Your Dream Home: A Comprehensive Guide to Buying a House, Condo, or Co-op (Money America's Financial Advisor)

Marguerite Smith

Language: English

Pages: 256


Format: PDF / Kindle (mobi) / ePub

The experts at "Money" magazine offer sound advice on everything involved in buying a house, condo, or co-op in this clear, concise guide. This book helps consumers construct a winning game plan when purchasing a home that's also a financial investment.

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The long-term investment outlook, say the forecasters, is rosier than you might imagine. If you choose with a cool head and are willing to hang on for a while, your place in the sun—or the ski chalet or the Cape Cod saltbox—might possibly add a sharp, upward punch to your net worth over the next decade or two. The force behind this upbeat prediction is the voracious baby boomers. When that generation boogied into its thirties, back in the late 1970s, their endless appetite for housing pushed the price of starter homes and trade-ups way, way up.

No matter how enticing the deal sounds, you cannot count on future appreciation with a time-sharing arrangement. Indeed, thousands of time-share owners have struggled to find buyers because the time-share salesman in their resorts have steered potential buyers to the new, unsold units. It’s not unusual for owners to have to swallow losses of 35%–60% when they finally unload their property. Those who hang on, either from choice or necessity, may find their initial attraction melting away. You may grow tired of visiting the same resort every year or be unable to schedule your vacation during that same week in July.

If you are relatively young and cash is in short supply, some form of term insurance, with your spouse or estate as beneficiary, is likely to be the optimum choice. If invested prudently, the proceeds would produce enough annual income to keep your family afloat in case of the breadwinner’s death. Statistically, however, disability is far more of a threat than death at an early age, so investigate what coverage is available at a decent price if your employer doesn’t provide sufficient protection. Refinancing Having recently obtained a mortgage, this may be the topic furthest from your mind.

The owner retains the right to trade the stocks, but the market value of the portfolio cannot drop below 33% of the loan amount. If it does, the securities can be sold by Merrill and held as cash collateral. POINTS OR NO POINTS? There are two basic ways that mortgage lenders charge you for the use of their money: through the interest you pay over the life of the loan and through discount points, a onetime prepayment of interest, which lenders charge to increase their yield on the loan. One point equals 1% of the loan amount, so one point on a $100,000 loan would equal $1,000; on a $50,000 loan it would amount to $500.

2s and put together some simple numbers. Complete Table 2-2 to calculate your gross monthly income. TABLE 2-2 Calculate Your Monthly Income The first step in estimating what size mortgage you might qualify for is to add up the total monthly income for you and your co-borrower, if you have one. Be sure you include all money that your household receives on a regular basis. Item Borrower Co-Borrower Total Base Employment Income Part Time/Second Job Income Overtime* Bonuses* Commissions* Dividends/Interest Alimony/Child Support Unemployment Compensation Pension/Social Security Benefits Veterans Benefits Other Income Total Gross Monthly Income $ *If your overtime, bonuses, or commissions do not fall into 12 equal monthly payments, be sure to divide them so as to spread this income over 12 months.

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