Steps to get your finances in order

Get Your Finances in Order: To-Do List

1. Develop a household budget. Instead of creating a budget of what you’d like to spend, use receipts to create a budget that reflects your actual spending habits over the last several months. This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent, utility bills, and groceries.

2. Reduce your debt. Lenders generally look for a total debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt — car loans, student loans, and revolving balances on credit cards — down to between 8 and 10 percent of your net monthly income.
3. Look for ways to save. You probably know how much you spend on rent and utilities, but little expenses add up, too. Try writing down everything you spend for one month. You’ll probably spot some great ways to save, whether it’s cutting out that morning trip to Starbucks or eating dinner at home more often.

4. Increase your income. Now’s the time to ask for a raise! If that’s not an option, you may want to consider taking on a second job to get your income at a level high enough to qualify for the home you want.

5. Save for a down payment. Designate a certain amount of money each month to put away in your savings account. Although it’s possible to get a mortgage with only 5 percent down, or even less, you can usually get a better rate if you put down a larger percentage of the total purchase. Aim for a 20 percent down payment.
6. Keep your job. While you don’t need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.

7. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance promptly.

 Reprinted with permission from Realtor.org/Realtormagazine

 

Lender Checklist: What you Need for a Mortgage

Lender Checklist: What You Need for a Mortgage

 

□         W-2 forms — or business tax return forms if you’re self-employed — for the last two or three years for every

person signing the loan.

 

□         Copies of at least one pay stub for each person signing the loan.

 

□         Account numbers of all your credit cards and the amounts for any outstanding balances.

 

□         Copies of two to four months of bank or credit union statements for both checking and savings

accounts.

 

□         Lender, loan number, and amount owed on other installment loans, such as student loans and

car loans.

□         Addresses where you’ve lived for the last five to seven years, with names of landlords if

appropriate.

 

□         Copies of brokerage account statements for two to four months, as well as a list of any other major assets of

value, such as a boat, RV, or stocks or bonds not held in a brokerage account.

 

□         Copies of your most recent 401(k) or other retirement account statement.

 

□         Documentation to verify additional income, such as child support or a pension.

 

□         Copies of personal tax forms for the last two to three years.

 

 

The Best Times to Buy or Sell a House from TIME Moneyland

The housing market, a reliable bellwether of the economy, seems to be bouncing back.

Many of the nation’s largest home builders surprised analysts by reporting a profit in the quarter that just ended. Home sales continue to rise nationwide, compared with 2011, and home prices also are up. Prices rose 4.6% in August compared with a year ago — the largest year-over-year increase in more than six years.

All of this good news has been widely reported, so many Americans are thinking more about wading back into the real estate market, both as buyers and as sellers. But how many people know there are best times to buy and sell houses?

Here are some timing tips from real estate agents that can save home buyers and sellers a lot of money:

The best month to make an offer on a house is January. Fewer buyers are willing to house-hunt during cold, nasty weather, so there’s less competition and few, if any, bidding wars. Sellers also tend to be more motivated than they will be in the spring, when there are more buyers. Why? They may have just received their credit card bills that reflect Christmas spending and may be feeling financially insecure. And their decision to try to sell their houses in the winter means they’re willing to risk listing during a time of the year when properties tend not show particularly well.

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The best day of the month to make an offer on a house is the first Tuesday. Why early in the month? Because the homeowner just wrote a mortgage check for a house he no longer wants – or needs to sell — and he doesn’t want to write another one. Why Tuesday? Because by Tuesday he’s starting to worry that he won’t get any offers from house hunters who saw the house the weekend before.

The best time of the year to sell a house is the spring. Buyers come out of the woodwork during the spring, and with tax refund checks in the bank, spring buyers more often pay full price. In fact, sales peak in the spring, helping to explain why about 60% of those who move do so in the summer. Tip within a tip: Don’t price your house with a zero at the end. Studies show that people perceive a precise price, such as $282,284, as lower than rounded ones, such as $280,000, even when the rounded prices are actually lower. Real-life sales show that one zero at the end of an asking price lowers the final sale price by .72% and two zeros lower it by .73%. That may not sound like much, but it can add up to thousands of dollars.

The best day of the week to list your house for sale is Thursday. This is more true during a sellers market, but if you list your house for sale on a Thursday, it will be available right away for weekend showings and by Saturday — the most important day of the real-estate week — your house will have shown only two days. That’s important because the fewer days on market, the better chance the home will attract a full-price offer. Even if your house doesn’t sell by the next Saturday, it will still show only nine days on market, benefiting from the psychological advantage of a single-digit number.

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The best time to stop renting and buy a house is when it costs less to buy than to rent. Makes sense, but how do you figure that out? Find two similar houses – one for sale and one for rent – and divide the asking price by the annual rent. The difference is called the rent ratio. During the 1970s, 1980s and 1990s, the nationwide rent ratio stayed between 10 and 14, then rose to nearly 19 in 2006, when the housing market topped out. (The rent ratio neared 35 in San Francisco and San Jose in 2006.) A rent ratio of 20 or more usually means that it costs considerably more to own than rent after you factor in the mortgage, taxes, insurance, repairs and other expenses. It makes financial sense to buy when the rent ratio is a lot closer to 10 than to 20. 

Longtime journalist Di Vincenzo wrote the New York Times best seller Buy Ketchup in May and Fly at Noon: A Guide to the Best Time to Buy This, Do That and Go There. Last month, he released an app based on that book called WHEN. An all-new second edition on the best time to buy things, called Buy Shoes on Wednesday and Tweet at 4:00: More of the Best Times to Buy This, Do That and Go There, was released on Sept. 11.