Helping You:

Should I Rent or Buy?
Buying vs. Renting
5 Factors That Decide Your Credit Score
5 Reasons You Need a Real Estate Agent
6 Creative Ways to Afford a Home
7 Reasons to Own Your Own Home

8 Steps to Getting Your Finances in Order
8 Ways to Improve Your Credit

10 Steps to Prepare for Home Ownership
Budget Basics Worksheets
Budget Basics Worksheets
How to Stop Paying Rent & Own Your Own Home
Tax Benefits of Home Ownership

Should I Rent or Buy?

Most renters have enough income to buy a home, but don't even know it. For various rent levels, this chart shows the home price the renter could affored without paying more than their current rent, after tax deductions are figured in. The chart assumes that they don't have large debts and that they have a 10% down payment.

Monthly Rent	Purchase Price of Home	Mortgage Payment	MonthlyTax Savings
$800	$168,000	$1,110	$310
$1,000	$210,000	$1,390	$390
$1,200	$255,000	$1,670	$470
$1,400	$295,000	$1,950	$550
$1,600	$335,000	$2,200	$600
$1,800	$375,000	$2,500	$700
$2,000	$420,000	$2,750	$750

The rent you pay could build equity in your own real estate.

The chart below shows how much you are "giving away" in rent and interest own 10, 15, 20, or 30 years...money which could be used to build equity in your own real estate!

Rent Per Month	10 Year	15 Year	20 Year	25 Year	30 Year
$500	$102,422	$207,235	$379,684	$663,417	$1,130,244
$550	$112,665	$227,959	$417,652	$729,758	$1,243,268
$600	$122,907	$248,682	$455,621	$798,100	$1,356,293
$650	$133,149	$269,405	$493,590	$862,442	$1,469,317
$700	$143,391	$290,129	$531,558	$928,783	$1,582,341
$750	$153,634	$310,853	$569,527	$995,125	$1,695,366
$800	$163,576	$331,576	$607,495	$1,061,467	$1,808,390
$850	$174,118	$352,280	$645,464	$1,127,808	$1,921,415
$900	$184,360	$373,023	$683,432	$1,194,150	$2,034,439
$1000	$194,603	$393,766	$759,369	$1,326,833	$2,260,488

Buying vs. Renting

HOME OWNERSHIP

Should you buy or should you rent? This has become a complicated question for thousands of consumers. Not only is this question loaded with personal and lifestyle considerations, but financial issues as well. For some, buying is the only sensible thing to do and for others, renting is much more convenient. Most homeowners enjoy the pride of owning such a large investment, and others enjoy having a place to call "home". There are several advantages that go along with homeownership.

TAX BREAKS

Federal tax laws strongly favor homeowners. Mortgage interest and property taxes are generally tax deductible on your federal return. This can in turn provide you with an enormous tax benefit.

Capital gain benefits allow the homeowner to profit without paying taxes when selling their main residence. Please consult your legal or tax expert for restrictions and application of this popular tax benefit.

ABILITY TO BORROW AGAINST EQUITY

As a homeowner, you can borrow against the equity in your home using either a second mortgage or a home equity line of credit. The interest of such loans may be tax deductible, regardless of how you use the money. Many homeowners use home equity loans to consolidate other high-interest loans, to make repairs and improvements, and even to fund a child's education.

RENOVATIONS

As a homeowner, you have almost unlimited ability to adapt your living space to suit your individual tastes and needs. You can paint, wallpaper, decorate, landscape, and even have the potential to add more rooms. The possibilities are virtually endless.

LEVERAGE

When buying a home, you will probably use some of your own money (your down payment) and a large amount of someone else's (borrowed funds from your bank or other mortgage lender). If you are buying your second home, you can leverage the appreciated equity or profit into the purchase of your next home.

Owning a Home	Renting
Mortgage interest is tax deductible	Rent is not tax-deductible
Each mortgage payment goes into building a nest egg for your family	Every rent payment disappears forever
Equity in your home can be used to pay for your kids to go to college	Rent checks pays for your landlord's kids to go to college
Your payments stay the same with a fixed rate loan	Your rent increases each year
Your children get to play in your yard	Your children play in a parking lot
You do laundry whenever you feel like it	You pay to do your laundry each week
You enjoy greater privacy	You know your neighbor's musical tastes better than you know your neighbors
Pride of ownership	Pay less monthly for housing

5 Factors That Decide Your Credit Score

Scores range between 200 and 800. Scores above 620 are considered desirable for obtaining a mortgage. These factors will affect your score.

1. Your Payment History. Whether you paid credit card obligation on time.

2. How Much You Owe. Owing a great deal of money on numerous accounts can indicate that you are overextended.

3. The Length of Your Credit History. In general the longer the better.

4. How Much New Credit You Have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.

5. The Types of Credit You Use. Generally, it's desirable to have more than one type of credit - installment loans, credit cards, and a mortgage, for example.

5 Reasons You Need a Real Estate Agent

1. A real estate transaction is complicated. In most cases, buying or selling a home requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page government-mandated settlement statements. A knowledgeable guide through this complexity can help you avoid delays or costly mistakes.

2. Selling or buying a home is time consuming. Even in a strong market, homes in our area can stay on the market for months. And it usually takes another 30-60 days or so for the transaction to close after an offer is accepted.

3. Real estate has its own language. If you don't know a CMA from a PUD, you can understand why it's important to work with someone who speaks that language.

4. REALTORS have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you've done it before, laws and regulations change. That's why having an expert on your side is critical.

5. REALTORS provide objectivity. Since a home often symbolizes family, rest, and security, not just four walls and a roof, home selling or buying is often a very emotional undertaking. And for most people, a home is the biggest purcahse they'll ever make. Having a concerned, but objective, third party helps you keep focused on both business and emotional issues most important to you.

Reprinted from REALTOR® Magazine Online by permission of the

6 Creative Ways to Afford a Home

If your income and savings are making homebuying a challenge, consider these options.

1. Investigate local, state, and national downpayment assistance programs. These programs give loans or grants to cover all or part of your required downpayment. National programs include the Nehemiah program, http://www.getdownpayment.com,and the American Dream downpayment fund from the Department of Housing and Urban Development. http://www.hud.gov/new/release.cfm?content=pr02-014.cfm

2. Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do with a mortgage.

3. Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even an their-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and maintenance costs, but all the investors' names are usually on the mortgage. There are companies that can help you find such an investor if your family can't participate.

4. Get help from your family. Prehaps a family member will loan you money for the downpayment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history.

5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your downpayment. And in many cases, owners will apply some of the rental amount toward the purcahse price. You usually have to pay a small, nonrefundable option fee to the owner.

6. See if you can qualify for a short-term second mortgage to give you the money to make a higher downpayment. This may be possible if you have a good income and little other debt.

7 Reasons to Own Your Own Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, as well as some of the costs involved in buying your home.

2. Gains. Over the last five years (1998-2002), national home prices have increased at an average of 5.4 oercent annually. And while there's no guarantee of appreciation, a 2001 study by the National Association of REALTORS found that the typically homeowner has approximately $50,000 of unrealized gain in a home.

3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your mortgage payments don't go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.

6. Freedom. The home is yours. You can decorate any way you want and be able to benefit from you investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activites, lets you and you family establish lasting friendships, and offers your children the benefit of educational continuity.

8 Steps to Getting Your Finances in Order

1. Develop a family budget. Instead of budgeting what you'd like to specd, use receipts to create a budget for what you actually spent over the last six months. One advantages of this approach is that it factors in unexpected expenses such as car repairs, illnesses, etc..., as well as predictable costs such as rent.

2. Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 and 28 percent of income, you need to get the rest of your installment debt - car loans, student loans, revolving balances on credit cards - down to between 8 and 10 percent of your total income.

3. Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You'll probably see some great ways to save.

4. Increase your income. It may be necessary to take on a second, part-time job to get your income at a high enough level to qualify for the home you want.

5. Save for a downpayment. Although it's possible to get a mortgage with only 5 percent down - or even less in some cases - you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent downpayment.

6. Create a house fund. Don't just plan on saving whatever's left toward a downpayment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.

7. Keep your job. While you don't need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.

8. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.

8 Ways to Improve Your Credit

Credit scores, along with your overall income and debt, are a big factor in determining if you'll qualify for a loan and what loan terms you'll be able to qualify for.

1. Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else's poor financial management.

2. Pay down credit card bills. If possible, pay off the entire balance every month. However, transferring credit card debt from one card to another could lowever your score.

3. Don't charge your credit cards to the maximum limit.

4. Wait 12 months after credit difficulties to apply for a mortgage. You're penalized less for problems after a year.

5. Don't order items for your new home you'll buy on credit - such as appliances - until after the loan is approved. The amounts will add to your debt.

6. Don't open new credit card accounds before applying for a mortgage. Having too much available credit can lower your score.

7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquires from the same type of lender are counted as one inquiry if submitted over a short period of time.

8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

10 Steps to Prepare for Home Ownership

1. Decide how much home you can afford. Generally, you can afford a home equal in value to between 2 and 3 times your gross income.

2. Develop a wish list of what you'd like you home to have. Then prioritize the features on your list.

3. Select three or four neighborhoods you'd like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.

4. Determine if you have enough saved to cover your downpayment and closing costs. Closing costs, including taxes, attorney's fee, and transfer fees average between 2 and 7 percent of the home price.

5. Get your credit in order. Obtain a copy of your credit report.

6. Determine how large a mortgage you can qualify for. Also explore different loans options and decide what's best for you.

7. Organize all the documentation a lender will need to preapprove you for a loan.

8. Do research to determine if you qualify for any special mortgage or downpayment assistance programs.

9. Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.

10. Find an experienced REALTORS who can help you through the process.

Budget Basics Worksheets

The first step in getting yourself in financial shape to buy a home is to know what you make and what you spend now. List your income and expenses below.

Income
Take Home Pay/All Family Members
Child Support/Alimony
Pension/Socal Security
Disability/Other Insurance
Interest/Dividends
Other
Total Income

Expenses
Rent/Mortgage (include taxes, principal, and insurance)
Life Insurance
Heath/Disability Insurance
Vehicle Insurance
Homeowners or Other Insurance
Car Payments
Other Loan Payments
Savings/Pension Contribution
Utilities (gas, water, electric, phone)
Credit Card Payments
Car Upkeep (gas, maintenance)
Clothing
Personal Care Products (shampoo, shaving, cream, etc.)
Groceries
Food prepared outside the home (restaurant meals and carry out)
Medical/Dental/Prescriptions
Household Goods (hardware, lawn, and garden)
Recreation/Entertainment
Child Care
Education (continuing education, lessons for children)
Charitable Donations
Miscellaneous
Total Expenses =
Remaining Income After Expenses =

How Big of a Mortgage Can I Afford?

Not only does owning a home give you a haven for yourself and your family, it makes great financial sense, too.

This calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be too.

Rent: ___________________

Multiplier: X 1.32

Mortgage payment: _____________________

Because of tax-deductions, you can make a mortgage payment - including taxes and insurance - that is approximately one-third larger than your current rent payment and end up with the same amount of income.

Don't Pay Another Cent in Rent to Your Landlord Before You Read This FREE Special Report

If you're like most renters, you feel trapped within the walls of a house or apartment that doesn't feel like yours. How could it when you're not even permitted to bang in a nail or two without a hassle. You feel like you're stuck in the renter's rut with no way of rising up out of it and owning your own home.

Well don't feel trapped any more! A new FREE Special Report entitled "How To Stop Paying Rent and Own Your Own Home" has already helped dozens of local renters get out from under their landlord's finger, and move into a wonderful home they can truly call their own. You can make this move too by discovering the important steps detailed in this FREE Special Report.

It doesn't matter how long you've been renting, or how insurmountable your financial situation may seem. With the help of this report, it will become suddenly clear to you how you really can save for the down payment and stop wasting thousands of dollars on rent.

Order this report NOW and stop wasting thousands of dollars on rent.

Tax Benefits of Home Ownership

The tax deductions you can take for mortgage interest and property taxes greatly increase the financial benefits of home ownership.

Here's how it works...

Assume:

$9,877 = Mortgage interest paid

(a loan of $150,000 for 30 years, at 7 percent, using five-year interest)

$2,700 = Property taxes

(at 1.5 percent on $180,000 assessed value)

$12,577 = Total deduction

$3,521.56 = Amount you have lowered your federal income tax

(at 28 percent tax rate)

(12,577 X .28 = $3,521.56)

Note that mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.