Buying your first ‘love nest’? Here are things you and your partner should talk about.
We can all agree that buying a house is one of the most exciting milestones in a couple’s life. But then, it is quite a big investment, and if not handled properly, the stress from it can easily turn your dream-love-nest into a nightmare. However, there are a few essential things you can discuss with your spouse to make the process run more smoothly. And in my experience, having “the talk” before consulting your friendly neighborhood loan officer a.k.a., yours truly, is a great first step.
Who should be on the loan application?
This is a question that has been asked more times than I can count. Understandably so, because your debt, salary and credit scores will affect whether you’re granted a loan and what your mortgage rate is. My advice is to think through what you both bring to the table and decide if it makes sense for both of you to be on the loan. Sometimes it is better that only one of you should be on it but it is on a case-to-case basis. This is one important benefit to having a seasoned loan officer to walk you through the steps, help you weigh the pros and cons, and pick a course of action to best position yourselves for approval.
What are your non-negotiables?
Talking about the negotiables and non-negotiables also serves as a great practice of how you and your partner agree and compromise. First, write down what you simply can’t live without: At least three bedrooms? At least two baths? A big yard? A quiet road or great school district? Close to work or restaurants? Decide what you won’t compromise on, as well as anything that will be a major red flag.
How long are you planning to stay?
A major factor to consider in buying a home is whether you plan on staying there for good or it will be just a starter-slash-transition home until you decide to go for a bigger place. Although the answer to this question will likely change over time, laying out your timeline and expectations can help you decide which type of mortgage to apply for. For example, a 30-year fixed rate might make sense if you plan to stay forever, whereas a seven-year adjustable at a lower rate could be better if you plan to move again soon. Again, this is a great discussion to have with your loan officer who can help find the best rate for any scenario with her trusty online mortgage calculator.
Do you need (more) space for the kids?
Whether you are still on the “planning” stage or already have one or two mini versions of yourselves, it is best to decide whether you want more space for your future kids (if you plan on having more). Be mindful that the fees and costs associated with the home purchase might not be worth it if you see yourselves needing more space in the near future. Have an honest, open conversation about how you see your family growing and the kind of space you’ll need to accommodate such growth.
Understanding each other’s vision for your new home can help alleviate future stress as well as determine what your financial plan should be. This, and having someone a lovable loan and mortgage expert like me (a shameless plug, if you may), to walk you through each process are the main ingredients to a home buying experience that is happily-ever-after.
Better late than never. Before the month of January officially ends, here are some New year's resolutions you might want to make.
Three questions you should ask yourself before buying a home
To buy or not to buy – that is the question.
If you are still debating whether you should be a homeowner or not, ask yourself these three questions yourself first ― and make sure you have the right answers.
1. Do I have money in the bank?
It is always ideal to have enough money for a 20 percent down payment. So if you’re going to buy a $200,000 home, yes, that’s $40,000. BUT (yes, there's a but), the good news is that you don’t have to have 20 percent. Some financing options require as little as 3 percent of the purchase price. Others require 10 to 20 percent.
So for that $200,000 home, 3 percent for a down payment would be $6,000, which may seem a bit more attainable. The general rule is: the more money you invest initially through a down payment, the smaller the monthly payment will be.
But (of course, there's another BUT) there isn’t just that money for the down payment. You will likely need something in the bank for closing costs, which are usually 2 to 5 percent of the loan. We’re talking property taxes, mortgage insurance, a title search fee, and a home inspection, among other charges. While oftentimes, you may roll them into the loan, you’ll nonetheless want to avoid that if you can.
3. Do I have a low credit score?
I am pretty sure you knew it would ultimately boil down to this but first, the good news, which is also bad. You can actually buy a house even without having excellent or good credit.
Some lenders are now going as low as 580 for a credit score, but you also must have a good debt-to-income ratio. But just because you can get approval for a house doesn’t mean you should try to if your credit score is not in great (or good) standing.
More often, it is best to wait until your score improves, so you can enjoy lower interest rates and lower monthly payments.
2. Am I carrying a lot of debt?
Granted that you have money stashed away for this very purpose and your credit score is so-so, however, if you seem to owe money to just about everyone on the planet, you might have to hold off on buying a home.
Don't get me wrong, a lender may still prequalify you, but if you carry too much debt, you may find yourself in a situation called being "house poor," wherein a large part of your pay goes to your mortgage, leaving little money for other equally important things.
The rule of thumb, as most experts will tell you, is that you shouldn’t spend more than 30 percent of your monthly salary on your house. And lenders generally won’t approve a home to somebody who, after purchasing a property, will then have a debt-to-income ratio of 43 percent or more (that is, 43 percent of your salary is going toward paying debt).
Although having some student loans, credit card debt and a car loan won’t necessarily preclude lenders from approving you to borrow money for a house, the severity of your debts might be a reason for them to do so.
Buying a home shouldn't be complicated. We've enumerated the 12 basic steps involved in homebuying.
Feeling at home starts with me
Whenever I hear or see the words “Home Sweet Home,” there’s a profound sense of purpose that resonates with me. And I think it’s because I completely understand what it means to be in a “sweet” place you could call “home” – even better if it is your own.
Property Taxes: Important Dates to Remember
The most exciting time of the year usually begins in November – why? Well, for starters, it is when the joyous holidays begin, starting with Thanksgiving then, of course, Christmas follows in December. But before we get caught up with all the merrymaking, here are the dates to remember on property taxes. As a bonus, we threw in a property tax rate guide. You're welcome!
- November 1 - First installment of secured property taxes due; delinquent unsecured accounts are charged additional penalties.
- December 10 - First installment is delinquent after close of business; a 10% penalty added to payments made after this date.
- January 1 - Unsecured bills mailed out; lien date for unsecured taxes and current secured taxes.
- February 1 - Second installment of secured property taxes due.
- April 10 - Second installment payment deadline; 10% penalty plus $10 cost added to payments made after this date.
- June 30 - End of the fiscal year. Property Tax may become defaulted.
ON WILDFIRES AND FIREPROOFING
As wildfires rage on, here are some tips on how to “fireproof” your property.