What a Harvard Study Revealed About Renters
Recently, a study was done by some Harvard students showing exactly who is suffering from paying out rent each month to someone else rather than paying into their own home. What they found was that renters were spending more than half of their income in rent. This number sounds high because it is, and I wouldn't even encourage anyone to spend half of their income on a house. Making homeownership affordable is what helps families to stay in their homes.
Why Buying a Home Serves You Well
Buying a home isn't just about having a structure or a piece of property with your name on it. That is nice to have, and there is nothing to help you feel more proud than being a homeowner, but the reality is you are simply losing more money when you are renting and not paying your own mortgage. Here is the harsh reality; you are paying someone else's mortgage when you rent, and it's just going into their pocket.
Why not pay that mortgage interest back to yourself? The other thing that you need to be aware of is that there is no better time than now to buy because the interest rates are lower, and that won't go on for too much longer. With inflation coming down the pike, and a devaluing US dollar, the rates are going to sit where they are only for a short time. This down economy is on a fast track to nowhere, but it is working in your favor if you want to buy a home, get it at a great price and pay less in interest.
Buying a home at a lower price now and a lower rate will help you keep your payments down, and get you into a home that will truly be an investment for you down the road. Once the market does improve you will understand how much of an investment you really have on your hands. Building equity in the home will happen over time as you pay down your loan, and as the values of homes like yours go back up.
Preparing to Buy Right Now
I see all the time how people miss the boat on being prepared. It shocks me, but then it doesn't because I know that I can't expect everyone to live like I do. I want nothing more than to teach everyone how to become a homeowner, and part of that is teaching people how to handle their credit and their money wisely. Being prepared to own a home means evaluating your credit early on, so that you don't have any surprises during the process.
Get a copy of your credit report and take a look at what is on there. If you don't have a credit score then alternative credit like utility bill payments and other obligations can be evaluated carefully by the lender. While not ever lender will accept those, FHA does make some exceptions that conventional lenders don't make. This is the beauty in working with an FHA expert; knowledge is power and what you don't know could keep you from getting into a home right now.
Minimal down payment for first time homebuyers is also important, because FHA allows for as little as 3.5% down with a credit score off 640 or better. No two loans are alike, and with a lower score you could still get into a home with more money down. Don't close the door on your own opportunity, because you never know what is around the corner.
Questions and Answers
Find out the best advice on the way to apply Balanced Scorecard system in various companies. Find out more on Balanced Scorecard advantages in this article.
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Many second mortgages have been voided by the courts in order to put borrowers in a better position. The 80/20 mortgage plan is no longer an effective plan, and simply doesn't work. The FHA provides better solutions for you to get into a home without having extra debt that you don't need.
Your debt to income ratio is a big deal, and can make or break you getting your new home loan.
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Right now all you hear in the media is negative, but I am here to tell you the opposite. Buying a home now rather than later is a very smart move.
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