October 2009

How Debt Consolidation Helps Homeowners

Too many homeowners are living large with budget-busting spending habits and are facing the same bleak outlook no matter where they live across the nation. For many, it’s becoming a make-or-break situation just trying to pay their household bills everymonth. But those who have taken the first step in consolidating their bills are finding out that there is a light at the end of the tunnel.

Debt consolidation, including mortgage refinancing, is growing in popularity, and an increasing number of homeowners are jumping on the bandwagon in an effort to improve their overall financial standing.

One of the big advantages of debt consolidation is that often, when people see their balance dropping steadily each month, they are encouraged and work harder toward decreasing their debt even further.

Another reason debt consolidation can be so appealing is that having less debt makes it easier to get approved for a home loan. For renters this opens the door to home ownership; and for homeowners looking for help on their existing loan, this could mean refinancing.

However, borrowing against your house in an effort to decrease debt can backfire: you miss a payment or default on the loan and you lose your house. Although many homeowners in debt looking for a quick fix would rather not admit it, the best approach to debt consolidation is the more painful option – a change in behavior and attitude when it comes to handling money.

If you are not careful, many Americans who take out a loan to pay off credit cards or unsecured debt end up in worse shape within the next two years.

And remember, Consumer Credit Counseling Services advises homeowners to keep an eye on their debt ratio, and aim for monthly debt obligations to equal no more than 20 percent of their take-home pay.

Finding A Home With Real Value

Buying real estate can be a worthy enterprise. There is a considerable amount of money in real estate, and much to be gained from investing in worthwhile real estate. There are plenty of homes on the market today, but in a tough economy it can be hard to find real estate worth buying.

So, when buying real estate in this type of economy you want to make sure you invest in real estate that is going to prove valuable and help you make money when the housing market turns around, and it usually does. It may just take some time. If you want to purchase a home as an investment, you must know what to look for.

What To Look For

• Consider the location – location is often more important than the home itself. Most people move to a location not necessarily to a house. Where is the home? Is it central to a metropolitan area? Is it close to good schools? Is it in a bedroom community? Find out what you are looking for and what other people may be looking for in the future.
• Consider the lot – does the property have an incredible view? Does the property have great landscaping? Often the land itself is also more valuable than the house. Someone can always add on to a house. A great lot is well worth its weight in gold. Is it private? Does it offer privacy? Can the owners build in privacy by adding some bushes? Are trees well-planted?
• Look at the house itself – when you find a good location and a good lot, the next step is to find a great house. There are several things to look at here. These include the house size, the number of bedrooms, the number of closets, whether the house has a garage. The more amenities a home has the more likely it is to prove attractive. But remember different people want different things. Some people may consider a basement far more important when buying real estate than a detached garage. Three bedrooms are typically far more convenient than two. A home with more than one bathroom is usually more useful than one.

Avoid Foreclosure at All Costs

As we’ve all witnessed in the media this past year, some homeowners can be very hardheaded when they falls into financial hardship and are facing foreclosure on their home. Typically they will resist offers to sell their home. But while noble, this can also be thoroughly disastrous.

That’s why I think it’s critical to point out to the such homeowner that selling their property may be in their best interests. And if I could make one basic, simple appeal it would be that foreclosure must be avoided at all costs. The reason is that with foreclosure proceedings there also comes a number of catastrophic hassles that normally cause irreparable harm to the homeowner.

For example, if your home is foreclosed your credit rating is going to be devastated for a full decade. Of course, you can also seek protection against the creditors by filing bankruptcy, but bankruptcy has become significantly more difficult to qualify for as laws for filing bankruptcy have become much stricter.

Also, the damage done to a your credit rating due to a bankruptcy would make borrowing money next to impossible. That’s why it is significantly better to sell your property outright on your own terms than it is to suffer the disaster of having your property foreclosed upon.

Want to Rent Out Your 2nd Home?

Over the last twenty years or so, the number of people who own a second homes has increased greatly. So what used to seem like just a privilege for few is now something that more and more people enjoy. But given the recent economic downturn, the cost of leaving a second home empty is no longer an affordable option for some.

So if you own a second home and have always kept it for your own use, you might want to start thinking about renting it out while you are not using it.

But if you’re like most people, you don’t welcome the thought of renting out your property. Why? Because nobody likes the ideas of strangers living in their home away from home. However, people who rent out their second home usually find that it’s looked after very well by their guests. And crazy as it may sound, the better furnished and equipped your property is, the less problems are likely to occur.

And obviously, those of you who have second homes purely for long-term investment and very rare use for yourself are in an even better position to rent out your home. It won’t interfere with your plans for staying there, and you probably don’t have much in the home to worry about getting damaged.

Overall, renting out your second home is definitely something to consider. Even though you probably won’t ever get rich doing so, you will certainly offset all the day-to-day running costs of maintaining an empty home.

8 Steps To Take Before Purchasing a Home

There’s a great deal more to buying a home than you might think at first. Finding the home of your dreams and making an offer is a major part, but there are steps you must take first to prepare for the purchase so that everything can run smoothly.

I don’t mean spending months learning from books, manuals or attending costly seminars. I’m simply suggesting that you follow these tips and seek advice from experts:

1) Take a look at your commitment to a home. If you can’t commit to staying in one place for at least two or three years, then maybe owning your own home is not a good idea at the moment. It is costly buying and selling a home, so you may lose money if you need to move again soon after.

2) Take a good look at your finances. Start by making sure your credit history is clean by getting a copy of your credit report. Check that the facts are correct and fix problems if you find any. It is best to do this a couple of months before you start house hunting.

3) You must have enough money for your monthly mortgage payment, plus breathing room so that you can get pre-approved for a mortgage, You can use one of the many online calculators to work out your income, expenses and debts, and what you can afford. Getting pre-approved saves you wasting time looking at houses you can’t afford. It also puts you in a better position to make an earnest offer when you do find the house of your dreams.

4) Learn about the mortgage process and all the various different kind of mortgages. Its not necessary to put down 20% as there are numerous private and public lenders offering low down payments as well a low interest rate. Finding a satisfactory mortgage is as important as finding the right home.

5) Make a list of wants and needs. A need is something your home must provide you with, an essential, whereas a want is something you desire to have in your home.

6) Buy a property in a good school area, even if you don’t have children of school age. This is a top priority for many homebuyers and will help you when you want to sell, as these houses may better hold their value.

7) Do your home work and make sure your bid is based on similar homes in the neighborhood, for example if others have sold five percent less than the asking price, your should be at least eight percent below the asking price.

Always hire your own home inspector, experienced in home inspections in the particular area you are planning to live. He will be able to discover potential costly problems.

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