How much can you expect to pay for closing costs? It can vary several thousands but typical fees include items such as Discount Points, origination points, appraisal fee, application fee, credit report, title search and title insurance, survey fee, flood certification recording, and transfer charges, attorney fees, interim interest and finally an escrow account must be setup. These closing costs can reach up to $10,000 or more!

Now you can see why closing costs could actually be a deal breaker for some eager first time buyers. Many times buyers don’t even have a down payment large enough to cover closing costs. Imagine how disappointing it would be to walk into a lenders office with $10,000 ready to close a mortgage loan, only to realize your entire down payment is going to be eaten up in fees. Not a single dime will be applied to the principal amount of the loan.

So, before you get too excited about closing your mortgage loan, be aware of all the fees you will have to pay. It may sound depressing, but if you are prepared for these fees going into the mortgage it won’t be so bad. Owning your own home is a big step so do your homework and you’ll be happy with your decision.

Unfortunately, a very small percentage of Americans actually own their home, most of us finance our home over the course of several years. Popular finance terms are 30 and 15 year loan terms. However, even if you are financing your home you are still considered a home owner in most peoples eyes.

Many people who think they are ready to buy their first home have no clue how much house they really can afford. A little over a year ago banks were pre approving home buyers for thousands of dollars over what they could really afford. The way banks calculate how much house you can afford doesn’t take into account all the activities not reported in their formulas.

So how much house can you really afford? To find the solution to this equation you first need to create a simple budget. You need to realize how much money you make and how much money you spend in a month. Be very realistic in your budget amounts. If you know you can’t live without the $400 entertainment budget then include it, you don’t want to buy the house and the realize you don’t want to give up your daily coffee habit for a house.

The nationally syndicated radio personality Dave Ramsey will tell you not to spend more than 25% of your income on your house paymnet based on a 15 year fixed mortgage.  Others will argue you can afford more but all of these numbers are based on opinion and averages. Your personal situation may be completely different.

When you are calculating how much house you can afford don’t forget some mandatory items that come with a house. Items such as home owners insurance, property tax, maintenance and repairs, increased energy bills may skew your numbers quite a bit

This in turn means that just because you can make a rent payment of $800 per month doesn’t mean you can make a house payment of $800 per month. As I just mentioned there are many other expenses that come with home ownership be sure to include these in your budget.

Don’t stretch yourself too thin just to buy the house. Some people may try to tell you to buy the most expensive house you can afford even if it means some sacrifice. Your salary will soon increase and the payment stay the same so it will get easier with time. This just doesn’t prove to be true. Don’t try to predict the future, only buy what you can afford.

Before you purchase your new home carefully consider all these tips. Forclosuer is a very nasty process so don’t take a risk you really can’t afford. Know your finances inside and out before you sign the lines on the home mortgage!

My best friend also decided to build a new home too, and is currently renting a 3 bedroom 2 bathroom house. They too have a family of four and he tells me it’s plenty of room to accommodate all their needs. They only have a one car garage, but we most people use their garage for storage anyway.

Their rent is about $600 less than our house payment. Our new house payment will probably be several hundred dollars more than our current payment. Do we really need a house that nice, do we need a house that big? The obvious answer is no, and it would even be more financially smart for us to rent a house for $900 – $1000 per month.

We always hear it’s better to own a home than waste money paying someone else’s house payment, but is this really true? I’m sure there are certain circumstances where buying is better than renting but before you make a final decision you may want to check out all your options. There are many incentives to owning a home such as major tax breaks, but make sure the good outweighs the bad.

Another alternative is to rent a home for several years, saving the extra money to pay down on a home. The shorter term you finance the home for the more money you will save on interest. If we were to save $1,000 a month for 5 years we could pay over $60,000 down on our home, greatly reducing the amount of money we “throw away” in interest.

We are planning on putting our house on the market in the next year or so and finding a house to rent. Hopefully we can stay in the rental house long enough to save a decent down payment. We probably won’t wait the 5 years, but hopefully we will have several thousand dollars to pay down.

The point of this article is to let you know it’s okey to be picky when buying or building your first or next home. A hose is an investment, but it’s also your home and you need to enjoy living there. Just like anything else in life if you aren’t happy with something, you’ll constantly be searching for something else and it’s not simple to switch houses.

Before you purchase or build your next house I would suggest making a list of everything you like and dislike in your current home or apartment. If you don’t like something now you won’t like it in a different house. You should also research floor plans and layouts online or in books. Also visit open houses in your city to get actual visuals of houses and again list things you like and dislike about these homes.

When you are ready to buy don’t get in a hurry. There are probably hundreds of homes in any give area that are for sale. If you have to visit each of them before you make your decision. This is especially important if you plan to stay in the home a long time.

After you find your dream home if there are a few things the home doesn’t have, try to negotiate with the seller about taking care of those things. For example if you want ceiling fans in every room add this to the contract, you may get these small things taken care of by the seller before you move into the house. A motivated seller will sometimes go out of their way to close the sale of their home quick.

Remember this will be where you live so make yourself happy. If given the opportunity, don’t settle for second best when it comes to your home.

Falling home prices have caused increased sales over the past four months, but this months increase was much greater than expected. Low prices and the federal tax credit/housing stimulus program offered by the governemnt to first time home buyers was probably a huge boost to the sales.

Could this mean our economy is finally starting to climb back out of recession? I’m not an expert on the subject matter, but I do know that now is a great time to buy a home. With record low home values and record low financing options it’s an obvious choice if you are in the market for a home. With these record high home sales it’s no doubt that home values and interest rates will soon start to climb. Don’t miss out on a great time to buy a home or even a rental property.

I’m not a mortgage rate expert or by no means am I qualified to predict mortgage rate trends, but if you are in a variable interest rate mortgage loan I would seriously consider getting into a fixed rate mortgage soon, why?

As I mentioned earlier mortgage rates have been somewhat stable for the past several months. Fixed interest rates continue to hover around the 5.5% mark which is a great rate. With some positive signs of recovery from the U.S. economy it’s doubtful that the rates will take any significant drop over the next few months. Therefore I think it’s a great time to lock in a fixed rate interest rate around 5.5%.

The Kentucky General Assembly just added a new Bill that allows for a $5000 tax credit for those who purchase or build a new home within 1 year of the bills passage. The best part about the new bill is that it’s not for first time home buyers. First time home buyers will not be eligible for this credit because of the federal program, but it’s great news for home owners looking to trade up or down in housing.

There are of course a few rules and guidelines that must be met before you get the credit. First, they are only setting aside $25,000,000 in credits and it’s first come, first serve. If you want to take advantage of the mortgage tax credit get in early.

Second, the home has to be your primary residence and you have to live there for 2 years. I assume if you don’t you’ll owe the credit back.

If you want complete information feel free to download the entire document here.

Still wondering what it means to lock in an interest rate? When you lock an interest rate you are guaranteed to get that rate no matter how the market performs. If you lock an interest rate in today that’s good for 45 days then no matter how much interest rates rise you are still guaranteed the lower rate.

It would be a good idea to lock in interest rates if the trend in interest rates is rising. This will give the lender time to close the loan without worrying about rising rates. If the trend is down you would want to float your interest rate to take advantage of falling interest rates.

Finding the right time to lock a rate is a game. Even in a stable market it’s a risk to not lock a rate. Because of the highly volitle market interest rates can rise drastically even in the course of a day. Paying the lock fee will ensure you have ample time to close the loan and not have to worry about a drastic rise in interest rates.

At first I was very skeptical. I have never heard the term streamline FHA refinance before so I had to do a little research. After just a few minutes and several website articles I realize streamline loans are a totally legit way to refinance your home loan.

Your loan must meet a few guidelines before it’s eligible for the refinance.

1. The loan must already be insured by the FHA.
2. You have to be current on your mortgage payments with no late notice.
3. The refinance must lower your interest rate and monthly payment
4. No money can be received back to the borrower as a result of the refinance.

I contacted the company and started the process. The entire process was very simple and only required verification of employment, copy of our drivers license, social security numbers, and home owners insurance. We closed the streamline loan in less than 10 days. The underwriter even came to our house to sign the loan papers.

The only negative thing to say about the whole process was about $1,500 in closing costs due to the lender which wasn’t ever disclosed during the process. However, this is much lower than any other home loan I have every closed. Our escrow account even transferred over so that money wasn’t due at closing. The $1,500 was rolled into our loan so there was no out of pocket money due at closing. We lowered our interest rate 1% and our monthly payment decreased by $135. We should recover the closing costs in less than one year. Best thing about the streamline loan is that if the interest rate dropw another percent we can do the process again!

The original stimulus package proposed a $15,000 tax credit for anyone who purchased a home this year. Last year a $7,500 tax  credit was allowed for first time home buyers, but the money has to be paid back interest free eventually. This new tax credit is completely free to first time home buyers.

If you have been thinking about buying a home this is definitely the time to buy. Home mortgage interest rates are close to an all time low, home prices have plummeted over the past year, and now an $8,000 tax credit. It makes me wish I hadn’t purchased a home until now! Take advantage of this wonderful offer and consider purchasing a home this year that you can afford!