How To Buy A Home

Duration: 3 minutes and 46 seconds

Country: United States

Language: English

License: CC Attribution Non-Commercial Share Alike

Genre: Instructional

Producer: Howdini

Director: Howdini

Posted by: howdini on May 11, 2008

First time home buyers have a million questions, and luckily, CNN financial editor and author Gerri Willis has a million answers. Here's what you need to know before you buy a home.

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howdini...get yourself a guru
I'm Robyn Moreno for Howdini.com.
If you're looking to buy a home, your first question is likely to be, "What can I afford?"
we all want to be extra careful when it comes to borrowing.
Joining me to answer key questions for homebuyers is Gerri Willis, who is CNN's personal finance editor
and author of "Home Rich - Increasing the Value of the Biggest Investment of Your Life."
Welcome Gerri.
Hi Robyn, great to see you.
First off; how can I figure out how much house I can actually afford?
You know, it's not that hard. You really only want to spend a third of your income;
your gross income, that's before taxes, on housing.
But it's not the just the mortgage you have to worry about; it's also insurance, it's the cost of maintenance, and the cost of taxes.
So that's a very big bill at the end of the day.
You really need to sit down, do the calculations and make sure you've got the numbers right.
Ok, so now I'm looking over my numbers and you know what? I'm in good shape
I actually have more than the 10 to 20% that I need to put down.
Should I go ahead and put that down?
Well, congratulations first of all, on having the dough because that's no small thing.
But, yes, you should probably put down 20% because this is really going to give you skin in the game.
This means you're going to be able to afford this house, lenders will take you seriously,
they will give you the best terms...provided you have a good credit score.
So, I think it makes sense to put down 20%, but not more.
Why would I not put down more than 20% if I actually have it?
Well okay, think about it. If you're buying a new house...maybe you're doing it for the first time,
you're going to find that you have other costs that you didn't expect.
I can't tell you how many first time home buyers have come to me and said,
"Oh my goodness, the furnace went in the first month, I had to repair the roof..."
You know it's happened to me. So you want to be sure that you have a lot of money on hand or some money on hand,
when you get that new house in case the worse happens and you really have to put some money out
for a fix or some kind of improvement.
Now I know what I can put down, what I can afford...what are some tips for accessing the housing market in my area?
Well, it's pretty easy. You can really go online - that's the best way to get started to figure out
what is in your price range online because all the major brokerage houses will have online websites.
Because most folks will, particularly women, search on the web first.
So now you get an idea of "How far will my money go? What can I spend?...
What's affordable in the neighborhood I want to buy?"
We've all heard the mantra, "location, location, location."
So how do I figure out the best area that fits my price and my needs?
Well, a lot of people already have one neighborhood in mind.
But if you don't and you're a little flexible on where you're going to look,
you want to check out the basic services in an area.
Are there malls nearby? Are there dry cleaners nearby? Is there a place to go grocery shopping?
You want those things really close to your house just so that it's an easy place to live.
I know this sounds like really obvious but some people get stuck in an area where there are no services
and that's really painful.
Remember, at some point you're going to sell this house and the people who are buying it,
will want to be close to services as well.
What if I want to sort of get in an area that's up and coming, do you recommend that or is it all about the services?
You know in this market you don't have to worry about that because guess what?
Houses are on sale and houses are even on sale in very good neighborhoods.
At this point you don't have to go to an emerging neighborhood and take the risk,
that it's not going to become popular, that it's not going to catch on.
Okay, so this bad market is actually good for many people?
This bad market is great for buyers right now!
Look, if you have been off to the sidelines because you couldn't afford housing,
now is the time to really start thinking about looking, and looking hard, because prices are coming down.
And it's really a good time to get your money together and get in the marketplace and start asking questions.
So many people have been kept out of this marketplace by high prices but now is the time to get involved.
Thank you so much Gerri Willis for good information and opportunities for potential homebuyers.
Thank you.
And this is Robyn Moreno for Howdini.com
howdini...www.howdini.com

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