(NAPSA)—If you’re thinking— or just dreaming—about becoming a homeowner, before even setting foot on potential properties, it’s critical to make sure your financial houseis in order. Here are tips that can help: Ensure that you can truly afford your home. Take into account your entire financial pic- ture. A numberof online tools can help you estimate the price of a home you can afford based on your income, debts and other obligations. For example, there’s Front Door’s affordability calculator at www.frontdoor.com. There are also mortgage calculators that can show you how a larger down payment can lower your monthly mortgage payment. *Consider the positives— and the negatives—of homeownership. Homeownerscan reap considerable benefits including tax breaks, home appreciation and the opportunity to build personal wealth. Today, home equity—the value of the house minus the balance owed—represents a large portion of a typical family’s wealth. However, it’s important to remember that owning a home comes with a numberof financial obligations. Having to replace a roof, an appliance or something larger can cause considerable hardship if not properly planned for. Start building equity from day one. If you have a down payment of less than 20 percent, mortgage insuranceis often necessary. This is typically obtained through either the governmentbacked Federal Housing Administration (FHA) or a private mortgage insurer. Private mortgage insurance is commonly used when Ro a Zi Look closely at the financial posi- tives and negatives of homeown- ership before buying a home. putting at least 5 percent down, while FHA loans can require as little as 3.5 percent. While many first-time borrowers believe 3.5 percent is the better option, the added costs layered on top of the mortgage—in addition to recently increased FHA insurance premiums—are significantly more expensive than with a 5 percent down payment on a privately insured loan. By putting the 5 percent down, you can enter a home with more equity and build equity faster. *Rememberthe additional costs of homeownership. These can include closing costs; homeowner’s insurance; city and county property taxes; utilities; and, if you buy in a planned subdivision or a condominium, homeowner’s association fees. Before you buy a home, it’s important to understand thefull cost of ownership. When you do, you can have a home you love and the peace of mind that comes with knowing you’re prepared. Learn More To learn more, visit www. SmarterMI.com.
