Home Buying Techniques

Buying a home is an exciting and important life event. Being a first time home buyer means that you will have many decisions to make — and just as many questions that need answering.

Buying your first home is a huge step. These helpful home buying tips may reduce confusion about mortgage payments and the cost of buying a house:

• Get preapproved - Buyers should always get preapproved before they begin house hunting. Buyers should get a written preapproval from a reputable mortgage lender before they start shopping for a home.
• Calculate your mortgage payments - Buyer's mortgage payments might be the same or less than rent payments. The (principal and interest) monthly payment on a $200,000, 30-year, fixed rate mortgage with an interest rate of six percent (6.25%) is $1,231 — less than what some people pay for rent (taxes, insurance and any other fees, including closing costs, are extra).
• Share closing costs - Buyers may ask sellers to pay for closing costs. As part of the negotiating process when buying a house, the buyer may ask the seller to pay for a percentage of the non-recurring closing costs, sometimes saving thousands of dollars for the buyer.

Also ask yourself, "Is it cheaper to rent than to own?"

Here's a useful way to calculate and compare: Take the price of the type of home you want in your market. Now see how much it would cost annually to rent a similar property in the same area. For example, if you can purchase a home for $540,000 but can rent a similar one for $36,000 a year, your so-called price-to-rent ratio would be 15.

In general, buying starts to look attractive when the P/R ratio is around 15 or lower. (The current national average is 12.5.) As your market's P/R ratio falls, more sellers are likely to come into the market. So demand could pick up and help stabilize home prices.

Of course, 15 is just a ball park. While P/R ratios in many markets have come down lately, they're still high relative to their long-term average.

If you have any questions or comments, please use the comment link below and we'll respond to your question as quickly as possible. Your email address will never be published here for your privacy and protection.

Jobless Claims Highest in 6 Years

According to a recent Labor Department report, the nation's jobs market sent a fresh cry of distress as the number of newly laid-off people unexpectedly hit the highest level in more than six years. The AP's Ed Donohugh reports in this short video (runs :57)…

Do you think this latest jobs report truly reflects our nations' economy, or is this latest report just evidence that more people are looking for government help? We'd love to hear your opinion. Sound off by using the comment link below. Your identity is always protected when posting at our site. Your email address will never be published here.

Housing Bill Offers Breaks for Taxpayers

The federal housing and foreclosure relief legislation just signed into law by President Bush contains a little-noticed—but potentially far-reaching—change in real-estate tax policy.

It permits millions of homeowners who don't itemize on their federal tax filings to claim a deduction for at least part of their local and state property taxes. Though the House version set the maximum write-off at $350 a year for single taxpayers and $700 for married joint filers, the Senate's $500 and $1,000 prevailed.

The new legislation effectively adds another tax preference for people who own houses while offering nothing to those who rent. The idea, say supporters, is to provide greater tax fairness for a huge category of owners — often seniors and lower-to moderate-income households — who opt for the standard deduction but pay local and state property taxes.

Critics say the plan is just another example of the government's inequitable approach to housing policy — overemphasizing the financial benefits of homeownership versus renting.

What do you think? Does this new legislation discriminate against those who cannot afford to own a home? Is this fair legislation? We'd love to hear your opinion. Use the comment link below to sound off on this topic.

Protect Your Savings From Inflation

Not all savings methods are created equal. In fact, some can actually cause you to lose money. Money Editor Stacy Johnson explains in this short (1:31) video…

If you have any comments or questions, please post them here using the comment link below. Your privacy is protected, as we NEVER publish the email address of anyone who posts on our blog.

June Pending Home Sales Up 5.3%

The number of pending homes for sale rose in June, a rebound from the previous month.

The National Association of Realtors' Pending Home Sales Index rose 5.3% in June to 89 from a downwardly revised reading of 84.5 in May.

The index remains 12.3% below its level in June 2007, when it stood at 101.4, but it's at its highest point since October 2007, when it was at 89.9.

The number of homes under contract for sale fell more than expected in May, after a surprising spike in April.

Do you think these numbers reflect a possible end to the housing dive? We'd love to hear your comments and feedback. Just use the comment link below and tell us what you think. Your email address will never be published at this site to protect your privacy, even though it is needed in order for you to post a comment. We look forward to hearing from you.