The Pros and Cons of Paying off your Mortgage Early

If you can afford to pay extra on your mortgage every month, it seems to make sense to do so, right?

Surprisingly, the experts are divided on whether it’s such a good idea. Like many things in life, paying off your mortgage early has its pros and cons. Let’s take a look at some of the most significant.

Why you might want to consider paying your mortgage off early

Financial experts who agree that hacking away at your mortgage every month is a good idea point primarily to the interest you’re shelling out.

The president’s Tax Cuts and Jobs Act, however, has changed that scenario. First, the cap on interest has been lowered. Next, you’ll need to itemize your deductions on your taxes to get the benefit of the mortgage interest deduction. This means foregoing the new, increased, standard deduction.

Obviously, this is something you want to run by your accountant or tax specialist.

Other than that, those who think paying the loan off early give good reasons for suggesting it:

  • Peace of mind. What would you do with the money you’d have every month if you didn’t have to make a mortgage payment? That’s one heck of a feeling of security.
  • The more you pay off every month, the more equity you’ll earn. This is especially important for older Americans. With high equity, or owning the home outright, comes the ability to qualify for a reverse mortgage, which is a safety net for many on a fixed income.
  • Do it for the kids. When the home is owned free and clear, there’s a better chance it will remain in the family. Regardless of whether this is important to you, it creates a “forced savings” plan for your heirs.

Reasons to reconsider paying your mortgage early

  • Earlier we addressed taxes and your mortgage. Keep in mind that “if the interest on your mortgage is less than the standard deduction, you aren’t getting an additional tax benefit,” according to Forbes contributor Nancy Anderson.
  • The extra payments shouldn’t take priority over other sound financial strategies, such as building an emergency fund and another for home maintenance needs.
  • Some financial experts claim that a better use of the extra money every month is to put it toward getting out of credit card and other debt with high interest rates.
  • “the amount you save in interest likely won’t exceed what you would earn in other long-term investments, such as stocks and real estate,” according to the pros at BankRatecom.
  • In the event of an economic downturn it may be important to have a portion of your money in liquid assets, such as the aforementioned stocks. A home isn’t considered a liquid asset.

Sometimes the choice that makes sense doesn’t always offer peace-of-mind. Regardless of is more important to you, we urge you to speak with a financial planner to determine the best course of action.

Can I afford to buy a home?

It typically starts as a fleeting thought – in and out of your brain before you can really grasp it.

But, as time goes on, as the landlord becomes more demanding or the threat of yet another rent hike becomes unbearable, the idea of owning your own home may become so overpowering that you finally look into the feasibility.

Can I afford it?

It’s not as hard to figure out as you may think. Get out your calculator and let’s crunch some information.

Get in the right mind-set

One mistake we frequently see with our renter-to-owner clients is that they use more caution with their monthly budget when buying a car than they do when buying a house.

Think about it: The amount of your car payment is the leading factor in deciding how much you’ll spend on a car, right?

Since a house payment is far larger, you should use this same yardstick when determining how much you are willing to pay for a house.

Even if you’re approved for more, stick to looking at homes priced within your monthly budget.

Your finances

Before you know how much you can spend, you need to get crystal clear on your income and your debt. How much comes in every month and how much goes out? And, is there a chance that either will increase or decrease in the future?

For instance, if you’re planning on starting a family, your debt level will increase. If you’re finishing up a college degree for that better job you’ve been hankering for, your income may increase.

Get clear on not only the full picture of your current financial reality, but how it may or may not change down the line.

Start with your current income

Dig out last year’s tax return or your pay stubs to figure out how much money you have to spend each month (your take-home pay).

Do the same for any other income earners who will be co-borrowing with you for a home.

How much of that income is spent on debt?

Now let’s figure out how much of that income is spent every month. Add up your payments for the following:

  • Credit card payments – since these sometimes vary, use the minimum monthly payment amount listed on your statements.
  • Alimony payments.
  • Child support payments.
  • Installment loan payments (such as for a car, personal loan or student loan).

These are the debts the lender will scrutinize, but, for budget purposes, you need to know the total amount of money you spend every month, so also add in:

  • Commuting expenses
  • Groceries
  • Dining out
  • Clothing
  • Entertainment
  • Pet expenses
  • Gifts
  • Vacations
  • Donations
  • Any other routine expenses

Don’t include your current mortgage payment or rent. Subtract the sum of your expenses from your income.

This is how much money you have every month to pay for housing. Financial experts typically recommend spending no more than 30 percent of your before-tax income on rent or a mortgage payment.

If your result appears to be too low to afford a home, look for ways to trim your budget. Then, visit your accountant or tax specialist.

He or she can run the numbers on different scenarios that include the tax benefits of homeownership which may paint an entirely different picture.

Looking good?

If, on the other hand, your finances appear to be set for homeownership (and your credit profile as well), you’ll need to ensure that you have enough money for the actual purchase process. This includes a down payment and closing costs.

The amount you’ll need for a down payment depends on the loan program you decide to use. If you’re a qualifying veteran or you use a USDA Rural Development Loan you may not have to pay anything. Otherwise, plan on paying from 3.5 to 20 percent of the loan amount as a down payment.

The amount of money you’ll need at closing depends on a number of variables. For instance, many home sellers will pay a portion of the buyer’s closing costs. In 2016, homebuyers paid, on average, $3,815 for closing costs, according to ATTOM Data Solutions.

Home prices have skyrocketed since 2016, however, so plan on paying more than that (unless the seller agrees to help you pay closing costs).

A note on the down payment

If you’re short on cash and long on the desire to own a home, you may want to consider trying to qualify for one of the many down payment assistance programs available.

Reach out to us with any questions. We’re happy to help.


Wild Weather is no Excuse to Hibernate in Winter

The most common New Year’s resolution is to exercise more, according to NPR and The Marist Poll. Losing weight and a vow to “eat better” came in third and fourth, respectively.

All of the above certainly rank high on our lists, which is why we decided to take a break from talking about real estate and homeownership responsibilities and talk fitness as we head into the new year.

While the aforementioned survey didn’t say why 80 percent of us fail to keep our resolutions, when it comes to fitness and losing weight, the weather could have something to do with it.

Baby, it’s cold outside

Sure, there are some die-hard outdoor enthusiasts who will jog in any weather, but for most of us, winter means moving the fitness routine indoors. Whether your favorite activity is a sport or a rigorous workout routine, we’ve scoured tips to help you burn calories, indoors, on the cheap.


There are indoor tracks in most major and many smaller cities. Check out the YWCA or YMCA. If all else fails, take to the treadmill at the local gym.


Fortunate are those bikers who live in a town with a velodrome, such as that offered in Blaine, Minnesota’s National Sports Center. Lacking an indoor bike facility, again, hit the gym.


Trade the summer wheels for blades at an ice-skating rink. Open skate sessions are typically inexpensive and hours convenient to practice your axel to your heart’s content.

Don’t want to give up your wheels? Indoor roller rinks are ideal.


Burn those calories indoors at a YMCA pool.

Bend it like Beckham – Indoors

Blue skies and balmy temperatures make for ideal soccer weather. Don’t let the fact that we don’t have year-round futbol weather prevent you from working on bending that ball like David Beckham.

Indoor soccer is the solution. Not only can you keep your skills up but enjoy an excellent cardio workout with some core work as a bonus.

Many parks and rec facilities offer indoor leagues and practice areas when there aren’t games.


If walking is the way you stay fit you can still do it, even in the dead of winter. Community centers are the place to find walking tracks but don’t overlook the local mall.

Just don’t wreck your workout session with window shopping and noshing.

Try Something New

If your workout-routine of choice doesn’t involve a gym during the mild weather months but you just can’t face the thought of joining one during the winter, consider trying something new that’s not related to sitting on a stationary bike in a room full of sweaty people.

For strength training and cardio, consider swinging kettlebells. You can pick them up at any sporting goods store, Walmart or Target.

Then, in your own living room you can blast away 20 calories per minute, with a 20-minute routine being “the equivalent of running a 6-minute mile pace,” according to a study published at

Of course, you’ll need a cool routine, so search YouTube videos for “Kettlebell Workout Routines.”

With any of these suggestions you can emerge from winter with your hot and healthy body ready for spring.

Two deadly homebuyer and seller mistakes

While selling a home isn’t quite the massive challenge many try to make it out to be, as with any process, there is always the possibility something may go wrong.

Our experience has taught us where these possible pitfalls lie so we’re pretty good at avoiding them.

Two in particular, however, are solely in the seller’s hands. Sadly, and either of them can be deadly to the successful sale of your home (or the purchase of your next one).

Here are two we see most often.

1. Not taking the seller disclosure statement seriously

The seller disclosure statement is something that the buyers can, and will if the need arises, use in a court of law.

Grab your attention?

Good, because this is one document to take seriously. Regardless of how busy you are, find a block of time to devote to completing it, in a quiet spot, where you can consider each answer you provide.

You’re not expected to know what’s lurking behind the walls of your home (unless you do, then you need to disclose it), only problems that you are aware of.

If you are less-than truthful, and something goes wrong that the buyer can prove you knew about, you may be liable for both monetary losses and, in some cases, punitive damages.

In some instances, buyers have been able to cancel the sale – even after living in the home – and the seller is forced to take it back and return the buyer’s money.

If what you fail to disclose results in injury or death, you may even end up in prison, on criminal charges.

Yes, it feels odd to disclose the home’s flaws to the very person you are hoping will find it flawless, but protect yourself and be completely honest on the seller’s disclosure.

If you have any questions about it, please ask.

2. Not understanding the mortgage process

If you’re buying a home to replace the one you’re selling, get to know the loan process. Unfortunately, too few mortgage professionals take the time to explain even the most basic parts.

A common misunderstanding shared by many homebuyers is that loan approval means they’re in the clear and, once the contingencies are removed (such as the home inspection and the appraisal), the home is pretty much theirs.

What they haven’t been told is that the lender will do one final “pull” of their credit to ensure that nothing has changed since they accepted the borrower’s application. It’s known as a “soft pull,” because it doesn’t impact the borrower’s credit rating.

Changes, such as applying for credit, will show up on this report, impact your score or debt-to-income ratio and your loan may be cancelled.

Until you sign the closing papers, don’t apply for credit, don’t switch jobs or move money from one account to another. Leave the financial aspects of your life exactly as they were when you applied for the loan.

As always, reach out to us if you have any questions on the home buying and selling process. We’re happy to answer them.

Home fire season is upon us: Do you have enough insurance?

House fire

Fall and winter see an increase in home fires. It makes sense when we consider that we cook more around the holidays, we light more candles and we place more flammable objects near heat sources (hello holiday tree!).

In 2017 (the latest year for which the National Fire Protection Association, or NFPA, has statistics), there were 379,000 residential structure fires across the United States. More than 2,600 deaths occurred as a result.

Additionally, fire caused $7.7 billion in damage to homes, or an average per-property loss of $21,463, according to the NFPA.

A home fire can be devastating, to both family and finances. Don’t wait to find out post-fire that you lack adequate insurance coverage to rebuild or repair.

Dig out your homeowners’ policy now and set your mind at ease.

Are fires covered by home insurance?

The standard home insurance policy covers home damage caused by fire and smoke.

A good standard policy will cover damage to the structure, attached structures as sell as your personal property within the home and, often, even landscaping.

An even better standard policy will cover the cost of staying somewhere else while the home is being repaired.

That said, consider the two situations under which a fire is typically not covered in a standard homeowner’s policy:

 Vacant home fire – Homes are typically considered “vacant” if nobody has lived in them for the past 30 days. If you plan on moving and the home will be vacant for that long, or if you own a seasonal rental that sits unoccupied for 30-day or longer stretches, you can purchase vacant home insurance, usually as an endorsement (an addition or amendment) to your current policy.

This, of course, depends on whether your insurer carries vacant home insurance.

Step one, then, is to pore over your insurance documents (or call your insurance agent) to ensure that fire is covered (it almost always is) and that it applies to the vacant home. 

Arson – The person who sets a fire deliberately is known, legally at least, as an arsonist. Not only is this a criminal offense but it may constitute insurance fraud as well.

When you report a home fire to your insurer, the company will first send an investigator to the home to look for the cause of the fire and for signs of arson.

The company will deny coverage if it’s learned that the fire was arson.

How much insurance coverage does the average homeowner need?

The maximum amount that the insurance company will give you to cover a loss is known as the policy’s “limits.” And, since no two homeowners are alike, the limits vary according to your needs.

When considering whether you have enough coverage, think about the following:

The home – Construction material prices and labor costs fluctuate. If you haven’t thought about your insurance policy for years, it’s time to dig it out and ensure you have enough coverage to replace your home.

Don’t make the common mistake many homeowners make by basing your coverage on your home’s current market value.

“The price you paid for your home—or the current market price—may be more or less than the cost to rebuild,” suggests the experts at the Insurance Information Institute (III).

“And if the limit of your insurance policy is based on your mortgage (as some banks require), it may not adequately cover the cost of rebuilding.”

The question to ask yourself isn’t “How much is the home worth right now?” but “How much will it cost to rebuild my home, in today’s dollars?”

Your personal property — In a home fire, it’s not just the flames that cause destruction. The smoke and the water used to douse the fire often destroy personal property as well.

If you haven’t yet taken a home inventory, do so as soon as possible. You’ll find lots of tips and advice online, such as this handy Home Contents Inventory Worksheet at, a walk-through of the process from III and a home inventory Q&A from Farmers Insurance.

If you find that you may need more coverage for your “stuff,” increase the limits for personal property. And, be aware, some items, such as expensive jewelry or artwork may come with lower limits, according to the folks at III.

We all know that homes should have working smoke detectors. It’s also important to consider having several fire extinguishers on-hand.

Some fire-protection additions may even get you a discount from your insurer. These include:

  • Centrally-monitored fire alarm
  • Fire-resistant construction
  • Sprinkler system

Speak with your insurance company representative about your coverage needs before something happens, not after.

5 Tips to Improve Winter Curb Appeal

The weather outside may be a bit frightful, but it’s not so bad that folks aren’t out shopping for homes. And, selling a home in winter is a brilliant idea.


Studies show that homes are far more likely to sell within six months than during any other season.

Of course, we want yours to sell a lot quicker than that, so let’s take a look at some ways to entice those chilly homebuyers out of the nice, warm car and into your home.

Clear the way

A huge pile of snow between the curb and the home isn’t a way to invite people to look closer at the home. It’s not safe, either.

Ensure that the access to the home, whether it’s via the driveway or a walkway, is clear of ice, snow and debris.

Sal Vaglica of This Old House magazine suggests spraying the areas with a liquid magnesium chloride blend before it snows. This, he claims, will “keep ice from bonding to hard surfaces.”

Use 1 gallon of the solution per 1,000 square feet to be treated.

Make the front door pop

In snowy areas, a jolt of color is unexpected and charming. Slap some color on the front door, via semi-gloss exterior paint.

Don’t be shy here – choose a bold but deep color, such as charcoal gray or black. Zillow’s 2018 Paint Color Analysis studies show that homes with black front doors sold, on average, for nearly 3 percent more than homes without black front doors.

“For a seller, painting a front door is one the least expensive home prep projects, but also one that can have a powerful impact on a home’s sale price,” according to Zillow home design expert  Kerrie Kelly.

Anything you can do to add color to the home’s exterior will boost its appeal and the perfect

Don’t stop with paint

How about some new hardware to further jazz up that newly-painted front door? Consider a striking new door handle.

Then, take a look at what surrounds the door and update those items as well. For instance, consider larger, bolder house numbers, a new porch light cover and mailbox.

Gardening, in winter?

If there’s snow, there really isn’t much you can do to spruce up the landscaping. What you can do is tidy it up by removing broken limbs and debris.

Consider adding some potted plants along the walkway or on the porch. Use colorful planting pots and some bold winter-hardy plants. Get ideas on what to plant, here.

Other curb appeal-boosting options to consider:’

DIY those drywall cracks and holes in the wall

When getting your home ready to sell, or doing minor repairs on one that you’ve purchased, you’ll inevitably run into drywall issues.

From cracks to holes, they’re unsightly, but, thankfully, easy to fix.

How do they happen?

New homeowners tend to be a bit more alarmed than the experienced about cracks in the walls of their home. Take a deep breath – there are three common reasons for these cracks:

Settling – Over time, homes “settle.” “This is simply a result of the downward force of gravity on physical structures,” according to the pros at Edens Structural Solutions in Bixby, OK. As they settle, cracks may form.

Humidity affects wood-framed homes by causing the wood to expand and contract. “This in turn puts stress on the plaster or drywall in front of it,” according to the experts at HJ3 Composite Technologies, LLC in Tucson, AZ.

Old homes typically have plaster walls, instead of drywall. Over time, plaster becomes loose, causing it to crack.

Problem drywall can be a problem

If your home was built between 2001 and 2009, you may have what is known as “problem drywall.” Not all do, but enough homes have it to be aware that yours might too.

If you do, you’ll want to take remediation steps before working on the wall. Learn how at, the website for the U.S. Consumer Product Safety Commission.

Repairing standard drywall

Once you’ve determined that your home doesn’t contain problem drywall, you can get to work fixing those cracks and holes.

If this is your first time, check out some of the instructional videos on YouTube, like these from Howdini, Buildipedia and This Old House.

  • Cracks – Smaller cracks are a cinch to repair. Apply drywall compound, let it dry completely and then sand the area until it’s smooth and level.

For larger cracks, use the drywall compound and then apply fiberglass tape over it while it’s still wet.

  • Small holes – Use painter’s putty to fill the hole and level it using a putty knife or drywall knife. Allow it to dry, sand it down and then apply spackle. When that dries, give it another sanding.
  • Medium-sized holes –The ideal material for a hole that is too large to patch with putty is a drywall patch, available at home improvement and hardware stores.

 Stick it to the wall and then apply joint compound over it. Allow the compound to dry and then sand down the high spots.

Large holes – Even out the irregular shape of the hole by using a saw to cut around the edges. Cut a piece of new drywall to fit inside the hole and apply fiber reinforcing tape or fiberglass tape around the edges.

Slap some joint compound over the area, sand it smooth when it dries and then apply another layer of the compound (the video at Buildipedia will walk you through this entire process).

Once you’ve sanded your repairs, it’s time to paint over them. Use a heavy nap roller to ensure that the texture of the repaired area blends with the rest of the wall.

Before you DIY your home sale or purchase: Learn about services only a real estate agent can offer

Many industries offer unique services. Sure, you can cut your own hair, but can you make it look like this year’s hot, sleek bob?

You can also repair your own roof. Keep in mind however that 36 percent of all fatalities result from falls – from roofs.

Some jobs are better left to professionals, especially those jobs that impact your safety, pocketbook and, yes, even your looks.

We know what you’re thinking: Why should you give up some of that hard-earned home equity to some real estate agent when you are perfectly capable of selling the home yourself?

Read on. 

Real estate agents do far more than show homes

Many consumers feel that all a real estate does is tour homes all day, showing them to potential buyers. While that is a big part of many agents’ jobs, it is in no way all they do.

Each transaction that an agent is involved in contains a myriad of small details. A transaction can fail if any one of these falls through the cracks; they are that critical.

And, these details are something the average homeowner can’t possibly know about unless he or she has sold real estate as a professional.

So, aside from showing homes and marketing homes for sale come all the details that must be juggled by someone who is an expert detail juggler. That someone is a professional real estate agent.

Real estate agents clear up all the jargon and confusion

Yes, a real estate attorney can help you decipher a home purchase contract, but at a hefty price and with no guarantee you’ll walk away from the conversation with a better understanding of what the contract means.

Then, there are the common terms you’ll need to understand, inherent in all real estate transactions.

From mortgage jargon, like “DTI” and exactly what is included in closing costs to real estate terms, such as “contingencies” and “chain of title,” your real estate agent has all the answers.

Are you aware of a buyer’s duty of “due diligence” and how not knowing about this duty can negatively impact not only the purchase, but your future enjoyment of the home and your finances?

Appraisals and home inspections: you may need an adviser to deal with the results

There are two steps in the home sale and purchase process that are common yet produce the most anxiety (other than waiting for loan pre-approval): the appraisal and the home inspection.

Most real estate consumers don’t understand that results of either inspection that are less than optimal don’t necessarily kill the deal.

There are ways to deal with a low appraisal or a less-than-perfect home inspection report that can keep everything on track. But, again, most homebuyers and sellers aren’t aware of these procedures. Real estate agents deal with them often and are experts at finding a solution to benefit all parties.

This valuable knowledge is something you won’t receive if you don’t have a real estate agent representing you.

Your final chance

Homebuyers have several chances to view the home after signing the purchase agreement. They will often attend the home inspection and, sometimes, the sellers permit them an additional visit to take measurements or to oversee requested repairs.

One visit is set in stone, however, and that is known as “the final walk-through.” The purpose of this visit is to ensure that the home is in the same condition it was when you agreed to purchase it and it typically takes place within the week leading up to closing.

The final walk-through is not an additional opportunity to negotiate.

In other words, if you notice something objectionable during the walk-through that you hadn’t noticed before, it’s too late to bring it to the seller’s attention (which is another reason you need your agent’s second set of very experienced “eyes” during the early phases of the process).

Far too many buyers treat the final walk-through casually, breezing through the home, blissfully unaware of what they should be on the lookout for. Without a real estate agent by your side, you will have no idea.

These are only a handful of the unique services that agents provide.

I can’t tell you how many times I’ve pointed out features of a home (both bad and good) that my clients didn’t notice, how many times I’ve negotiated even minute contract terms for clients when they weren’t around to witness, how often I’ve recommended trusted tradespeople, inspectors and lenders to my first-time buyers to ensure they don’t get ripped off.

As mentioned earlier, there are so many details that real estate agents deal with daily that most consumers have no way of knowing about. But now you know about at least a few of them.




Easy holiday season safety tips

Shopping, cooking, crackling fires and twinkling lights – all essential elements of the winter holiday season.

It’s a time of celebration and, often, distraction. All of those essential elements can turn into hazards when we let our guard down. With knowledge and planning, however, they don’t have to be.

For parents, child safety should be top-of-mind

The youngest among your brood may need repeated safety reminders (“Don’t speak to strangers,” for instance) while you’re out and about this time of year.

Prepare them before you leave the car and again upon entering the mall, for what to do in the event you are separated.

Remind them to remain inside the mall, preferably at a spot that you’ve predetermined and pointed out. Show them a security guard so they know who to approach if they’re lost and can’t locate the meeting spot.

Keep their safety in mind while decorating the home for the holidays as well. Place the menorah up high and hang ornaments and anything with a cord, out of their reach.

Game pieces and other small items, such as dreidel, are choking hazards for the tiny ones.

Let’s get back to shopping

Two types of crimes become more prevalent during the winter holiday season, robbery and personal larceny, according to Janet Lauritsen, professor of criminology and criminal justice. These include a high incidence of vehicle break-ins and purse snatchings.

Here are some tips lower your risk of becoming a victim while shopping:

  • Before you leave your car, think ahead to when you’ll be returning. If it will be after dark, park as close to a source of light as possible.
  • Check the car to ensure you’ve left nothing of value on the seat or floor.
  • Put your phone away, keep your keys in your hand (with the ends pointing outward to use as a weapon) and walk briskly and with purpose. The less distracted you appear, the better your chances of not becoming a victim.
  • Don’t enter the car until you’ve checked under and behind the car and the backseat. These are all popular hiding places for perps.

Avoid home fires

Holiday trees can dry out quickly and become fire hazards. In fact, the National Fire Protection Association claims that “a dry tree can catch fire and burn faster than newspaper.” See for yourself at

  • Water your tree every day over the season.
  • Place the tree at least three feet from heat sources.
  • Check light strings for frayed or exposed wires and broken light sockets.
  • Don’t run extension cords under carpets or rugs and never overload them.
  • Avoid the use of real candles on the tree.

Holidays are risky for pets, too

The American Society for the Prevention of Cruelty to Animals (ASPCA) offers tips to keep your pets safe over the holidays:

  • Some holiday plants, such as holly, poinsettias and mistletoe are toxic for dogs and cats.
  • Holiday tree water, standing in the reservoir, may contain fertilizers so don’t allow your dog to drink from it.
  • Ensure that the tree is secured to the stand so that a curious, climbing cat doesn’t topple it over.
  • Chocolate and raisins are toxic for dogs.
  • Foil ingested may mean a trip to the emergency vet. Foil candy wrappers and tinsel should be placed out of your pets’ reach.

Keep the holidays safe by preparing and by not allowing yourself to become distracted to possible danger.

3 critical first steps for the first-time homebuyer

It’s tough being a newbie at anything, right? Learning new lingo, how things are done and how you’ll do them is a little confusing at first. Once you get the hang of it, though, everything becomes clear and you can relax into whatever it is you’re learning.

The same holds true for the home-buying process; when you’ve never bought a home before it can be challenging to know where to start and tempting (but not wise) to jump into the process by looking at homes for sale.

So, let’s get you off to a good start – one that will lead to success when buying your first home.

The money stuff

Waiting for loan preapproval is brutal for those who have no idea where they stand on the credit scale. Those in the know, however, are far more confident, understand the loan process better and still have fingernails when the preapproval decision comes in.

Be a member of the latter group by ordering your credit from the “Big 3” credit reporting agencies, Trans Union, Experian and Equifax. By law, you are entitled to a free copy from each agency every year or if you’ve been turned down for credit.

Make sure you order your reports from, the only company authorized by the government to provide these free reports.

When you get your reports, read over them carefully, keeping track of any problems you find. Each report will tell you how to file a dispute, so if you do find errors, even seemingly insignificant ones, file one. Even a small discrepancy can cause a big impact on your credit score.

Go over your finances, figuring out how much money comes in every month and how much goes out, paying close attention to recurring debt payments. The lender will do the same when it figures your debt-to-income ratio, or DTI.

If you want to calculate where you stand now, you’ll find information on how to determine your DTI on the Consumer Financial Protection Bureau’s website.

If your DTI is high, work on bringing it down by either bringing in more income or paying off some debt.

Stash some cash for your down payment, closing costs, home inspection fees and earnest money deposit. The National Association of Realtors recommends setting aside between 2 and 7 percent of the purchase price of a home just for closing costs, although I think 7 percent is rather high.

Shop for a mortgage

I’m happy to refer you to some of the lenders my clients commonly work with, or ask friends, family and colleagues for a referral to someone they enjoyed working with.

You’ll typically need the following documents when you meet with a lender to apply for a mortgage:

  • If you are self-employed you’ll need tax returns otherwise, gather up your pay stubs and W2s.
  • Copies of the bills you pay every month.
  • Bank statements (including blank pages).
  • I.D.

Document requirements vary depending on your personal situation and the lender, so ask for a complete list of what you’ll need to supply.

Make your wish list

Yay! The fun part. Now you can start thinking about that new home. What exactly do you want? Use these considerations when trying to figure it out:

  • Nail down the location. Do you need to live near schools, downtown, public transportation? Do you want a neighborhood with lots of activity or something more serene? Kids nearby or few kids?
  • What type of home do you want? Is there a particular architectural style? New or old?
  • What are your must-haves when it comes to the interior of the home? Include things such as the number of bedrooms, bathrooms, square footage of the house.
  • Describe your dream home. Once we know your budget, we can pare it down, but for now list everything you want in a home. Carpet or hardwood, gourmet kitchen, an office, a media room, gym, space to garden and views are something that might go on this list.
  • Finally, name three features that you simply must have in your new home. These items are non-negotiable and they’ll be at the top of the list.

These are the basic steps in the home-buying process. Take steps 1 and 2 and then call us for help with your wish list.

Take the steps in order and you’ll be moving in no time!