Should You Buy New or Used?
There are many advantages to both new and existing homes. Which one you purchase depends on your preferences.
When it comes to buying a house, new can be very nice. But existing homes have many benefits as well. You should consider all of the benefits to each type of home before you make your decision.
Why buy an existing home?
When you buy an existing home, you are usually able to buy a larger home for your money. New construction is usually priced by the square foot, a more expensive way of determining value. Construction costs are greater today than they were 10 years ago. When you purchase an existing home, the square feet are not calculated based on today’s square footage parameters. The cost is based on the age, style and location of the home.
You are often able to find better quality of appliances and features in an existing home. Most new homes contain “Builder’s Grade” features. These are not the top of the line appliances and components. An older home has probably been modified and remodeled since it was built. Homeowners often upgrade their appliances and carpeting as they can afford to do so.
With an existing home, you are getting an established neighborhood. You know who the neighbors are before you move in. If you are moving into a new construction neighborhood, you don’t know what mix of people will move into the surrounding homes. This can affect the quality of the neighborhood and the housing values in the future.
Advantages of buying new
The first decade of a house’s life is its formative years. This is the time when the most price appreciation occurs. The new home has a lot of appeal. It needs little maintenance, doesn’t require immediate remodeling or upgrades and is an economical choice if you don’t have a lot of money for upkeep right now.
New homes usually come with warranties that cover many of the components of the home. For the first two years, the warranty can cover almost everything from appliances to carpeting and the heating and air systems. The first ten years will cover the structure itself from erosion, shifting and foundation problems. Warranties can save you a lot of money on home repairs.
Many homeowners take great pride at being the first to own a home. They can add options to the floor plan and create the home of their dreams. There are no hidden problems or dishonest sellers to worry about. When a new neighborhood is filled with new owners, a rapport can be built that is not found in established neighborhoods.
Buying a home, whether new or slightly used, is a very emotional decision. Look at all of your options when looking at homes to purchase. You may find that you like the appeal of an existing home’s charm or the starkness of a new home. The decision is ultimately yours to make. Whether new or used, owning a home is a truly rewarding experience.
Martin Lukac (http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!
10 Steps To Successful Debt Consolidation
If you are having trouble balancing your income and expenditure because of large debts then read on and discover your options in credit card debt consolidation.
Debt consolidation can be an excellent option when you find your finances getting out of control but before you go out and sign up for a debt consolidation loan there are a number of factors you must take into account.
1) Why are you looking to consolidate debt?
The basic principle of debt consolidation is that you take out a single loan and use that loan to repay all your existing credit card debts, loans and overdrafts.
This normally results in lower payments generally spread over a longer term. Before you proceed with debt consolidation you should first consider whether there is a better alternative.
2) Sell assets to clear your debt
Rather than rescheduling your debts see if there is any way you can repay some or all of your debts yourself. Sell unwanted valuables and other items.
Depending on the item you can sell to dealers, advertise in local classified ads or through Ebay. Sell unwanted books through Amazon. If your debts are very high and you own your own home consider downsizing to release equity.
3) Pay more than the minimum off your credit cards.
If you can pay more than the minimum monthly payments you should seriously consider continuing with your existing credit cards and clear the debts over the next 12 to 18 months.
While it may mean restricting your spending in other areas it will be the cheapest option long term. Of course you may still opt for debt consolidation to make managing your debt easier.
4) If you are currently only just managing to pay the minimum monthly payments on your credit cards, or your total credit card debt is increasing each month then debt consolidation may be the right choice. There are a number of options when considering debt consolidation:
5) A mortgage or re mortgage
If you own your own home the lowest interest rates are obtainable by taking out a new mortgage to pay off your existing mortgage (if any) plus enough funds to repay you other debts.
If repaying your existing mortgage will result in penalty charges consider a 2nd mortgage with your existing lender. The interest charged will probably be slightly but not significantly higher.
6) Take out a secured loan with another lender
If you have already missed or been late with any payments, and as a result your credit score is too low for your mortgagor, consider a secured loan with another lender.
Secured loans in these circumstances are more expensive and the lenders are quick to repossess your home if you miss payments. Only take this route if you are certain that you can make the repayments.
Depending upon how bad your credit history is, so long as you maintain all your payments for the following 1 to 3 years, you can replace this loan with a mortgage or re mortgage once your credit score improves. There will be penalties however if you repay a secured loan early. Ensure you read the fine print.
7) A loan secured on other assets
If you have an expensive car, boat or plane you will probably be able to obtain finance using these assets as security. The rate of interest will be higher than a loan secured on property. If you do not have property or it is fully mortgaged securing a loan on other assets may be an option.
8) An unsecured loan
If you do not have property or other assets an unsecured loan is often a possibility. An unsecured loan is usually over a shorter term, normally up to a maximum of 7 years but occasionally longer. As a result the monthly payments will be higher but the debt will reduce quickly.
As the lender has no security your property and assets are less at risk if you default. The lender could, however, send in the bailiffs if they obtain a court order.
Because there is no security expect to pay a higher interest rate, particularly if you have a poor credit history.
9) Don’t forget the credit card option.
If your debts are relatively low and you still have a reasonable credit history applying for another card with a 0% or low interest balance could be an alternative to a debt consolidation loan.
Go for a 0% balance transfer if you can realistically repay all or most of the debts in the 0% balance transfer period. If however, there will still be a substantial debt at the end of the balance transfer period go for a permanently low interest rate.
Be aware there may be a 2 - 3% charge on the balance transfer. To ensure you don’t slip back into debt cut up all your credit cards and close paid off accounts.
10) Check all the options before making a decision.
As you research all the options it will quickly become clear if there is one obvious solution. For many individuals there will be more that one option so it is essential check them all out before making a final decision. Go to a range of different lenders and mortgage or loan brokers and obtain the best package for you. Remember you have the final say and just enquiring does not commit you to any course of action.
For a great many people debt consolidation provides an ideal solution to excessive credit card debt. Sorting out debt problems takes a little time, effort and determination. Once you’ve sorted your debts you will find life more enjoyable and relaxing and, with no debt collectors calling or contacting you by post or phone, much less stressful.
John worked for many years in insurance and finance and now writes on credit card management at Credit Card Debt or go to How To Repair Your Bad Credit History for another article on debt management.Flexible Payment Mortgages
With most mortgages, your payment is the same every month. But what if your paycheck isn’t so regular? Would you like to be able to vary your mortgage payment depending on your cash flow? An option ARM — also called a flex-ARM or pick-a-payment loan — allows you to do just that.
How does it work?
An option ARM is an adjustable-rate mortgage with a twist. You don’t pay a set amount each month. Instead, the lender sends a monthly statement with up to four payment options. You simply choose the amount you want to pay that month and then submit your payment.
The options vary, but here’s the most common menu:
Minimum payment: This is calculated using an “initial” interest rate that can start as low as 1.25 percent. Because this payment is so low, it’s useful for months when you don’t have much cash on hand, perhaps because you are waiting for a commission or bonus check. But any unpaid interest gets deferred, or added to the principal of the loan, so your principal grows.
Interest only: You pay all the interest due, but none of the principal. This doesn’t reduce your mortgage balance, but it allows you to avoid deferring interest.
30-year amortized: This matches the monthly payment of a mortgage amortized over 30 years at your current interest rate. It includes both principal and interest.
15-year amortized: The same as above, but amortized over 15 years. This is the highest monthly payment. Choosing it allows you to reduce your principal faster than any other option.
The fine print
The biggest caveat with option ARMs is that those enticing initial rates are short-lived. The low minimum payments that make these mortgages so attractive can increase dramatically. In addition, every five years, the loan is recast — that is, a new amortization schedule is drawn up to ensure that the remaining balance will be paid off by the end of the loan’s term. When that happens, the minimum payment can be pushed even higher.
What’s more, if you defer too much interest, you can reach what’s called negative amortization. If your balance grows to 10 percent to 25 percent (depending on state law) greater than the original principal, your loan is automatically recast and you have to start paying the fully amortized rate, which will increase your monthly payments.
Another potential downside of option ARMs is that they’re more complicated than most other mortgages. Home buyers may be seduced without fully understanding how much the minimum payments will increase over the long-term. When the monthly amounts go up, these people can experience payment shock.
To learn more about flexible payment mortgages, visit http://www.lendingtree.com/cec/yourhome/yourmortgage/open-arms.asp
About The Author
The editorial staff at LendingTree is committed to helping consumers become smarter borrowers. Visit http://www.lendingtree.com/cec for more information and tips on buying, selling, and financing a home. Copyright 1998-2006, LendingTree, LLC.