Janice Walker's Blog
For most college students and recent grads, the prospect of buying a home seems slim and distant. With the cost of a college education growing each year and the price of houses inflating, it can seem daunting to begin to save for a down payment or build credit.
However, there are ways to start planning now for buying a home, even if you are burdened with student debt and rising rent.
In this article, we’re going to do just that. If you’re a recent grad or a current college student, read on for a guide to buying a home.
What do you need to buy a home
Once you graduate college you might be wishing you could have taken an elective called “How to Be an Adult 101.” There are many personal finance problems in life that just aren’t taught in school, from saving for retirement, to borrowing for a house or car, to investing in stocks and bonds.
So, what are the main things you’ll need to buy a home? Before you start applying for mortgages, you should know that just because you can get approved doesn’t mean you should buy a home.
Purchasing a home is a huge investment and one that most homeowners take decades to pay off. With high interest rates and private mortgage insurance (PMI), the cost of owning a home can be immense.
To avoid PMI and get a good interest rate, you’ll need a few things.
Your credit score is one thing that lenders take into consideration when determining how risky it is to lend to you. They want to know that they’ll receive a return on their investment and that you won’t stop paying your mortgage. A good way to gauge this is by looking at your financial history.
Your credit score mainly takes into account the following five things:
Payment history - 35%: Do you pay your bills (utilities, loans, etc.) on time each month?
Credit usage - 30%: How much of your maximum credit have you used? If you max out your cards this can reflect poorly on your ability to manage money. However, if you don’t use any accounts you might have a hard time building a payment history.
Length of credit history - 15%: The longer you’ve been paying bills the more trustworthy you are to lenders
New credit - 10%: If you recently opened or attempted to open cards this will temporarily lower your credit score as it could be a sign of financial duress
Types of credit - 10%: store accounts, credit cards, loans, etc. Having a variety of credit types will boost your score.
Having student loans as a college graduate can often give your credit score a leg up on others who don’t have a credit history. However, to boost your score you’ll want to keep making on-time payments and consider using a credit card if you can afford it.
Most recent college grads cringe when they hear that their employment history is important to lenders. However, you might be pleased to know that being a full-time student is something lenders take into consideration.
They will, however, need to see employment history from your current employer, and the more you can prove that you have a stable job the better.
One of the most important things you can do right now is to save for a down payment. Designate a portion of your paycheck each week to a separate savings account if you need to in order to hold yourself accountable. The bigger down payment you can make, the better your interest rate and the more money you’ll save over the length of your mortgage.
Finally, don’t let increases in your salary change your lifestyle. Staying frugal will help you avoid “lifestyle inflation” or spending more simply because you make more. Decide what you value, and choose purchases wisely.
429 Country Way, Scituate, MA 02066
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429 Country Way, Scituate, MA 02066
Home renovations are generally thought of as a good thing. You can update your home for your own comfort. New amenities will make your life easier. Your home can expand in size. Whatever you are planning to do in your home is bound to have a positive affect. One thing to be aware of when you’re gearing up for the process of any type of home renovation is that of your home insurance. You want to protect yourself and your home as your go through the stages of home renovations. Below, you’ll find some tips to help you complete renovations you desire in your home without having surprise insurance bills.
Check That Your Contractor Has Insurance Coverage
Before you sign a contract with any contractor be sure that they have sufficient insurance coverage. In particular you want to be sure that they have workers‘ compensation coverage and liability insurance. Don’t be afraid to ask the contractor for the necessary certificates and confirmation of insurance coverage before you even sign the contract. It’s your right as a consumer to know that your contractor is covered properly.
Beware Of Subcontractors As Well
Just because your general contractor is covered doesn’t mean that all subcontractors that are hired have the correct insurance. Electricians, plumbers, and other specialty contractors will need their own insurance on the job. The same rules apply as when you’re hiring any other contractor. Check with the general contractor to understand if their policy will cover all workers that are hired, or if these individuals need to carry their own insurance policies. Check with your home insurance company to see what your home insurance does and doesn’t cover during a renovation period on your home. The more knowledge that you have going into the process, the better it is for you.
For Your Homeowner’s Insurance Policy
Once the renovations are complete, you’ll need to reassess the policy coverage amounts that you have for your home insurance policy. The renovations that you have completed will undoubtedly increase the value of your home causing you to need to increase the replacement value of your home on your insurance policy. Don’t forget to include everything from new appliances to furniture that has been replaced in the renovation. This will help you to avoid any gaps in coverage. This way, you’ll know that your home will be fully covered. With the right insurance coverage you’ll know that your home is can be rebuilt to the same specifications in the event of a complete loss. You always want this peace of mind as a homeowner.