together

Many single people purchase their first house with a friend; both parties can benefit from the investment in homeownership and reduce the financial burden and risk. Friends who buy houses together need to legally protect themselves from life's changes. They may not be friends forever; one person may need to move away for marriage or other reasons, so before friends buy together, they should visit an attorney together to write a property agreement.

For tax reasons, it is important to keep good written records about who came up with the downpayment, who makes the monthly payment and who pays for upgrades and repairs, or how all the financial obligations to owning a home are split between the owners.

Just because you are not married does not mean you can't go through the same headaches as married couples who divorce. If you decide ahead of time how you will handle a break-up and put that in your property agreement, you may save yourself a lot of arguing and attorney fees if a break-up occurs.

You may decide that if either one of you wants to sell, the other has 60 days to get a mortgage to buy out the other person's half of the house. If you disagree about the value of the house, each of you can hire an appraiser and you can average the two appraisers' estimates of your home's value.

If you and a friend are joint tenants and the other person dies, you get the house. If you are tenants in common, the partner can Will half the house to someone else – someone who may force you to move out and sell the house.

You can Will each other a life tenancy, so that your partner's heir has to wait until you both die to collect the inheritance. Make sure you know what happens if you both die and you Will the property to different people. And while joint tenancy may help keep probate costs down, you may still owe state or federal taxes after the death of your house partner.

In a handful of states, registered domestic partners automatically inherit, but having a Will or a living trust is a surer bet. Other states allow community property, where you each own half the house and your Will says what happens to your half when you die.

Spending Wisely To Own A Home

Many single people prefer to buy a home and build equity for themselves rather than pay rent to someone else. If you've been at the same job for a while and anticipate staying in the area you currently are living, buying a home is a great way to invest in yourself. Here are some tips for getting started:

Budget yourself
Figure out how much take-home pay you have each month. Add up your expenses. If you are spending more than you earn, cut back on extras like lunches and dinners out, cappuccinos and new clothing. Find a way to set aside savings each month, even if it’s only $100 or $200.

Did you borrow money for college? Work towards paying off debt from student loans. Do you owe money on your credit cards? Make those payments on time. Work toward paying more than the minimum due on your credit cards -- or you’ll never get that balance paid off. The calculators at http://www.choosetosave.org can show you how long it will take to pay off your balances. If you make a double payment, remember that you still owe the next month’s minimum payment by the due date.

Save for a home and retirement
If you find it impossible to save money, trick yourself by having the savings automatically withdrawn from your paycheck or bank account. Tell the human resources officers where you work what you’re saving for (retirement or a home) so they can set up the right savings plan. Or ask your bank to automatically transfer money from your checking account to a savings account or investment fund each month.

Establish credit
How is your credit? You can get your free credit reports (they are free once a year) and order your credit scores (a small fee is charged) from all three national credit reporting agencies at http://www.annualcreditreport.com. If you have little or no credit, start building good credit by applying for a credit card where you bank. Make small purchases and pay the entire bill before the due date.

Are you a chronic late-payer? Have the credit card issuer set up automatic payments from your checking account. If you pay even one month late, your credit score will fall. The lower your score, the more interest you may need to pay when you borrow money for a home or a car.

Traps to Avoid

Wedding debt
A wedding is a once-in-a-lifetime event. If the two of you are paying for it and you overspend, it becomes a paying-for-years event. Trim your expectations and your wedding budget so you’re not burdened with wedding debt. The average wedding for 150 people costs $20,000. Cut that guest list in half and you’ll have enough money left over to put the down payment on your first home.

Credit card debt
Only charge what you can pay off entirely each month. Before you charge a big ticket item, such as furniture, figure out how much you need to pay each month to pay the balance as quickly as possible. Avoid charging anything that won’t last as long as the payments you’ll have to make on that item.

Living beyond your paycheck
Are you living paycheck to paycheck, never saving a dime? The best path to riches is to simply spend less than you earn — no matter what size paycheck you take home. To see where your money goes each month, get a notebook and write down every penny you spend for one month. At the end of the month, figure out what you can cut to live within your means.

Identity theft
Never give callers or e-mailers personal information, such as your Social Security number, address and employer information unless you’re absolutely sure they are who they say they are. e-mails that claim you can get low-cost credit cards and mortgages or erase your debt are sent by thieves trying to steal your identify. Thieves pretend to be telemarketers as well. Most banks and credit card companies only communicate with you via letters. Do not provide financial or personal details in response to an e-mail solicitation from what appears to be your bank. If you question whether an e-mail correspondence from your bank is legitimate, call your bank and verify.

To Get Ahead

Buy your first home
It’s never too soon to buy your first home. Special programs can help you purchase a home with little money down, if you have good credit. Talk to a mortgage banker about first-time home buyer mortgages, downpayment assistance organizations and local home buying programs. Ask questions about terms. Be sure you understand how adjustable-rate mortgage payments may increase.

Make jump-ahead principal payments
Ask your mortgage lender for an “amortization chart” that shows how much of your monthly payment goes to principal and how much to interest. Look at the chart and ask your lender how you can make an extra principal payment each month. Doing this can shave years off your mortgage and save you thousands of dollars in interest.

Home Buyers Course

Home buying has its challenges especially if you are doing it for the first time. Working toward your goal of homeownership should be an exciting and fun time in your life – it shouldn’t be scary! This free Web-based* Consumer Home Buyer Education Course has been designed to take the mystery out of the process.

The following topics will be covered:


-->The benefits of buying a house
-->Establishing and using credit
-->Developing your family budget
-->Selecting a home and neighborhood
-->Clarifying the home buying process
-->Working with a mortgage lender
-->Avoiding predatory lenders
-->Preparing a mortgage application
-->Evaluating mortgage loan and financing products
-->Conducting pre-purchase and follow-up inspections
-->Surviving closing
-->Tips for maintaining a home

Tips for first time home buyers

*The rule of thumb is that you should be able to afford a mortgage three times your income.

*Lenders subtract any debt payment from your income, so if you have a big debt, you have a lot less income — and a lot less house.

*When you are looking at a house, you have to have a wish list, but you have to understand that no house is going to be perfect.

*Don't judge a book by its cover. Same goes for a house. Go inside and look around before making a decision.

*When you buy a property, you should always have a home inspector come through. You never know what they're going to uncover, so don't crack the champagne just yet. If the home inspector should find something, then you can use it to your advantage to renegotiate the deal. Or you might have to walk away.

*You have to see past the junk and see the potential. When you buy a house, it's not just a place to live in, it's an investment. Keep in mind your dollars down the road.

*Home staging is big business. It can add thousands of dollars to the selling price. An unstaged house that has not been properly prepared for sale will sell for much less than the asking price.

*Feelings often take over the first time you go through a house, but the second visit allows time to do a thorough inspection led by your head, not your heart.

*The three most important matters when it comes to negotiation are information, preparation and realism.

*Reality often outweighs fantasy when it comes to buying a home.

*When a renovated house is priced low, it is a good indication that the owners are looking for a bidding war — they want to get as much money as possible out of the sale.

*When you're house shopping, you can't pull a number out of a hat. Find out what other homes in the area have sold for, how long ago the sale was and what amenities they have.

*What you want to pay for a house has nothing to do with the fair market value. What you can or cannot afford has nothing to do with the value of a house.

*The key to success when buying a home is to trust the experts.

*Before you begin to house shop, you need to have an idea of what kind of neighborhood you want to live in and the style of house you want.

*When it comes to investing, the best place to invest is in an up-and-coming area.

*It is especially important to have a home inspection if you are looking to buy an aging or older house. They look past the visible surface to the infrastructure, inspecting plumbing and looking for faulty fixtures and waste lines. They check electrical systems to make sure they aren't overloaded or a safety hazard. They also look at possible structural problems like the foundation, walls and floor joists.

*The old adage holds true. If it ain't broke, don't fix it.

*It's great to have your financing in place before you look because houses are bought and sold overnight. You could lose your dream property waiting to secure the financing.