I am a strong advocate of homeownership. Owning a home can bring personal satisfaction as well as financial rewards. The financial benefits of home ownership can range from tax breaks to the appreciation in the equity of the home over time. Here are some of the financial benefits.

Tax Advantages. Homeowners may be able to deduct mortgage interest and property taxes as an expense against income.
Appreciation. Real estate values generally rise over time.

Asset. Real estate is seen by lenders as a solid asset, low risk, durable and marketable. Therefore, lenders are more willing to loan a high percentage of value. This allows a homeowner to benefit by having control over an entire high-value asset with a low initial investment or down payment.

Marketable. Real estate can be sold at a predicable price to a dependable group of available buyers, provided enough time is allowed to expose the property to those buyers.

Control and Management. Real estate provides its owner with valuable control and management of its value.

Intangibles. There are so many intangibles that are priceless. The security of your child knowing the front door she walks through today will be the same front door next month, next year–maybe even far in the future when she brings her kids to Grandma and Grandpa’s. Developing friendships with your neighbors and feeling you have a place in the community. Planting a garden because you know you’ll be around to smell the roses. Additionally, homeowners rate themselves to have a higher sense of self-satisfaction and lower levels of depression. People who owned homes also were more likely to say they were sure that their lives will work out than those who don’t own their homes.

The decision to buy has as much to do with your personal needs as it does to do with the financial reasons that can motivate a buyer. Do the math to understand the monetary ramifications. Take time to understand your own motivations before you rush into a decision to buy.

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How You Profit By Working With A Realtor

One of the biggest purchases you’ll make is purchasing a home. Using a Realtor to assist you during the buying process makes good sense and does not cost the buyer.

Selecting The Right Agent

It’s true--Not all real estate agents, Realtors, and Brokers are alike. It’s wise to shop around and find the agent that’s right for you. These are some of the things you should be looking for.

Listens to My Needs. Your Realtor should listen more than talk. You agent should always know what is important to you, and keeps your priorities above his or hers.

Hard Working and Eager. Your Realtor should be ready, willing and able. They should be eager to get out there to show you homes or do what it takes to get your home sold in a timely manner and for the right price.

Accessible. There is nothing more frustrating then when you need to speak with your Realtor then getting their voice mail or have to leave a message. You need an agent who is available when you need him or her. You need someone you can reach immediately.

Positive Attitude. Whether you are buying or selling, your agent’s positive attitude can make all the difference. An agent that is wishy-washy or depressed can dampen the buying and selling process to your determent.

Confident and Assertive. Confidence indicates they know what they are doing. Being assertive shows they will take a stand if necessary during critical negotiations.

Strong Negotiating Skills. Your Realtor should have good listening skills and be a good communicator. They should be open-minded to new options. Your agent should realize that negotiations do not have to be hard or distasteful. Masterful negotiators know how to lead the conversation toward the interests their buyer or seller cares about, when to take a break to refocus, or how to shift the discussion from focusing on past disputes to future goals.

Ethical. Your Realtor must have an outstanding reputation and perform their duties with moral clarity. Its very important that you can trust your Realtor to do what they say, when they say it.

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Keep in mind closing costs are negotiable. Additionally, the cost depends on whether or not you’ll be obtaining a mortgage. The following is to assist you in becoming familiar with those items that can be a part of the closing costs.

Buyers usually pay the following:

What does this usually equate to? About 2 to 4% of the purchase price of the home. However, don’t let this deter you from purchasing a home. As I stated above, closing costs are a negotiable item and if negotiated properly, the seller may assist you in paying the closing costs.

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It’s a fact. The higher your credit score, the better interest rate you will receive as a borrower. What is a Credit Score – It is an estimated ability to pay back the loan.

Components of a Credit Score. Generally speaking, your credit score is based upon the following criteria in order of importance.

These are quantifiable aspects, once accumulated, typically result in a number between 350 and 850. Lenders believe the higher the number, the more likely you are to pay back the loan.

Credit Bureaus. There are three separate credit bureaus which keep track of your score. Experian®, TransUnion®, and Equifax. It’s important to know most lenders look at all three scores when making a decision on your loan, since scores can and often do vary.

What a Credit Score Means. A borrower with an outstanding credit score is rewarded with a lower interest rate because of their proven track record. Consumers with less-than-perfect credit receive loans with a higher interest rate. On a monthly basis, having a higher interest rate means more money out of a borrower’s pocket.

Improving Your Score. To start, it’s recommended you consult with a qualified mortgage professional. An originator can provide examples of reasonable credit usage, discuss options for paying off existing debt, and advise you regarding whether limiting or expanding your credit is most beneficial. A mortgage consultant can also assist you with identifying negative items or potential errors on your credit report. It’s important to deal with such issues as soon as possible. In addition, if you need credit counseling, a mortgage professional can help you to obtain it.

Here are some additional tips to keep in mind.

Loans and credit scores can work against each other, but a good mortgage professional can provide the proper guidance.

If you prefer a proactive approach, log on to www.annualcreditreport.com and obtain a free copy of your credit report. Contacting a mortgage lender with your credit report in hand will only expedite your journey towards a brighter financial future.

Credit Worthiness

Generally, with any lender, the degree of financial risk involved is the overriding concern when considering whether to approve a loan. To weigh that risk, lenders consider two primary factors:

To further minimize the lender's financial risk, the loan is also secured by the home as collateral. Among the primary criteria lenders use to evaluate a borrower's credit worthiness are:

INCOME
Income from salary or other sources must be stable and verifiable, have a history or track record and be likely to continue in the future. Applicants with frequent or recent job changes must provide sufficient, justifiable explanations. Income derived from sources other than employment generally takes extra time and effort for the lender to confirm. Frequently, the lender may request that federal income tax returns from previous years or a business's financial statement and balance sheet be submitted.

CREDIT HISTORY
The applicant's willingness to repay the loan in a timely manner is a vital consideration in approving a loan. A satisfactory record of mortgage payments on previously owned real estate or rental payments is important.

To review the applicant's full credit history, lenders obtain a standard factual data credit report from the Credit Bureau. Late payments, past-due accounts, collections, judgments and bankruptcies reflect irresponsibility toward repaying debt and must be explained fully by the borrower. Other alternative credit sources may be researched if a credit history report isn't available.

ASSETS
To qualify for the loan, the borrower also must demonstrate a consistent pattern of accumulating assets. Assets may be applied toward a down payment, which lowers the lender's risk, or retained as a cushion for unexpected future expenses, which also minimizes the lender's risk.

At the very minimum, the borrower must have sufficient assets to pay for the cash down payment, any prepaid items and the closing costs of the loan. However, lenders also want the borrower to have liquid assets remaining in an amount equal to at least two month's mortgage payments after settlement.

Most standard conventional loans require a minimum 5% down payment. Private mortgage insurance (PMI) is usually required on down payments of less than 20%. PMI protects the lender against financial loss in case the borrower defaults. However, with the many different programs now available it is possible to obtain loans with zero down and no PMI. Additionally, individuals who are qualified my be able to get assistance through the FHA or VA loan programs, if eligible.

LIABILITIES
In assessing the degree of financial risk, lenders also consider the borrower's installment debt, revolving charge account balances, amount of child support, alimony or maintenance payments, and any checking account credit lines.

THE PROPERTY'S APPRAISED VALUE
When deciding whether to grant a loan, lenders also consider the property's appraised market value. Lenders use a Loan-to-Value (LTV) to calculate how much mortgage money the lender is willing to lend. Basically, the LTV is the relationship--expressed as a percentage--between the mortgage amount and the lesser of the appraised value of the property or the sales price. The higher the LTV the more financial risk to the lender, while a lower LTV generally means less risk and more latitude in approving the loan application.

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