When buying a house, many people just worry about having the down payment and getting approved for the mortgage. However, that’s not all you have to worry about monetarily. Although the down payment may be a significant part of your home purchase, there are many other costs associated with owning a house. In this article, I will discuss the various costs of buying a home, with hope that you can reanalyze and take a second look at your finances and see if you really can afford buying a new home.
A home equity loan and a home equity line of credit has many similar facets so it can be confusing sometimes. For instance, both programs let you borrow up to 85% of the value of your home and both use your house as a collateral. However, there are some very important differences that you need to take note of.
Since 2008, we have seen a rapid decline of available home loan programs due to the credit crisis. No longer are banks allowed to give out mortgages with unverified income. And the days of no-down payment loans are over. There is a duality to this tightening of credit. The tigthening of credit has made it harder to buy a home. However, at the same time, real estate is as cheap as ever to own. The US Federal Housing Finance Agency puts the February 2011 housing price index at 181.8, which puts it at the same level January 2004.
The average FICO credit score in the United States is a 687. The medium credit score in the US is a 723. Which one is a better determinant of the credit worthiness of Americans? In assessing credit scores, the medium is a better indicator when assessing the credit scores of Americans on the aggregate. That is because in terms of talking about an average credit score, that is just a number and does not tell you where you fall within the credit score range—as in, what is your percentile. Whereas, if you measure credit score by the medium, you know what your score is and where it is in relation to the rest of the population. In other words, the medium score tells you precisely and accurately what your score is and where you rank.
In recent years the practice of home buying in our country, with all the accompanying grief and debt of subprime mortgages has given the whole “American dream” a bit of a bad name. In the past we may have been taught that buying and owning a home was an inalienable right, and a mighty good investment.