Part 16 (2/2)

2,015

1,923

The table shows roughly howprincipal and interest) For example, if you took out a 30-year loan at 6 interest, your payment would be about 1,500 But if you shopped around and found a 55 rate, you'd pay 1,420, saving 80 every month for 30 years A difference like that really adds up over time

TipVertex42com offers a free Excel spreadsheet that lets you calculate approxie, taxes, and insurance, but also maintenance and improvements Download it here: tinyurlcoe you take out will depend on your goals and your financial situation Most people opt for a e with a fixed 15- or 30-year term Here's some info that can help you decide which is best for you: - Interest rates on 15-year es are lower than those on 30-year loans, but because the loan is only half as long, your her (See the table above to co for retireher reat option because it'll save you a bundle in interest But if it's going to crie instead

- For e is the best choice The monthly payreater flexibility If you want to pay more than the minimum ae? Should you prepay your ives you a kind of safety net: If you lose your job, say, it's easier to make the payments on a 30-year loan than a 15-year loan

NoteBe wary of e products like adjustable-rate and interest-only loans These may seem attractive, but there are a lot of pitfalls involved These types of loans are for ”sophisticated” borrowers (If you're not sure whether you're a sophisticated borrower, you're not) Closing the Deal As you wait for the lender to approve your loan docus to think about Your top priority should be checking the background of the home you're about to buy Your lender will require that the house be appraised, but you should go further Once your offer is accepted: - Ask the seller to pull a CLUE report (tinyurlcoe is a database the insurance industry uses to track insurance claims connected to people and property A CLUE report tells you what sorts of clai the past 7 years You can't order this report yourself-only the person ns the property can

- Get an independent inspection A good inspection will cost several hundred dollars, but it's worth every penny Ask friends, family, and coworkers to recommend inspectors Don't use an inspector recoent; you want soh, and whose livelihood isn't tied to others in the process Tag along during the inspection and ask questions (You may want to film the house at this time) Don't panic if the inspector finds problehbors Ask about the house and the neighborhood The seller e conversion he did without a peruy next door probably won't be

- Stay on top of things The ho process involves a lot of people, and they're usually juggling lots of other deals, too Don't be afraid to be the squeaky wheel that needs a little grease Your questions may drive people crazy, but that's okay What's worse: To annoy the title-insurance company or to lose tens of thousands of dollars because you were too chicken to speak up?

- Do a final walk-through On the day before you close the sale, ask to take one final pass through the house Are thetreatht fixtures still the saoal here isn't to do another hootiate on, just to be sure everything's in the same condition as when youcosts into the ood idea, but itrun

- Ask to read theis when you sit down and finalize the deal by signing all the necessary paperwork) This is the n ibberish-do you really want to read it for the first ti? What happens if you discover there's a penalty for prepaying the e? Or that the contract specifies a term of 15 years instead of 30 years? If you don't read the contract, you have nobody to bla If you need to, have a lawyer review the paperwork This is likely to be the biggest legal contract you ever sign, so take the ti is when you sit down and finalize the deal by signing all the necessary paperwork) This is the n ibberish-do you really want to read it for the first ti? What happens if you discover there's a penalty for prepaying the e? Or that the contract specifies a term of 15 years instead of 30 years? If you don't read the contract, you have nobody to bla If you need to, have a lawyer review the paperwork This is likely to be the biggest legal contract you ever sign, so take the tiht

TipIf you don't already have a lawyer, consider hiring a real-estate attorney to review your e paperwork It'll cost you a few hundred bucks, but that's peanuts co on your ho this process, your laill be the only other person actually in your corner representing your best interests

Owning a Hoot yourself a horatulations! Of course, your responsibilities don't end there

When you rent a place to live, your only cost is the monthly rent payment (and maybe utilities) But when you own a hoage payments, you have to pay property taxes, homeowners insurance, utilities, , and more

Let's look at two of thethea hoercoular Maintenance Your house is like a living, breathing organis order, eventually so-and usually at the worst possible ti my wife and I woke to find our water heater had broken, flooding one end of the house Happy holidays!

Just as daily exercise and a sensible diet keep your body healthy and help you avoid costly ular ho into probleencies

As a rule of thumb, every year you should set aside about 1 of your home's purchase price for ure about 3,000 for annual upkeep Of course, this is just a guideline-some years you'll spendat all

When we bought our new house in 2004, the home inspector told us that for every dollar we spent on hly 100 in future repairs He wrote in his inspection report, ”In my experience as a professional hoe ranges, and I have seen thousands of dollars of da 5 to 10 and just a fewas much maintenance as possible yourself, you'll save money and develop confidence and kno It can be inti at first, but with time, you can learn how to do s I've learned over 15 years of playing handy repairs Rash actions can turn a small problem into a disaster

- Act quickly Take care of proble a leaky roof Can you guess how that turned out during a rainy Oregon winter?

- Use a reference Shelling out 20 bucks for a book like the Reader's Digest Coest Complete Do-It-Yourself Manual (2005) can save you thousands of dollars over the years And the Internet is a great place to find answers to co downloadable videos and PDFs; just et your info from reputable websites (2005) can save you thousands of dollars over the years And the Internet is a great place to find answers to co downloadable videos and PDFs; just et your info from reputable websites

- Work methodically Be orderly Follow instructions Measure twice, cut once When you take so apart, neatly set the pieces someplace safe (and label them if you don't think you'll be able to reital cas are assembled before you dismantle them

- Don't erous-do-it-yourself experiences happen when you assus For exaht fixture; test the wires before you touch them Don't assume a pipe is a certain diameter; measure it before you drive to the hardware store

- Pay attention You can never tell what piece of inforht be important, so as you work, notice details Are the electrical outlets you're replacing two pronged or three pronged? How big were the screws on that gizerous, and things like electricity and chainsaws can kill you Which brings us to the next item in this list

- Knohen to call an expert Many nuisances around the horease; don't be intie disposal But be willing to call in a specialist for dangerous or co your DIY skills, take classes froe or attend seminars at a home-improvement store

Because routine maintenance is so vital, it can be helpful to draw up a checklist of annual chores Here's one from the Mississippi State University Extension Service: tinyurlcoood list, too: tinyurlcom/NCHH-homelist And for you old-school Internet fans, check out the Big List of Home Maintenance Tasks from althomerepair: tinyurlcom/USENET-homelist

On The Money: The Pros and Cons of Ho your home is that you can use the equity you build to oals Nor sloith time But there are a couple of ways to use your home's equity for other purposes: - A hoenerally has a fixed interest rate and a term of 10 to 15 years Basically, it lets you borrowyour home's equity as collateral

- A hoe, but takes the for credit account, much like a department store credit card With one of these, you can borrowas you don't exceed the HELOC's upper lienerally have variable interest rates and a 10-year term

Traditionally, people have used HELs and HELOCs to pay for home improvements, like remodels and additions But you could also use thee, or even pay off credit cards (The recent credit crisis has put a da hoher to take out a secondho option: The interest rates on HELs and HELOCs are ot balances on several credit cards, it's likely that your cole payment on a home-equity loan would be Plus, in most cases, interest on a hoe interestStill, hoical cure-alls; they don't elie the habits that led you into debt in the first place, you could end up in worse shape in the long run And there are serious risks that co hooes wrong, you could lose your house!For more about how to tap your home's equity wisely, see tinyurlcoe is just like paying any other debt-except there's a loton it If you don't pay your car loan, all you lose is a way to get around But if you don't pay your e, you could lose your hoe on ti pays to keep in e insurance as soon as possible Second, decide whether accelerating your e payments make sense for you The next two sections have the details

Private Mortgage Insurance Lenders require private e insurance (PMI) from homebuyers who take out loans for more than 80 of a property's value So if you buy a house with a down payment of less than 20, you'll probably have to carry PMI

NoteIf you can't afford a 20 down pay out a second e when you buy the house This second loan-coyback loan-usually takes the form of a home-equity loan or a hoe Paye Payments)