The Basics of Home Owership

Homeownership is a critical part of The America Dream. Many potential buyers are worried about the current mortgage industry and where they stand in their goal of homeownership. Lenders are “getting back to the basics,” and potential buyers should “get back to the basics as well.

BASICS OF HOMEOWNERSHIP

• Create a Budget – As tough as it may be, create a budget and stick to it! To own a home, you will need to save money for a down payment. Know where every dollar comes from and where it goes. Staying on a budget is not always fun, but keep your long-term goal in mind – homeownership. Owning your own home will be well worth the sacrifices.
• Save, Save, Save – The more you can put down on a home, the better. Avoid having to pay Private Mortgage Insurance (PMI) by putting down 20%. Look over your budget and see where you can cut costs to save more money. Lenders like to see money for a down payment plus money for unexpected expenses. Top financial advisers recommend having 3-6 months of expenses saved in an emergency fund.
• Read Your Credit Report – Get your free credit report at www.AnnualCreditReport.com. Federal law states that you can check your credit report each year for free. Other sites claim to be free, but www.AnnualCreditReport.com is the only federally approved site. If you find any discrepancies within your report, follow the directions to correct the report. Having a good credit score can save you money when it comes time to apply for a loan.
• Lending Basics – Fixed rate loans are safer than adjustable rate mortgages. With a fixed rate interest rate, you will be protected from shifts in the market and world events affecting interest rates. Depending on your loan, a 15-year mortgage can save you thousands versus a 30-year mortgage.
  
  If you need help with any of these basics, consult a financial advisor, a loan officer, your real estate agent or a friend of family member. May books and online resources are available as well.