Buying a home: Prepare by getting your finances in order

July 3, 2012 by ·

(ARA) – For those considering buying a home, the current real estate market presents some unique opportunities. One of the side effects of the economic roller coaster ride of the past few years is that home prices have gone down and more homes have gone on the market. For buyers, that means more choices and better deals.  However, those same tumultuous years also can also teach buyers a lesson: Make smart buying decisions and be wise with your finances.

Impulsive buying is never a good idea when it comes to a purchase as significant as a home, but it was something of a trend at the height of the mid-2000s. Now, with banks lending far more cautiously, you need to be absolutely certain that your finances are in order – and healthy – to be able to get the best deal on your purchase.

There are a number of steps you can take to get ready to buy a home, and you might need to work on them simultaneously. Consider that you’ll need to start saving, if you haven’t already, but you’ll also need to review your credit score and do what you can to either maintain it or work toward healthier credit. Both of these tasks will help make the home-buying process better for you.

Your credit is an important factor in determining the terms under which you can get a mortgage. Broadly speaking, the better your credit is, the more positively you’ll be viewed by lenders – and that can lead to better interest rates. And because you’ll be paying off your home for years to come, it’s important to get the best rate possible.

Start by checking your credit report. You’re entitled to one free check of your report, from TransUnion and other credit reporting agencies every year.  As much as you need to check your report to find out what shape your credit is in, it’s also essential to review it for inaccuracies or fraudulent activity, both of which can have a negative impact on your score.

If your credit health needs some work, start taking action immediately. Paying bills on time, reducing your overall debt and limiting new credit inquiries can all help to build your credit – but be patient as it can take time for your positive actions to take effect. Nevertheless, the sooner you make the effort, the sooner you’ll see results.

Making a prudent decision about buying a house comes down to an honest assessment of what you can afford. Keep in mind that you might be approved for a loan that’s larger than what is practical for you to afford. While it may be tempting to buy a pricier house, the stress of struggling to make payments could diminish your enjoyment of your new home and even put you at financial risk. One rule of thumb is that most borrowers can afford a home loan that runs about two and a half times their annual salary.

Buying a home is a complex process, but one that is ultimately very rewarding when done right. By organizing your finances well in advance, you’ll help set yourself up for success. For more information about credit and buying a home, visit www.transunion.com.

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Rent or Own? The Pros of Each

June 18, 2012 by ·
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By : Andy Asbury    99 or more times read
For some people, owning a home is an integral part of achieving the American Dream. But for others, and perhaps a growing number of people, home ownership is not in the cards. And oftentimes, that is a calculated choice people make. The reality today is that some people simply prefer to rent a home instead of own one. Of course, there are upsides to both renting and owning.

Owning a home: Pros
The home is yours. Want to change the paint color? Go ahead. Refinish the floors? You can do that, too. Build equity as you make monthly mortgage payments? Check. People who own their condo, loft or single-family home have flexibility to make the changes they want, provided they are not outside the bounds of city ordinances (in the case of single-family homes) or association co-op rules (in the case of condos and lofts).

And in some markets, including Minneapolis, owning a home actually makes more economic sense. According to a recent Wall Street Journal survey (based on data from Zillow, Inc.), 12 of 27 metro areas favor owning a home rather than renting one. In Minneapolis, for example, the average monthly mortgage payment for homeowners is $776, compared to the average monthly rent payment of $953.

Homeowners also enjoy a sense of security. They are not subject to landlords who do not want to extend a lease, or who are not prompt in dealing with issues that arise. Additionally, homeowners essentially invest in themselves each time they make a mortgage payment or complete a home-improvement project.

Renting a home: Pros
You are not the owner. That means your landlord, not you, likely is responsible for major repairs. Furnace goes out? Call the landlord. Ditto if, for example, the roof develops a leak. For that reason, people who rent can take comfort in knowing exactly how much of their money goes into their home each month or year.

Renters also enjoy flexibility. Since leases generally last for fixed periods of time, renters can live in one spot for a year or two, and then try somewhere else. Or maybe you have a job that keeps you on the move. In that case, renting is a good choice because you are not on the hook for selling a home before you can move.

Renting also tends to be less labor-intensive than owning. Renters often can decorate a home to line up with their personal tastes, but they generally do not need to worry about things like landscaping, mowing the grass in the summer, or removing snow in the winter. As a result, renters have more time for the activities they enjoy.
Author and Broker, Andy Asbury, studies Minneapolis condos, closely. His team of Urban Agents at Better Homes and Gardens Real Estate Area Leaders are focused on the latest trends in buildings like the Carlyle in downtown.
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