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Old 01-09-08, 08:17 PM
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Question Budgeting and buying?

Dh just got a new job and starts on Monday!
 

 
So we're finally in a position to start paying off those bills. Deanna - what's the name of the book you recommend for budgeting?

Also right now we are renting, but we'll need to move when our contract is up at the end of May. (2 little one's in a 2 bedroom apartment up 4 flights of stairs just isn't going to work!) So we have to figure out if we want to continue renting or maybe look around to buy something. Both dh and I know NOTHING about buying. Prices around our area are pretty high - about 220,000 for a townhouse. What are a few basics that we need to know about buying a place? Will they want a certain amount put down? How can we figure out what our monthly payments would be so we could see what price range to shop in? We're thinking about renting again, but dh wants to stay at this job position for at least 3-4 years, so I hate to throw more money away towards renting a place.

So I would love any advice or knowlege anyone has to share!
 
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Old 01-09-08, 09:00 PM
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The name of the book that Deanna and I both use is The Total Money Make Over by Dave Ramsey. We started out Debt reduction plan in Aug of 06, in that time we have paid off almost $13,000 in debt, paid cash for our roof $6000 and have $5000 in one savings account and $4000 in another, we are going to put that together with our tax refund and pay cash for a small car, like a civic.
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Old 01-09-08, 09:35 PM
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Yep, it's the Total Money Makeover. Try getting it from your library and see what you think.

It COMPLETELY changed our lives. We started it in January of 2006 and we paid off $26,000 in debt in the first 19 months. Then we bought our new house and put it on hold for a bit. Now that our old house is about to close, we'll be back on it and pay off the last $6,000 by spring. We have only one income and we've done this through budgeting, selling things, and working hard.

If you need help getting started, JUST LET ME KNOW!! We know coordinate Dave Ramsey's Financial Peace University at our church and our first class will graduate from the 13-week series tomorrow after paying off $80,000 and saving nearly $40,000!!!!! In 13 weeks!!!!

I believe wholeheartedly in this plan and that's only because we've incorporated into our lives and it's changed our financial future.
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Old 01-09-08, 09:46 PM
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Oh, the house buying...

Well, you'll want to have 20% down when you purchase a home. Otherwise you'll pay Private Mortgage Insurance (PMI) until you have 20% equity (Unless you do an FHA loan and then it's at least 5 years and you may NEVER be able to eliminate PMI without refinancing.)

The first step is to go to a banking institution, mortgage broker, or online bank and get preapproved. Your mortgage payment should be no more than 25% of your take-home pay. Look at online calculators and see what a mortgage payment would be for a house in your area that's in your optimal price range. Remember to add as much as 40% to that number if you'll escrow your taxes and insurance into your mortgage payment. **We do this so we're not hit with a big tax or insurance bill. But some people choose to pay it separately.

**Be careful because often times (even still with the mortgage "crisis"), the banks will offer to loan you way more than you can afford. Avoid this, avoid adjustable rate mortgages (ARMs), and stick with a 15-year (ideally) or 30-year FIXED rate.

Then, once you figure out what kind of price range you're looking at, ask friends and family for a referral to a real estate agent. We made the wrong choice of choosing our first realtor because she seemed nice. She was a lunatic! We switched so someone through our church (she advertised in the bulletin and we'd heard good things about her) and we've bought two houses and are selling one with her now. So word of mouth definitely helps.

He/She will guide you through the process of booking showings in homes you like and will help you when you want to make an offer.

Once you make an offer, you'll have to cover the expense of any and all inspections as well as closing costs (though most buyers will work with you to help with those costs if you write it in your offer).

Now---if you have debt to pay off and you can find a suitable apartment/townhome with reasonable rent that will free up some cash in your budget to pay down debt, Dave Ramsey would suggest that as a short-term answer. But it's not a good goal for long-term financial freedom.

Whew--that was long-winded. I'd be happy to give you call sometime and help you get started with your budget if you need help. I have Excel spreadsheets and other things that I can help you with if you need assistance. Usually the hardest part about budgeting is getting started!
 



 
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Old 01-10-08, 12:43 AM
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I would suggest building up your bank account and insuring financial security before beginning to buy a house.

you will want to put down 20% to avoid the PMI, AND, because with that much down, you can get a much better loan rate too.

Besides, now isn't a very good time to buy just yet - give it another year or so until the market finishes correcting itself from the overinflated frenzy it was in for the past several years.
Just keep your eye on the prize.

When you look for a new apartment, look for something that will work for you but isn't 'luxury' and/or more than you need. Your main goal is to save $ right now and any $ you spend on stuff you don't need (that extra nice luxury apartment for instance) is just that much longer that you won't be saving up enough money to buy a home.

And the $ in your pocket isn't all that you need either, spend the time getting your credit score to shine. Pay off all your debt, get rid of all your credit cards, and use that time to watch your credit score skip up and up.
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