Lifestyle Trends
Buying a home? Tips to protect your biggest investment
(ARA) - If you're in a position to buy real estate, chances are pretty good you'll end up with a great bargain - perhaps a home you typically wouldn't consider in a different market. While it could remain a buyer's market for several months to several years, be aware that lending institutions are scrutinizing prospective homeowners more than ever.
The real estate collapse has caused banks and mortgage lenders to be more diligent in their practices and to tighten up lending criteria, requiring not only high credit scores but also documented employment, income and financial information. If you need to sell your home first, these new practices also apply to your buyers - especially if this is their first home. Banks may also request that you purchase life insurance to cover your mortgage, in the event something were to happen to you or your spouse. Term insurance is often an affordable way to protect your mortgage. You certainly don't want to risk your family losing that home you worked so hard to get, should the unexpected happen. Learn more at www.sbli.com.
Before you start house hunting, get copies of your credit report. Make sure the facts are correct and fix any problems immediately. After any problems are addressed, make sure your report accurately reflects those changes. If you find your financial situation needs some attention, helpful hints can be found in the guide: Improving Your Finances and Credit.
Other helpful hints:
* Whether you're a first-time buyer or need to sell your house first, know that you should commit to living in your home for at least a few years. The transaction costs of buying and selling a home - even in a good market - could cause you to lose money. And if the market is still slow months from now, it's an even worse scenario trying to make a move when houses are not selling.
* Even in a down market with low interest rates, don't be tempted to buy more than you can afford. Use an online mortgage calculator to figure out what you can afford.
* Getting pre-approved for a mortgage will put you in a good position to make a serious offer when you find the right house. Not to be confused with pre-qualification, which is a brief review of your finances, obtaining pre-approval from a lender is based on your actual income, debt and credit history.
* Take time up front to conduct your own market research on where you want to live. Consider the quality of the schools, your commuting time and proximity to highways, tax base and any other factors that will affect your lifestyle.
* Work with a reputable real estate agent who understands your financial situation, your goals and the community in which you are looking. A good agent will respect your limits and not show you houses that are over your price range, unless you make that request.
First-time home buyer credit:
If you're a first-time home buyer, the American Recovery and Reinvestment Act of 2009 has been extended; it allows for a tax credit of up to $8,000 for first-time buyers who sign a purchase and sale agreement by April 30, 2010 and close by June 30, 2010. Keep in mind that total house payments, including taxes and insurance, should not exceed 25 percent of your take-home pay. This will help you decide on what amount you need to safely put down as a deposit and be able to afford each month. Talk to a tax professional for more details.
While home prices are better than ever, it's still critical to carefully determine if you can afford to make a move. No matter what your goals are, make sure your credit history is in order, plan accordingly and do your research. If you find this is not the right time to buy, the work you do now will only help you when it's a better time to make that investment.
SBLI and The No Nonsense Life Insurance Company are registered trademarks of The Savings Bank Life Insurance Company of Massachusetts, which is no way affiliated with SBLI USA Mutual Life Insurance Company, Inc. SBLI products may not be available in all states.
Courtesy of ARAcontent
