Your Dream Home: A Comprehensive Guide to Buying a House, Condo, or Co-op (Money America's Financial Advisor)
Format: PDF / Kindle (mobi) / ePub
The experts at "Money" magazine offer sound advice on everything involved in buying a house, condo, or co-op in this clear, concise guide. This book helps consumers construct a winning game plan when purchasing a home that's also a financial investment.
going up. Many ARMs with payment caps have no corresponding interest rate caps. As a result, you may end up paying the lender less than the amount of interest you owe each month. If this happens, this unpaid interest is added to your loan balance, and the principal amount you owe increases rather than decreases with each payment. This is called negative amortization—and generally should be avoided. 6. Conversion to fixed-rate loan: Some ARMs let you convert to a fixed-rate mortgage at specified
homeownership. You’ll find a blank version of this chart on page 12 for you to fill in. Item Buy Rent Comment 1. Annual income $60,000 $60,000 2. Annual rent $8,400 3. Mortgage payments $10,818 $9,865 is tax-deductible interest; $953 is principal. 4. Real estate taxes $1,500 5. Heat, other extra costs of ownership $3,000 6. Pretax cost of housing $15,318 $8,400 Sum of items 3 + 4 + 5. Renting is $6,918 cheaper before taxes. 7. Tax deductions $11,365 Interest paid plus real estate taxes 8. Tax
buyers. In addition, you may add your closing costs to your mortgage and borrow the entire amount. You will be charged points, however, and have to pay an additional 0.5% interest to cover mortgage insurance that protects the lender. One encouraging note: The FHA has recently revised and relaxed its lending guidelines to eliminate some requirements and to make the process easier for creditworthy minority and nontraditional buyers. The agency is more willing now to give credit for overtime
borrow for the new residence. The thinking is that if the old home hasn’t been sold by closing, it may never be sold. • If you’re receiving alimony, child support, or maintenance funds, you need not declare this income to the lender. You may choose to report the income, however, in order to qualify for the largest possible loan amount. Conversely, alimony, child support, and maintenance that you pay are considered debts and must be reported. • If you’re relying on a cash gift from a relative
house. Be smart and start the process before you start your home search. At the very least, having mortgage money in hand will give you an edge over the competition if you are house hunting in a seller’s market. At best, investing the time for a comprehensive mortgage search can save you thousands of dollars and countless hours of aggravation. The goal of your savvy shopping: to ferret out a lender with low rates and a good reputation for customer service. If you call six lenders a day for five