Buying a home

[bee9984]

I just found this on Oprah from a past show with Suze Orman about buying a home. She has some good points


http://www.oprah.com/tows/pastshows/...021003_c.jhtml


Financing a Home

Suze says couples shouldn't wait until they buy a new home to see if they can afford to keep it—they should play "house" now.

Why a Home Costs More Than a Mortgage
How to Play "House" Financially
Reality Check
Rules to Live By
Get Out Your Calculator!

Why a Home Costs More Than a Mortgage
Suze recommends only spending 25 percent of your take-home pay each month on your mortgage. If your monthly take home is $4,000, then your mortgage payment should be $1,000.
For every $100,000 of a mortgage that you want to take out, in today's interest rates of about six percent, a 30-year mortgage will cost you about $600. If you want a $300,000 home, a 30-year mortgage will cost you about $1800. And that's just the mortgage!
Each month you'll have more expenses than just a mortgage. You will have homeowner's insurance, property tax, Private Mortgage Insurance (PMI) if your downpayment is less than 20 percent, and general maintenance/repairs. Estimate spending an additional 30–45% of the mortgage to get a realistic feel of what it will cost you to own a home.

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How to Play "House" Financially
Calculate what the monthly payment will be on the house you want to buy.
Suze says you should try not to spend more than 2.5 times your family's salary on a house.
Your minimum downpayment should be 5–10 percent of the purchase price. You should put at least 20 percent down to avoid PMI costs or having to pay for higher interest rate loans. There are many lenders that will allow you to buy a house for no money down, however in Suze's opinion, that can lead to trouble.
Open up a new money market fund or savings account. Pick a due-date and every month for the next six months, deposit into this account the difference between the projected cost of owning your new home and what you are currently paying for rent or mortgage on that due-date.
At the end of the six months, evaluate how "making payments" affected your lifestyle. If you made all the payments comfortably and on time, you know that you can afford to own a home for this amount of money at this point in time. And best yet, you now have some money for the downpayment on your dream home!
If you missed or were late in making any payments, in Suze's opinion you cannot afford the house you were thinking about buying. She suggests finding a monthly payment that will be more comfortable to make; considering a smaller house; or waiting until your finances improve. Here is the good news: not only do you know what you can realistically afford at this point in time without hurting your credit score, but now you have a sum of money in a savings account that will help you achieve your future goals.

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Reality Check
The first sign you can't afford a home: The credit card debt you have is increasing.
Suze says your monthly expenses—credit card bills, mortgage or rent—should not exceed 40 percent of your salary.

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Rules to Live By
If you do purchase something at zero percent financing or don't have to pay anything for a year, make sure you can pay your bill in full at the end of that time. If you don't, you may accrue compounded interest.
In general, Suze says do not buy anything (other than a house or a car) that will take longer than a year to pay off.
If you have to lease a car to "afford" it, you shouldn't have that car.
In this volatile economy, Suze says you should have 8 months worth of living expenses saved in an emergency account.

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[homesteadmamma]

thanks

[bee9984]

You are welcome

[bee9984]

I just wanted to add that I read another article by Suze and she made a statement which I found to be a real reality check , she said this;

"If I have to finance it , I can't afford it."

Anyhow, I really liked that