Tag Archives: mortgage help

The Big House/Longer Commute Trade-off

Equifax shows how to avoid too much mortgageFor the past few years, the big news in home buying has been no news. Home buying activity has been relatively flat recently thanks to the downturn in the housing market. But not long ago, during the housing boom, the big news was how big homes were becoming. Remember all the McMansion headlines? Buyers bought into the trend that bigger homes were better. Many buyers bought more home than they could afford.  As the housing market begins to creep back up, buyers should be more cautious about what they really need in a home and not get stuck living beyond their means in a giant house.

The new Equifax Finance blog article “

What Kind of Mortgage Can You Afford?” explains further, warning buyers to not get trapped into buying the biggest house they can afford, even if it is miles and miles away from work. Combining commuting expenses with housing expenses can give buyers a better idea of how much they can afford. If you are going to live 30 miles from work, you have to take into account your transportation costs when determining what you can afford each month. Take into account rising gas prices, vehicle maintenance, highway tolls, parking fees, etc.  Could you live 15 minutes away from work, save about half on commuting, and have a slightly smaller home? What would you be willing to trade to swap the time spent in your car with time spend with your family? Or, could you take advantage of public transportation? The greener choice would be to live as close to work as possible to reduce transportation times.

A good estimate of housing plus transportation costs is about 45 percent of your monthly take-home pay, but yours could be more or less depending on various factors, like whether or not you can use public transportation, how much gas your car guzzles, etc.  But the bottom line is that there will be give and take when it comes to the two. Lower transportation costs mean you can afford more home; higher transportation costs mean less. And you should also take into account the full cost of owning a larger home, including utilities. That big home may not be that great of a deal when you face very cold winter heating or very warm summer cooling costs for that huge house.

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Reminder: There’s Still Mortgage Help for Those Who Need It

energy efficient homesIf potential new home buyers are a little nervous about jumping into the real estate market and applying for a mortgage, it’s understandable. With all the talk about stringent lending standards and the gaffs major lenders have been making, it’s hard to know where to start.

The truth is that several programs were available to help before all the madness began, and they’re still available to homebuyers today. “

Zero Down Home Loan Options,”  an

Equifax Personal Finance Blog post by real estate expert Ilyce Glink, offers links and information on several of those programs.

For veterans who served at least 90 days during wartime and at least 181 continuous days in peacetime (and didn’t receive a dishonorable discharge), VA loans are a good option. They are backed by the government, and they allow veterans to finance up to 100 percent of the purchase price of their primary residence. The VA sets price limits for each county, and the property must fall within those limits.

Programs are available to non-veterans, too. The USDA Rural Development Direct Loan program is another way to buy without a downpayment. Again, there are location requirements, but you might be surprised at how many eligible “rural” properties are close to seemingly urban locations. There’s an income ceiling, based on the average median income where you’re purchasing. For this loan, the requirements state that borrowers must be unable to get credit elsewhere, though they still must have a decent credit history.

For HUD homes in FHA foreclosure, you can get into a home with a downpayment as low $100 through FHA’s $100 Down Payment Incentive program. Other HUD programs also offer low down payment options, ranging from zero to $1,000 down.

If you are buying your first home, there are lots of extra opportunities just for you, many of them managed locally. Glink recommends using your favorite Internet search engine to narrow down the “first time home buyer down payment” options for your city name.

The

Equifax Personal Finance Blog offers links to information on the VA, FHA, HUD and USDA programs. As intimidating as home loan shopping may seem, there’s plenty of help and information available to ease the process. Take advantage of it before today’s low interest rates are history.