Homeownership Is Still Within Your Reach

America is coming out of a strange fog, one that first settled down on our country during the heady days of the 1990s. Back then, the way lenders determined how mortgages and other loans should be offered was relaxed, allowing consumers to become homeowners with little or nothing down.

The worst form of that fog could be found in the form of no-documentation mortgages, those lending vehicles where prospective homebuyers were not required to show proof of income. A well meaning plan to help low income people become homeowners ended up being a boondoggle, one whereby homeowners could not keep up with mortgage payments and soon found themselves having their homes foreclosed. A contributing factor to today’s economic climate were these sub-prime mortgages, something that has cost our country dearly.

Qualifying For A Home Loan

Lending requirements have tightened considerably over the past few months, making it much more difficult for first time home buyers to jump in the market. With housing prices off considerably from highs reached in 2006 and 2007, the opportunity to find an affordable home is quite good. Still, many borrowers are finding that they need to have very good credit (a credit score of at least 700) and a sizable down payment, usually 20%.

These two requirements has made it difficult for first time buyers, especially those who don’t yet qualify for a loan. However, what you can’t afford today, you may be able to afford six months, one year, perhaps three years from now, opening up a world of opportunity if you can patiently wait.

To reach your goals of having enough money for a down payment, the following steps can help you get there as soon as possible:

Establish a savings pattern – If you have $15,000 saved toward the purchase of a home and know that you’ll need as much as $30,000 to qualify for that $150,000 house, that means you need to save another $15,000 in as reasonably short a period of time as possible. If you desire to become a homeowner within the next two years, then that means you’ll have to set aside $625 per month in savings to reach your goal. If you can spare that much money over that time, then your goal is within reach. If not, you either need to stretch out your savings plan or consider other ways to raise the money.

Attack your debt — While saving for a home, you’ll want to also make sure that your debt is reduced and that you are up to date on all payments.  Your credit history will be scrutinized by your future home lender. Make sure you pull your credit reports and clean up any potential problems. The better your credit, the higher your credit score. The higher your credit score the increased likelihood you’ll be approved for a loan and get that mortgage at a fair rate.

Control your expenses — The #1 hazard to your bottom line are your expenses. Some costs you cannot control, but many of them you can. Consider consolidating debt, choosing a better cell phone plan, downgrading your cable, eating in, shopping in bulk, cutting back on entertainment costs, etc. There are plenty of ways you can save on expenses without radically adjusting your lifestyle — make good use of the internet to find the best way to conserve your cash!

Live on a budget — Once you have full knowledge of your income and expenses, then you’ll be a position to establish a budget that can help you reach your goals. You’ll have a better understanding of where your money goes and what steps you can take to save more money with a budget.  Living on a budget now will help you when you become a homeowner, giving you the power and freedom you need to succeed.

Bank on it — The money you are setting aside for your down payment should be placed in an interest bearing savings account. This is no time for you to put your money at risk, but it could be a good time for you to lock in your money for twelve months or longer at a high interest rate. Currently, certificates of deposits (CDs) are paying about as much as 4.25% through online institutions such as ING Direct. Your money is insured, it’ll grow faster, and you can reach your goal sooner.

Seeking Help As You Embark On Your Journey

Finally, if you are having trouble reaching your goals, being accountable to someone else can certainly help. Your spouse, friend, or trusted professional can be of assistance to you, offering their perspective on matters and encouraging you along the way.

Saving money to buy a home can be a trying experience. However, once you qualify for a home and find the house that you like, you’ll find that all of your hard work has paid off, giving you the most valuable asset that anyone can own.

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Adv. — To find learn ways to help you save your hard earned money, visit SayLowerBills.com to find ways you can lower your family care costs, manage debt obligations, and how to manage your income.

Tags: down payment, first time homebuyers, home loan, lending, mortgages

Talk of a $700 billion federal bail out; the collapse of Washington Mutual, Wachovia, and Merrill Lynch; as well as uncertainty about the coming presidential election has cast a gloomy cloud over the housing market. But, for people who are qualified to get a home today, the best deals can be had possibly making the fourth quarter of 2008 to be the best time to buy a home in a long time.

Are You Mortgage Qualified?

The key, of course, is being qualified. Unlike just a few years back when mortgage lending rules were relaxed to let hundreds of thousands of people buy homes who would never had been qualified under today’s rules, the mortgage market is actually quite good for today’s buyers. Consider the following:

Mortgage Rates — Lo and behold, mortgage rates are still quite good. A 30-year fixed rate mortgage can be had for just under 6% while jumbo mortgages are going for around 7.25%. This means that if you’re in the market for a modest home, you’ll find the best rates provided you have a sizable amount of money to put down and your credit is very good.

Weak Housing Market — You’ll want to steer clear of neighborhoods where foreclosed homes are dominant, but don’t be afraid to pluck a distressed sale from a better neighborhood where few homes are being offered for sale. Make your move quickly because savvy investors are smelling an opportunity and although they may be thinking about flipping, they still have to consider whether the market will rebound in the next few months to consider making an investment now.

At Or Near Bottom — Double digit drops in housing values over the summer and additional drops this fall are indicating that the bottom of the market may be near. Unfortunately, no one knows when the bottom has been reached, but if home values are off by 20% or more in your area, do you think that a downward spiral will continue?

If you plan on looking for a home this fall, get your financing lined up in advance. That way, when you find a home, you can show wary sellers that you are mortgage qualified and ready to negotiate seriously and follow through on your offer. Check out some smart money tips before you jump in too.

Tags: fixed rate mortgage, home loan, mortgage

Your home loan consists of four elements, two that you are probably aware of, and those are the principal and interest. Two additional elements, taxes and insurance, must also be considered when applying for a loan, secondary elements which can be the deciding factors in whether you get approved for a loan or not.

Which brings us to an important question — if you are in the market for a new home, have you factored in what your property taxes and homeowners insurance premiums will be?

Some things for you to consider:

You may have a general idea how much taxes you’ll be paying annually for your home, but there are factors which can skew these numbers tremendously, even in the same taxing district.

For example, taxes on a three bedroom ranch home could be higher than on a four bedroom colonial, because the width of a ranch home is wider than with a colonial. Other factors that can make a difference include: the age of the home, location, and property size.

Homeowners’ insurance isn’t as easy to figure out today as it was in the past. You may think that $500 annually will cover your insurance needs but discover that your home is in a flood plain, necessitating that you take out expensive flood insurance which is only available through the federal government.

You also discover that since your home is a little too close to the ocean, where all homes have seen rates double, triple, even quadruple since the 2005 hurricane season. What had once been a fairly small expense, home insurance isn’t any longer.

You’ve done your homework finding an excellent mortgage loan. Now go and check out what you’ll be paying for property taxes and homeowners insurance to see if you can really afford your new home.

Tags: home buy, home insurance, home loan, mortgage, private property, Property Taxes, real estate