C.A.R. reports entry-level housing affordability rises 18 percentage points in first quarter
LOS ANGELES (May 20)—The percentage of households that could afford to buyan entry-level home in California stood at 44 percent in the first quarter of 2008,compared with 26 percent for the same period a year ago, according to a reportreleased today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures thepercentage of households that can afford to purchase an entry-level home inCalifornia. C.A.R. also reports first-time buyer indexes for regions and selectcounties within the state. The Index is the most fundamental measure of housingwell-being for first-time buyers in the state.
The minimum household income needed to purchase an entry-level home at$356,350 in California in the first quarter of 2008 was $67,830, based on an adjustable interest rate of 5.65 percent and assuming a 10 percent down payment.First-time buyers typically purchase a home equal to 85 percent of the prevailingmedian price. The monthly payment including taxes and insurance was $2,260for the first quarter of 2008.
At $67,830, the minimum qualifying income was 30 percent lower than a yearearlier when households needed $96,500 to qualify for a loan on an entry-levelhome. Recent decreases in home prices and mortgage rates have broughtaffordability into better alignment with income levels of the typical Californiahousehold, where the median household income was $50,700.
The First-time Buyer Housing Affordability Index rose 11 percentage points in thefirst quarter of this year compared to the fourth quarter of 2007 due to a .56 pointdecrease in the mortgage rate and a 14.3 percent decrease in the entry-levelmedian home price.
At 64 percent, Sacramento County and the High Desert region were the mostaffordable areas in the state. Monterey was the least affordable area in the stateat 29 percent, followed by the San Francisco Bay Area at 30 percent.
Leading the way...® in real estate news and information for more than 100 years,the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of thelargest state trade organizations in the United States, with nearly 175,000members dedicated to the advancement of professionalism in real estate.C.A.R. is headquartered in Los Angeles.
C.A.R. FIRST-TIME BUYER HOUSING AFFORDABILITY INDEX *
Saturday, July 5, 2008
Monday, May 26, 2008
Affordable Housing!
For release:Tuesday, May 20, 2008
C.A.R. reports entry-level housing affordability rises 18 percentage points in first quarter
LOS ANGELES (May 20)—The percentage of households that could afford to buyan entry-level home in California stood at 44 percent in the first quarter of 2008,compared with 26 percent for the same period a year ago, according to a reportreleased today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures thepercentage of households that can afford to purchase an entry-level home inCalifornia. C.A.R. also reports first-time buyer indexes for regions and selectcounties within the state. The Index is the most fundamental measure of housingwell-being for first-time buyers in the state.
The minimum household income needed to purchase an entry-level home at$356,350 in California in the first quarter of 2008 was $67,830, based on an adjustable interest rate of 5.65 percent and assuming a 10 percent down payment.First-time buyers typically purchase a home equal to 85 percent of the prevailingmedian price. The monthly payment including taxes and insurance was $2,260for the first quarter of 2008.
At $67,830, the minimum qualifying income was 30 percent lower than a yearearlier when households needed $96,500 to qualify for a loan on an entry-levelhome. Recent decreases in home prices and mortgage rates have broughtaffordability into better alignment with income levels of the typical Californiahousehold, where the median household income was $50,700.
The First-time Buyer Housing Affordability Index rose 11 percentage points in thefirst quarter of this year compared to the fourth quarter of 2007 due to a .56 pointdecrease in the mortgage rate and a 14.3 percent decrease in the entry-levelmedian home price.
At 64 percent, Sacramento County and the High Desert region were the mostaffordable areas in the state. Monterey was the least affordable area in the stateat 29 percent, followed by the San Francisco Bay Area at 30 percent.
Leading the way...® in real estate news and information for more than 100 years,the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of thelargest state trade organizations in the United States, with nearly 175,000members dedicated to the advancement of professionalism in real estate.C.A.R. is headquartered in Los Angeles.
Source: CALIFORNIA ASSOCIATION OF REALTORS®
C.A.R. reports entry-level housing affordability rises 18 percentage points in first quarter
LOS ANGELES (May 20)—The percentage of households that could afford to buyan entry-level home in California stood at 44 percent in the first quarter of 2008,compared with 26 percent for the same period a year ago, according to a reportreleased today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures thepercentage of households that can afford to purchase an entry-level home inCalifornia. C.A.R. also reports first-time buyer indexes for regions and selectcounties within the state. The Index is the most fundamental measure of housingwell-being for first-time buyers in the state.
The minimum household income needed to purchase an entry-level home at$356,350 in California in the first quarter of 2008 was $67,830, based on an adjustable interest rate of 5.65 percent and assuming a 10 percent down payment.First-time buyers typically purchase a home equal to 85 percent of the prevailingmedian price. The monthly payment including taxes and insurance was $2,260for the first quarter of 2008.
At $67,830, the minimum qualifying income was 30 percent lower than a yearearlier when households needed $96,500 to qualify for a loan on an entry-levelhome. Recent decreases in home prices and mortgage rates have broughtaffordability into better alignment with income levels of the typical Californiahousehold, where the median household income was $50,700.
The First-time Buyer Housing Affordability Index rose 11 percentage points in thefirst quarter of this year compared to the fourth quarter of 2007 due to a .56 pointdecrease in the mortgage rate and a 14.3 percent decrease in the entry-levelmedian home price.
At 64 percent, Sacramento County and the High Desert region were the mostaffordable areas in the state. Monterey was the least affordable area in the stateat 29 percent, followed by the San Francisco Bay Area at 30 percent.
Leading the way...® in real estate news and information for more than 100 years,the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of thelargest state trade organizations in the United States, with nearly 175,000members dedicated to the advancement of professionalism in real estate.C.A.R. is headquartered in Los Angeles.
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Saturday, April 5, 2008
Is Your Home a Burglar's Dream? Security Tips...
If you are losing sleep over keeping your family safe and secure, here are five home-security statistics to remember, along with smart ways to avoid the wannabe burglar.Before you go on a security-related spending spree, check with your local police department and ask them about your area's crime rate. This can give a better sense of the potential risks.- Source: Department of Justice, Bureau of Justice Statistics.
1. More than 62 percent of home burglaries in 2005 took place between 6 a.m. and 6 p.m. (in which the time of the crime was known):Six out of 10 people are being robbed while they're at work. However, there are steps you can take to ensure your home is protected when you're not there.- A security system is a great place to start.- If your neighborhood is prone to crime, form a neighborhood watch.- Getting a dog can help you feel safe when you're home and an alarm when you aren't.- Locked windows, bolted doors, and motion sensitive lights are mainstays if you don't already have them
2. The average monetary loss per burglary in 2005 was $1,725. Who has $1,700 lying around that they could do without? Not many. Make sure to keep your belongings in a safe place, or have them appraised by your insurance company. Obviously, you can't replace the sentimental attachment to your wedding ring, but at least you wouldn't have to pay to replace it.
3. In 84 percent of burglaries, the offender gained entry into the victim's residence or other property.Most criminals are not sneaking into back yards and stealing the lawn furniture. They first get on the property, and then try to get inside.- If you have trees or other landscaping that provides too much cover for prowlers, consider trimming them back.- If you don't have a fence, consider putting one up. A fence is a great deterrent.- Pull the shades both at night and while you're not home. This makes it difficult for prowlers to "case" your home. If they can't determine if you, or your dog, are home, or if you have anything worth stealing, then they are likely to choose an easier option.
5. 74 percent of reported home-fire deaths result from fires in homes without working smoke alarms. This one is pretty simple: Get a smoke alarm and make sure it works. Nothing is more important than your family. You can replace your home, but this is a very small price to pay to keep your family safe.
1. More than 62 percent of home burglaries in 2005 took place between 6 a.m. and 6 p.m. (in which the time of the crime was known):Six out of 10 people are being robbed while they're at work. However, there are steps you can take to ensure your home is protected when you're not there.- A security system is a great place to start.- If your neighborhood is prone to crime, form a neighborhood watch.- Getting a dog can help you feel safe when you're home and an alarm when you aren't.- Locked windows, bolted doors, and motion sensitive lights are mainstays if you don't already have them
2. The average monetary loss per burglary in 2005 was $1,725. Who has $1,700 lying around that they could do without? Not many. Make sure to keep your belongings in a safe place, or have them appraised by your insurance company. Obviously, you can't replace the sentimental attachment to your wedding ring, but at least you wouldn't have to pay to replace it.
3. In 84 percent of burglaries, the offender gained entry into the victim's residence or other property.Most criminals are not sneaking into back yards and stealing the lawn furniture. They first get on the property, and then try to get inside.- If you have trees or other landscaping that provides too much cover for prowlers, consider trimming them back.- If you don't have a fence, consider putting one up. A fence is a great deterrent.- Pull the shades both at night and while you're not home. This makes it difficult for prowlers to "case" your home. If they can't determine if you, or your dog, are home, or if you have anything worth stealing, then they are likely to choose an easier option.
5. 74 percent of reported home-fire deaths result from fires in homes without working smoke alarms. This one is pretty simple: Get a smoke alarm and make sure it works. Nothing is more important than your family. You can replace your home, but this is a very small price to pay to keep your family safe.
Tuesday, November 27, 2007
Save Money at the Pumps!
TIPS ON PUMPING GAS (Good information)
I don't know what you guys are paying for gasoline.... but here in California we are also paying higher, up to $3.50 per gallon. But my line of work is in petroleum for about 31 years now, so here are some tricks to get more of your money's worth for every gallon.Here at the Kinder Morgan Pipeline where I work in San Jose , CA we deliver about 4 million gallons in a 24-hour period thru the pipeline. One day is diesel the next day is jet fuel, and gasoline, regular and premium grades. We have 34-storage tanks here with a total capacity of 16,800,000 gallons.
Only buy or fill up your car or truck in the early morning when the ground temperature is still cold. Remember that all service stations have their storage tanks buried below ground. The colder the ground the more dense the gasoline, when it gets warmer gasoline expands, so buying in the afternoon or in the evening....your gallon is not exactly a gallon. In the petroleum business, the specific gravity and the temperature of the gasoline, diesel and jet fuel, ethanol and other petroleum products plays an important role. A 1-degree rise in temperature is a big deal for this business. But the service stations do not have temperature compensation at the pumps.
When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3) stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapors that are created while you are pumping. All hoses at the pump have a vapor return. If you are pumping on the fast rate, some of the liquid that goes to your tank becomes vapor. Those vapors are being sucked up and back into the underground storage tank so you're getting less worth for your money.
One of the most important tips is to fill up when your gas tank is HALF FULL or HALF EMPTY. The reason for this is, the more gas you have in your tank the less air occupying its empty space. Gasoline evaporates faster than you can imagine. Gasoline storage tanks have an internal floating roof. This roof serves as zero clearance between the gas and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature compensated so that every gallon is actually the exact amount.
Another reminder, if there is a gasoline truck pumping into the storage tanks when you stop to buy gas, DO NOT fill up--most likely the gasoline is being stirred up as the gas is being delivered, and you might pick up some of the dirt that normally settles on the bottom.
Hope this will help you get the most value for your money.
I don't know what you guys are paying for gasoline.... but here in California we are also paying higher, up to $3.50 per gallon. But my line of work is in petroleum for about 31 years now, so here are some tricks to get more of your money's worth for every gallon.Here at the Kinder Morgan Pipeline where I work in San Jose , CA we deliver about 4 million gallons in a 24-hour period thru the pipeline. One day is diesel the next day is jet fuel, and gasoline, regular and premium grades. We have 34-storage tanks here with a total capacity of 16,800,000 gallons.
Only buy or fill up your car or truck in the early morning when the ground temperature is still cold. Remember that all service stations have their storage tanks buried below ground. The colder the ground the more dense the gasoline, when it gets warmer gasoline expands, so buying in the afternoon or in the evening....your gallon is not exactly a gallon. In the petroleum business, the specific gravity and the temperature of the gasoline, diesel and jet fuel, ethanol and other petroleum products plays an important role. A 1-degree rise in temperature is a big deal for this business. But the service stations do not have temperature compensation at the pumps.
When you're filling up do not squeeze the trigger of the nozzle to a fast mode. If you look you will see that the trigger has three (3) stages: low, middle, and high. In slow mode you should be pumping on low speed, thereby minimizing the vapors that are created while you are pumping. All hoses at the pump have a vapor return. If you are pumping on the fast rate, some of the liquid that goes to your tank becomes vapor. Those vapors are being sucked up and back into the underground storage tank so you're getting less worth for your money.
One of the most important tips is to fill up when your gas tank is HALF FULL or HALF EMPTY. The reason for this is, the more gas you have in your tank the less air occupying its empty space. Gasoline evaporates faster than you can imagine. Gasoline storage tanks have an internal floating roof. This roof serves as zero clearance between the gas and the atmosphere, so it minimizes the evaporation. Unlike service stations, here where I work, every truck that we load is temperature compensated so that every gallon is actually the exact amount.
Another reminder, if there is a gasoline truck pumping into the storage tanks when you stop to buy gas, DO NOT fill up--most likely the gasoline is being stirred up as the gas is being delivered, and you might pick up some of the dirt that normally settles on the bottom.
Hope this will help you get the most value for your money.
Tuesday, October 30, 2007
Q & A
Q + A: Removing "Popcorn" Ceilings
Of all the ceiling questions we get on our national radio show The Money Pit, removing popcorn ceilings has to rank as one of the most popular. These are probably biggest challenge up in the ceiling zone found in homes from the paneling-and-disco era. At the time, they were an acoustic solution and a handy way for builders to skip having to add three layers of drywall mud and tape (with the added distraction of those little sparkle bits that were scattered across the ceilingscape), but today, they can be an inconvenient eyesore.
Removal is possible, but it takes some pretty intense work to accomplish: you’ll have to soak the popcorn surface with water (we recommend using a pump garden sprayer for this) and then scrape it all away with a six-inch drywall knife. You’ll then be left with a lot of material that should be disposed of properly, not mention some significant ceiling repair before applying an oil-based primer and a flat finish.
There are maybe a million better ways to spend a Saturday, starting with your annual dental cleaning. If you can live with the texture, you can always use a high-pile, slitted roller to apply a new coat of color that coordinates with the rest of the room.
Q + A: Electric Dryer vs. Gas Dryer: Which is Cheaper?
This makes total sense. In general, electric dryers are about 15% more expensive to run compared to gas. While this isn’t enough to justify the cost of installing a gas line and gas meter, it does make sense as a “while you’re at it” kind of project!
Another good reason to switch is that gas clothes dryers have never been “smarter” at saving you energy. Many of the newest Energy Star models include moisture sensors which turn off the dryer when the clothes are dry, which might happen before the timer reaches the end of its cycle, thereby saving both energy and the wear-n-tear on your clothes!
Q + A: Tips to Avoid Shower Shocks!
There’s nothing like receiving an unexpected blast of cold or hot water while showering to carve a knick into your otherwise domestically blissful household! The reason this happens is because of a pressure imbalance in the plumbing system. When you step into the shower and adjust the hot and cold water mix, you have established a balance between those two supply lines that deliver just the right amount of warm water. However, when the absent minded spouse flushes away, the additional demand for cold water to fill the toilet means less water is available for your original mix. Hence, the balance of hot and cold water supply changes and you get scalded in the process! The same thing could happen when the dishwasher or clothes washer starts to fill after you’ve set your shower in motion. In that case, you’d be blasted by chilly cold water as the hot water flow is shared among those other two appliances.
Fortunately, there is a mechanical solution. It is called a pressure balanced shower valve and it does just that – maintains the balance between hot and cold water, regardless of the amount of water available at any one time. If you had a pressure balance valve in your shower and the toilet was flushed or the dishwasher kicked on, the flow of the water would be reduced but the temperature would remain consistent. These valves also have an anti-scald feature allowing you to set the maximum temperature, adding an additional layer of safety for both kids and adults.
-Tom Kraeutler
Of all the ceiling questions we get on our national radio show The Money Pit, removing popcorn ceilings has to rank as one of the most popular. These are probably biggest challenge up in the ceiling zone found in homes from the paneling-and-disco era. At the time, they were an acoustic solution and a handy way for builders to skip having to add three layers of drywall mud and tape (with the added distraction of those little sparkle bits that were scattered across the ceilingscape), but today, they can be an inconvenient eyesore.
Removal is possible, but it takes some pretty intense work to accomplish: you’ll have to soak the popcorn surface with water (we recommend using a pump garden sprayer for this) and then scrape it all away with a six-inch drywall knife. You’ll then be left with a lot of material that should be disposed of properly, not mention some significant ceiling repair before applying an oil-based primer and a flat finish.
There are maybe a million better ways to spend a Saturday, starting with your annual dental cleaning. If you can live with the texture, you can always use a high-pile, slitted roller to apply a new coat of color that coordinates with the rest of the room.
Q + A: Electric Dryer vs. Gas Dryer: Which is Cheaper?
This makes total sense. In general, electric dryers are about 15% more expensive to run compared to gas. While this isn’t enough to justify the cost of installing a gas line and gas meter, it does make sense as a “while you’re at it” kind of project!
Another good reason to switch is that gas clothes dryers have never been “smarter” at saving you energy. Many of the newest Energy Star models include moisture sensors which turn off the dryer when the clothes are dry, which might happen before the timer reaches the end of its cycle, thereby saving both energy and the wear-n-tear on your clothes!
Q + A: Tips to Avoid Shower Shocks!
There’s nothing like receiving an unexpected blast of cold or hot water while showering to carve a knick into your otherwise domestically blissful household! The reason this happens is because of a pressure imbalance in the plumbing system. When you step into the shower and adjust the hot and cold water mix, you have established a balance between those two supply lines that deliver just the right amount of warm water. However, when the absent minded spouse flushes away, the additional demand for cold water to fill the toilet means less water is available for your original mix. Hence, the balance of hot and cold water supply changes and you get scalded in the process! The same thing could happen when the dishwasher or clothes washer starts to fill after you’ve set your shower in motion. In that case, you’d be blasted by chilly cold water as the hot water flow is shared among those other two appliances.
Fortunately, there is a mechanical solution. It is called a pressure balanced shower valve and it does just that – maintains the balance between hot and cold water, regardless of the amount of water available at any one time. If you had a pressure balance valve in your shower and the toilet was flushed or the dishwasher kicked on, the flow of the water would be reduced but the temperature would remain consistent. These valves also have an anti-scald feature allowing you to set the maximum temperature, adding an additional layer of safety for both kids and adults.
-Tom Kraeutler
Tuesday, October 16, 2007
How to Save for Your First Home As Buying One Gets Tougher
It's a dream of many young adults to buy a first home. But there's an unfortunate reality: Even buying a "starter home" with today's lofty prices can mean saving tens of thousands of dollars for a down payment.
How do you pull it off? The key, obviously, is to save like crazy. Beyond that, here are several suggestions that may make the path to home ownership a bit easier.
1. Aim for 20% down.
Timothy Wyman of the Center for Financial Planning in Southfield, Mich., says you may be able to get by with putting only 10% of the purchase price down, as long as you are confident your income will remain steady or grow and you plan on keeping the home at least five years.
But Mr. Wyman says buyers should ideally aim to save up 20% or more of the price. The risk of putting down too little: If the home falls in value and you sell at a loss, you'll owe more to the lender than you receive from the buyer.
In addition, many mortgages require buyers who put down less than 20% to get private mortgage insurance, which can add $80 to $100 to your monthly bill. And the less you put down, the higher your loan balance and therefore your monthly payment will be.
Mortgage lender Washington Mutual estimates that a buyer who puts down 5% on a $300,000 home with a 5.88% 30-year fixed-rate mortgage might pay $2,133 a month, including fees and property tax, while a buyer who puts 20% down would likely pay $1,682 a month. (The estimate assumes the 5%-down buyer must pay for mortgage insurance.)
You'll also need extra money set aside on top of the down payment for closing costs such as title insurance and mortgage fees, which can reach up to $5,000. If you want to pay "points" to lower your mortgage rate -- a smart idea for borrowers who expect to stay in a home several years -- you'll want a few thousand dollars more.
To find out the price of local starter homes, so you can estimate what you'll need to save up, you can check out home listings on Realtor.com or compare sales data at Zillow.com.
2. Keep it separate.
Set up a separate account for your down-payment funds, so the money doesn't get intermingled with other savings and so you can keep track of how much you save. This would probably be a taxable account at a bank or brokerage firm.
Mr. Wyman suggests setting up regular automatic deposits from a checking account into the down-payment account to force regular savings. "You want to be moving money to this account before you spend it," he says.
3. Consider your time horizon.
How best to invest down-payment money depends on your time horizon for purchasing a home. Those planning to buy in three years or less should put the money in conservative investments such as short-term certificates of deposit or short-term bond mutual funds to shield themselves from potential market downturns.
If you're waiting at least five years to buy, you can invest more aggressively. A balanced mutual fund that invests in, say, 60% stocks and 40% bonds, such as Vanguard Balanced Index Fund, is a good choice and should perform better over the longer period.
4. Get extra help.
Few first-time buyers pony up the entire down payment on their own. Nearly 23% of first down payments come as gifts from relatives and friends, according to a recent survey by the National Association of Realtors.
While such assistance is great, there are also other places you can look. There are many down-payment assistance programs for first-time buyers that are offered by banks, local governments and charities. Many are open only to low- or moderate-income buyers and some are targeted to specific communities.
Some programs lend buyers a substantial portion of the down payment. For example, the California Housing Finance Agency can provide eligible first-time home buyers in Los Angeles 3% of a home's purchase price as down-payment or closing-cost assistance. The money must be repaid when the buyer sells the home, refinances or pays off the loan.
Many lenders have information about assistance programs that borrowers can seek help from.
5. Clean up your finances.
Your credit history will determine the loan terms and mortgage rates you qualify for. You could be offered a smaller loan or charged a higher rate if a lender is concerned you might not be able to repay.
So before approaching lenders, first-time buyers should give themselves the financial equivalent of a physical exam, says Ellie Deskin, a financial planner in Troy, Mich. This means checking your credit score and credit reports with the three major credit bureaus and fixing any errors. (Consumers can now get one free copy of each report annually by going to Web site annualcreditreport.com.)
Also consider paying down some debt, especially high-interest debt such as credit cards, that might flag you as a riskier borrower.
While some debt is okay, being overloaded will likely tarnish your loan terms.
6. Weigh mortgage tradeoffs.
Lenders increasingly offer creative loans, such as interest-only loans and certain types of adjustable-rate loans, that can reduce your monthly payments -- at least for a while. But these alternative loans can be much riskier than fixed-rate loans, because monthly payments can jump after a few years.
A general rule of thumb is that your monthly mortgage payment shouldn't exceed 28% of your household's gross monthly income. Check out some mortgage calculators at Dinkytown.net to calculate what your monthly payment would be with different types of loans.
7. Hands off retirement savings.
If you're just shy of saving up enough for a home, you might consider taking a small loan from your 401(k) plan or withdrawing some principal from a Roth IRA. But many financial advisers caution against tapping retirement accounts too heavily for a home purchase.
For one thing, you're going to need your retirement stash, so you don't want to gouge it. Taking a loan from your 401(k) can also be risky, since you may have to pay it back if you leave the company. And if you take money out of your Roth, you can't replace it, so you lose some of the Roth's long-term benefit of tax-free earnings.
By Kelly K. Spors,Wall Street Journal Online
How do you pull it off? The key, obviously, is to save like crazy. Beyond that, here are several suggestions that may make the path to home ownership a bit easier.
1. Aim for 20% down.
Timothy Wyman of the Center for Financial Planning in Southfield, Mich., says you may be able to get by with putting only 10% of the purchase price down, as long as you are confident your income will remain steady or grow and you plan on keeping the home at least five years.
But Mr. Wyman says buyers should ideally aim to save up 20% or more of the price. The risk of putting down too little: If the home falls in value and you sell at a loss, you'll owe more to the lender than you receive from the buyer.
In addition, many mortgages require buyers who put down less than 20% to get private mortgage insurance, which can add $80 to $100 to your monthly bill. And the less you put down, the higher your loan balance and therefore your monthly payment will be.
Mortgage lender Washington Mutual estimates that a buyer who puts down 5% on a $300,000 home with a 5.88% 30-year fixed-rate mortgage might pay $2,133 a month, including fees and property tax, while a buyer who puts 20% down would likely pay $1,682 a month. (The estimate assumes the 5%-down buyer must pay for mortgage insurance.)
You'll also need extra money set aside on top of the down payment for closing costs such as title insurance and mortgage fees, which can reach up to $5,000. If you want to pay "points" to lower your mortgage rate -- a smart idea for borrowers who expect to stay in a home several years -- you'll want a few thousand dollars more.
To find out the price of local starter homes, so you can estimate what you'll need to save up, you can check out home listings on Realtor.com or compare sales data at Zillow.com.
2. Keep it separate.
Set up a separate account for your down-payment funds, so the money doesn't get intermingled with other savings and so you can keep track of how much you save. This would probably be a taxable account at a bank or brokerage firm.
Mr. Wyman suggests setting up regular automatic deposits from a checking account into the down-payment account to force regular savings. "You want to be moving money to this account before you spend it," he says.
3. Consider your time horizon.
How best to invest down-payment money depends on your time horizon for purchasing a home. Those planning to buy in three years or less should put the money in conservative investments such as short-term certificates of deposit or short-term bond mutual funds to shield themselves from potential market downturns.
If you're waiting at least five years to buy, you can invest more aggressively. A balanced mutual fund that invests in, say, 60% stocks and 40% bonds, such as Vanguard Balanced Index Fund, is a good choice and should perform better over the longer period.
4. Get extra help.
Few first-time buyers pony up the entire down payment on their own. Nearly 23% of first down payments come as gifts from relatives and friends, according to a recent survey by the National Association of Realtors.
While such assistance is great, there are also other places you can look. There are many down-payment assistance programs for first-time buyers that are offered by banks, local governments and charities. Many are open only to low- or moderate-income buyers and some are targeted to specific communities.
Some programs lend buyers a substantial portion of the down payment. For example, the California Housing Finance Agency can provide eligible first-time home buyers in Los Angeles 3% of a home's purchase price as down-payment or closing-cost assistance. The money must be repaid when the buyer sells the home, refinances or pays off the loan.
Many lenders have information about assistance programs that borrowers can seek help from.
5. Clean up your finances.
Your credit history will determine the loan terms and mortgage rates you qualify for. You could be offered a smaller loan or charged a higher rate if a lender is concerned you might not be able to repay.
So before approaching lenders, first-time buyers should give themselves the financial equivalent of a physical exam, says Ellie Deskin, a financial planner in Troy, Mich. This means checking your credit score and credit reports with the three major credit bureaus and fixing any errors. (Consumers can now get one free copy of each report annually by going to Web site annualcreditreport.com.)
Also consider paying down some debt, especially high-interest debt such as credit cards, that might flag you as a riskier borrower.
While some debt is okay, being overloaded will likely tarnish your loan terms.
6. Weigh mortgage tradeoffs.
Lenders increasingly offer creative loans, such as interest-only loans and certain types of adjustable-rate loans, that can reduce your monthly payments -- at least for a while. But these alternative loans can be much riskier than fixed-rate loans, because monthly payments can jump after a few years.
A general rule of thumb is that your monthly mortgage payment shouldn't exceed 28% of your household's gross monthly income. Check out some mortgage calculators at Dinkytown.net to calculate what your monthly payment would be with different types of loans.
7. Hands off retirement savings.
If you're just shy of saving up enough for a home, you might consider taking a small loan from your 401(k) plan or withdrawing some principal from a Roth IRA. But many financial advisers caution against tapping retirement accounts too heavily for a home purchase.
For one thing, you're going to need your retirement stash, so you don't want to gouge it. Taking a loan from your 401(k) can also be risky, since you may have to pay it back if you leave the company. And if you take money out of your Roth, you can't replace it, so you lose some of the Roth's long-term benefit of tax-free earnings.
By Kelly K. Spors,Wall Street Journal Online
Monday, October 8, 2007
5 Simple Steps to Your Dream Bathroom
Bathroom remodeling is one of America's most popular home improvements and can be as budget-friendly as you choose. A simple spruce-up involving a new vanity top, bathroom fixtures and lighting can be done for well under $1000, but many homeowners are choosing to expand the space and add new tile, flooring, cabinets, even windows for a complete bathroom transformation. 1. Determine your exact bathroom needs.Do you want to enlarge your bathroom? Do you need another sink? Wouldyou like to add windows? Does the bathroom tile need to be replaced?Think about what your ideal bathroom will look like and then prioritize your needs before your wants. If space is an issue in your bathroom, consider expanding it in any possible direction. Extra square footage will open up your cramped bathroom and increase the possibilities. Taking out a wall and replacing it with a window allows natural light in the bathroom and creates a more open feel. Since most people have many hygiene products, increasing your storage space should also be considered.
2. Gather bathroom design ideas. Think about colors, textures, and overall style. Peruse bathroom fixtures, tile and flooring options. Ceramic tile is a popular choice for bathroom flooring. If you think ceramic tile will be too cold to walk on in the winter, radiant floor heating provides heat from below your floor, keeping your tiles, feet and the rest of your room very warm. A set of architectural plans will really help you and your remodeling professionals visualize the finished project, but any design preparations can be helpful. Consult with a designer for ideas or check out magazines and cut out ideas, designs or photos that approximate what you want. It can also behelpful to a designer if you can make a sketch on graph paper of what your plans are. Any of these things will be help you to express to your bathroom remodeling professionals.
3. Establish a realistic bathroom remodeling budget. At this time you will also need to determine how you will finance your bathroom remodel. Do you have a savings that you can dip into or will you need get a loan? The answer to this will be a factor in determining your budget. Will this be a larger remodel or are you making minor changes? When establishing your budget keep in mind the design ideas you would like and whether they fall on the pricier side. Also, it will always be less expensive if you don't need to relocate plumbing fixtures, such as toilets or sinks, so if you are on a smaller budget it is more economical to incorporate your current bathroom layout into the new design.
4. Don't forget building permits.Before beginning the remodeling process be sure to secure a building permit from your local city or county government. Failure to do socould ultimately make your bathroom remodel much more costly.
5. Consider popular bathroom design trends. Second sinks have become very popular in bathroom remodels as theyallow two people to use the bathroom at the same time. Non-traditional bathroom sinks are also popping up everywhere, quite literally.Above-counter sinks feature a more shallow basin giving the appearance of a bowl or dish resting atop the countertop. And don’t forget about the vanity. Antique bureaus are showing up as a fresh take on the bathroom vanity.Consider retrofitting an antique or purchase a vanitydesigned to mimic this look. If you only have a shower, consider replacing this with a bathtub which can serve double duty as both a bath and a shower. Vertical spas provide a massage in the shower with body sprays installed vertically along the wall. Whirlpool bathtubs have also become very popular intoday's bathrooms. Another popular trend in bathroom design is to separate the toilet from the rest of the bathroom. Nearly everyone elects to include a bathroom exhaust fan, often incorporating a heater on a timer, as well.
2. Gather bathroom design ideas. Think about colors, textures, and overall style. Peruse bathroom fixtures, tile and flooring options. Ceramic tile is a popular choice for bathroom flooring. If you think ceramic tile will be too cold to walk on in the winter, radiant floor heating provides heat from below your floor, keeping your tiles, feet and the rest of your room very warm. A set of architectural plans will really help you and your remodeling professionals visualize the finished project, but any design preparations can be helpful. Consult with a designer for ideas or check out magazines and cut out ideas, designs or photos that approximate what you want. It can also behelpful to a designer if you can make a sketch on graph paper of what your plans are. Any of these things will be help you to express to your bathroom remodeling professionals.
3. Establish a realistic bathroom remodeling budget. At this time you will also need to determine how you will finance your bathroom remodel. Do you have a savings that you can dip into or will you need get a loan? The answer to this will be a factor in determining your budget. Will this be a larger remodel or are you making minor changes? When establishing your budget keep in mind the design ideas you would like and whether they fall on the pricier side. Also, it will always be less expensive if you don't need to relocate plumbing fixtures, such as toilets or sinks, so if you are on a smaller budget it is more economical to incorporate your current bathroom layout into the new design.
4. Don't forget building permits.Before beginning the remodeling process be sure to secure a building permit from your local city or county government. Failure to do socould ultimately make your bathroom remodel much more costly.
5. Consider popular bathroom design trends. Second sinks have become very popular in bathroom remodels as theyallow two people to use the bathroom at the same time. Non-traditional bathroom sinks are also popping up everywhere, quite literally.Above-counter sinks feature a more shallow basin giving the appearance of a bowl or dish resting atop the countertop. And don’t forget about the vanity. Antique bureaus are showing up as a fresh take on the bathroom vanity.Consider retrofitting an antique or purchase a vanitydesigned to mimic this look. If you only have a shower, consider replacing this with a bathtub which can serve double duty as both a bath and a shower. Vertical spas provide a massage in the shower with body sprays installed vertically along the wall. Whirlpool bathtubs have also become very popular intoday's bathrooms. Another popular trend in bathroom design is to separate the toilet from the rest of the bathroom. Nearly everyone elects to include a bathroom exhaust fan, often incorporating a heater on a timer, as well.
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