Owning a home is easier than you think
Buying your first home can be intimidating. There's a lot
of misinformation floating around that can lead you to believe
that owning a property is out of your reach. But it's easier
than you might think. Here's what you need to know:
Buying versus renting
Monthly mortgage fees can be lower than the cost of paying rent.
Plus, unlike rental payments that almost always rise, you can
request a fixed-rate mortgage to lock in your monthly payments
for the life of the loan. You can also write off the interest
you pay on your mortgage. (It's tax deductible up to a limit
of $1 million, though always consult a tax advisor about your
situation.) And, to top it off, you'll be increasing your net
worth by building equity in your home.
Making a down payment
Lenders no longer expect all buyers to have a down payment of 20
percent in order to qualify for a mortgage. According to the
National Association of Realtors, today most first-time home
buyers put 10% or less down on their homes. There are also
government-backed down-payment assistance programs available to
help you if you're having trouble coming up with sufficient
funds. (See link below to related article.)
Qualifying for a mortgage
Don't assume you won'nt be able to qualify for a mortgage
just because you have a low credit score. If your score puts you
in the category of a disky borrower,?you may be required
to pay for mortgage
insurance. You may also incur a higher interest rate. But
once you’ve paid your mortgage down for a year or two, and you
improve your credit score, you should be able to cancel the
insurance and renegotiate the loan at a better rate.
Meeting monthly payments
If you can make your rent, you can meet your mortgage every
month. Just be realistic. Make sure you have enough money left
over to pay your other bills. Most lenders recommend that your
total monthly debts, including your mortgage, should not exceed
36 percent of your income before taxes. When you first take
possession, you'll also need to factor closing costs (often
two to five percent of the home's purchase price), plus
moving, redecorating and maintenance into your budget and allow
for increases in ongoing expenses such as utilities and taxes.
Subsidizing your mortgage
Still not sure your money will stretch as far as you need?
Don't throw in the towel just yet. Consider getting a roommate
to help meet the mortgage payments or renting out the basement.
If you're self-employed, moving your office into your home may
enable you to write off a portion of the expenses (check with a
financial advisor).
Use our free mortgage payment calculators:
1.How much do I have to earn?
Not sure how much money you'll have to earn to afford your house payment and accompanying expenses?
2.Mortgage payment calculator
Want to know how much your monthly payment is for your mortgage?
3.Bi-weekly mortgage calculator
Want to know how much time and money you'll save paying off your loan on a bi-weekly payment plan?
4.Additional payment calculator
How much do you save by paying more or making additional payments than your initial mortgage terms?
5.How much can I borrow?
Want to know how big of a mortgage you can take on?
6.Should I pay discount points?
Not sure if you should pay discount points on your mortgage loan?
7.How much will I save by refinancing my loan?
How long will it take to recoup the costs of refinancing my home mortgage?
8.How much will my tax deduction be?
Want to know how much your home mortgage will save you in taxes?
9.APR calculator
To find out the annual percentage rate of your loan, enter the loan amount, interest rate, points, other costs and year-length term.
10.Interest only monthly payment calculator
To find out the monthly savings you could gain from an interest-only payment plan. |
