Easy Steps for Buying a Home

A home of one’s own is like a dream come true. Buying a home could be a good investment if the market is on the rise. It gives you many benefits other than being an owner. There is reduction in income tax payments through tax deductions on mortgage payments and property taxes and along with that you get a steady source of cash flow with the growing equity in your home, not to mention the freedom and independence of your own home.

Buying a home should be planned carefully and this involves a step by step procedure.

Personal review: The first step is to determine your financial position and fix a budget accordingly. Your current income, monthly expenses, credit report, down payment that you are ready to put along with the closing costs will help you to do this calculation.

Finding a lender: This is one of the most important factors that should be considered. The lender is the best guide in determining things like how much mortgage you may get and give a pre-approval for the mortgage. Make sure to work with an honest and professional lender to avoid complications during the entire loan term. You may have to shop for a while for lenders, comparing costs and interest rates, and negotiating for a better offer.

Get a mortgage pre-approval: Only a mortgage pre-approval will give you an estimate of how much you may afford. A seller will always want to see a buyer who is financially ready for the purchase and in such cases the pre-approval gives you an added advantage.

Start searching for a home: It is always wise to take the help of an experienced real estate agent while looking for a home. The price of the house is essential for you to consider. Apart from this, the location of the house, the kind of house (new/ resale/ build new), its probable resale value are some of the other factors to be considered. Discuss with your real estate agent and make an offer to the seller. Remember to get a home inspection which tells you about the condition of the property.

Get the loan underway: As soon as the seller agrees to your offer, write a contract and start following through the loan. Contact your lender and ask him to start processing the loan as early as possible. If you have been pre-approved, most of the work is done and the loan will be processed quickly.

Get prepared for Closing: This is the final step in buying a home. On the closing date, the ownership of the house will be officially transferred to you. There would be several other up-front costs involved in the process which you have to pay at closing.

Find Below what our Financial Adviser, Mrs Martin wants to say regarding buying a home:

You should never hesitate to take necessary help from the real estate agent or your lender. If required you may also approach an attorney and consult him. You will feel comfortable about the transaction if you understand every step involved in the process as you are making a long term commitment and spending a major amount of money.

Understand Your Home Equity Line of Credit

Let us quickly understand this broad term, "home equity line of credit" first. A home equity line of credit amounts to an arrangement where a borrower's home acts as protection/collateral for a loan. This means that your home becomes a source of credit to finance home improvement projects, education, retirement programs, and other big ticket items. In maximum number of cases your bank or lending institution will allow you to draw upon a fixed amount of equity. This number is always based on a percentage of the appraised value of your property minus the rest of the money you owe on your mortgage.

Let me explain you this with an example. For instance, let's say that your home is worth around $200,000, and your equity line of credit allows you to access 50 percent of that value. Does that mean you can take out $100,000 worth of credit against your home? Not quite -- you have to subtract out how much you have left to pay on your house.

Always keep in mind that once the period during which you can draw your equity closes, you have to pay back the loan. It is a compulsion. This can happen all at once or over a fixed amount of time. Understand the conditions properly by which you need to repay the money before you start taking out an equity line, since the arrangement can have long-term consequences for your family's financial plan.

Now you will ask me is there any danger using the home equity as a kind of credit card? Absolutely -- if you fail to pay back the balance you owe plus your interest, you can get into creditor trouble and potentially lose your house or at least go into foreclosure. Trust me you might be able to get a better rate on your equity line of credit than you could by applying for standard consumer credit cards.

Check out what www.loans98.com wants to air about home equity line of credit:



I would like to conclude by advising you that always figure out various financing options before you institute paperwork for your equity line of credit, and take into account whether or not you might be moving in the next few years, since that may impact your rates and potential refinancing options.

Whom to Blame for the Credit Crunch?

Credit Crunch has become the hottest topic today of all times. Most of the country is beginning to feel the presence of the housing crunch and credit crunch right now. I don't think that there is a single entity to be blamed for this economy massacre. So who can we blame for the credit crunch? Maybe the brokers, the government, our banks, the borrowers, the market condition which we call these days the sub-prime market or even the wall street and last but not the lease our ridiculous expectations. Let me discuss this in details so that it will be easier for everybody to understand.

Can we blame the Banks?

As we all know the 1st thing that comes to our mind when we are thinking of banks are the home loans situations because they are ultimately the one who has to come up with the money that the borrower will use to purchase a home. I don't know weather all of you know this or not that out of total home loans given half of them are given directly from banks and the other half involves the middleman or the brokers. Many banks have been working more closely with borrowers in recent years, but many loans are still outsourced to the brokers.

Can we blame the Government?

People believe that the government does not do enough when it comes to policing the industry while others say that the government does more than enough and should hold no blame. Different people have different views on this matter. What we do know is the government is partially responsible no matter which side of the debate you take.

Can we blame the Brokers?

Brokers are just dealers in the better suit if we compare the drug market to the real estate market. Everything is almost common as in they find customers, they find loans, and they make a commission off of the sale paid for by the lender. Mortgage brokers are involved in half of the home loans distribution as we discussed above making sure that the borrower has the money to pay the loan back, and they must also make sure that the property holds its value in the event that a foreclosure occurs or a loan is defaulted on.

Can we blame the Wall Street?

I personally feel that, Wall Street firms are responsible for purchasing home loans from banks. Then they bundle these loans into packages for other investments depending on the level of risk involved in the leans.

Can we blame the Borrowers?

These people are the final buyers and they are the people who are actually using the home loans. Responsible borrowers would match future payments to future income, but irresponsible one will never do this. The demand for borrowers has never been as high as in the most recent years, so lenders are coming up with all kinds of new ways to entice borrowers into taking up loans even when they cannot afford them.

Can we blame the Sub-Prime Mortgage Markets?

Sub prime mortgages are helping many of us. Sub-prime mortgages are making it easier for people to get the homes that they want even when they cannot afford them, even if they do not have the financial stability to keep up with the payments. Sub prime mortgage loans definitely should share a large portion of the blame, but who is to blame for them? No one has the answer yet.