Your Path to Home ownership

Desi match is not only finding a life partner, but it is also finding a house matching your desi personality. And a perfect match between the house and its owner not only brings joy and peace in our life, but it also takes us ahead towards our other goals.

Joys of marriage are enhanced when you come to your home...sweet home. Now you are ready to rent a decent living place or to buy your own house. The choice is ultimately yours, whether you want to buy or rent a condo, a coop, a town house, a single-family house, a mansion or a villa. But the question remains, how to go about it? It is a big task, no doubt. There is a saying ‘nothing is impossible’ and that is true in home ownership as well. So there is no need to worry or get disappointed. Once you have decided, just remember a few important facts. The size, type and neighborhood of your new house depend upon your financial situation and also your will power. Real estate is a big market and also a booming one. There are competitions and there are pitfalls. You can have a smooth sailing with some homework.

In our cover story, we have tried to provide a detailed information about home-ownership, from getting started to basic mortgage math and understanding the tax benefits. There is a list of do and don’ts. There are tips about interior decoration and how to make your house auspicious from all directions. There is also a comparative study between ownership and renting. Basic knowledge about buying a house should help you to get started and make a path to your homeowership.

Real estate is an import way to invest ones savings as well. We do hope that this information will be beneficial in fulfilling your dream to own a house. And also hope that young desi couples find their own ideal homes.

7 Don’ts while buying a home

Ilyce Glink, syndicated columnist, financial reporter for WGN-TV in Chicago and author of "100 Questions Every First-Time Homebuyer Should Ask," Frank Cook, author of "You're Not Buying That House, Are You?" and publisher of the weekly newsletter Real Estate Intelligence Report, and John R. Britt, of Newhall, Calif., a current real estate expert witness and former CEO of several banks, have shared their expertise in giving you the following "don'ts" when you're considering buying a new house - particularly if you're a first-time home buyer.

Don't go alone - It's wise to have your own agent and attorney. Don't rely on just the seller's real estate agent. Shop for an agent experienced in representing buyers, especially if you plan to look at homes for sale by the owner (FSBO). That owner may not know about certain restrictions and disclosure laws or could be "conveniently" forgetting them, or just doesn't care about them.

Don't buy junk - Avoid spending money until after the closing is completed, whether by credit card or with cash. Keep debt down and as much money in your bank account as possible. The lender will check bank and credit card accounts.

Don't change jobs - Unless it can't be avoided through such things as drastic location changes, the experts say it's best not to change your employment picture until after closing. A worse move yet is to change from a salaried position to self-employment. Lending institutions like to see steady employment and generally insist that self-employers show two years of successful income.

Don't be too trusting - Just because the real estate agent seems caring and knowledgeable, don't forget, they work on commission. Don't put your life completely in someone else's hands.

Do your homework - Become familiar with the entire home buying process and protect your own interests.

Don't mess up your credit - Credit experts say it's important not to have too few or too many open credit accounts, and the best credit is old credit. Another possible pitfall is to transfer all your credit card balances to one card to get zero balances on the others. Your credit score actually will be higher in most cases if your balances are spread out across several cards.

Don't pay your bills - Paying credit cards down to below 50 percent of the your credit limit is generally helpful to boosting your score, but paying off all your debts is only wise if you still have enough cash when it's over to take care of your down payment, closing costs and prepays.

Don't think about lying - Lenders want to know how much cash you have to put into the house - truthfully. If you're borrowing the money for a down payment and have to pay it back, it will have an effect on your ability to meet all your obligations. A lie could backfire and ruin your whole deal.

Don't do any spring-cleaning - Don't throw out bills, bank statements, or tax returns. A better idea than cleaning out is organizing all your important papers that may well be requested by a lender, such as W-2s, 1099 income statements, recent pay stubs and tax returns for the past couple of years if you're self employed. While you're at it, round up your prior title insurance policy, and any canceled checks, settlement statements or other proof that you paid collections or disputed accounts. (Source: Bankrate.com)

What Vastu Shastra Says

The God’s room is generally located in the North-east direction. The kitchen is usually located in the South-east and the dining hall in the West. There are two options for the bedroom the Southwest and the South. The East side of the house should be kept open and could have an open courtyard. The study room should be located towards the North, also the treasury or the house chest can be placed in this location. The Northwest is an ideal place for the store room and can be the second location for placing God’s shrine. An impressive door can add to the prestige of the resident. But doors that squeak or groan or get stuck are considered harbingers of bad luck. Must go for a housewarming or groundbreaking ceremony to commence construction or before moving in.

Quotes

Hitesh Kadakia of American Royal Mortgage Corp says, "Use a title company as closing agent instead of an attorney. This way, the cost incurred would be only $300 as against $600-800 for a lawyer."

Jay Mehta of Assured Lending says "Young couples earning in the range $65-80,000 should buy instead of renting. They will get at least $8-9,000 in tax returns, which will account for about 90 percent of their mortgage payment."

Randhir Reddy, a professional photographer living inWoodbridge, NJ, says, "young couples should not buy early. When you pay a mortgage of $1,000, you are actually paying only $100 towards the principal amount, the rest is interest. I prefer paying less rent and saving money for a bigger down payment."

Types of Mortgages are aplenty, but go with caution [ By Sandhya Pramod ]

Home mortgages come in many packages but their final shape is based on the homebuyer's status and occupation. However, the most common home mortgages are the Fixed Rate Mortgage (FRM) and the Adjustable Rate Mortgage (ARM). The most common mortgage sought by first time homebuyers is a Fixed Rate, 30-year mortgage. To help you understand each type of mortgage, we've given a brief explanation for comparison below.

Fixed Rate - 30 Years This is the most commonly used mortgage plan. Your monthly payments are lower than they would be on a shorter (15 year FRM) term loan. The interest rate is locked in when you secure the mortgage and does not change over the life of the loan.

Advantages

Disadvantages

Fixed Rate - 15 Years Also becoming very common, the 15-year mortgage results in higher monthly payments, but a lower interest rate

Advantages

Disadvantages

Adjustable Rate Mortgage

An adjustable rate mortgage has a fixed interest rate at the time the mortgage is secured. At the start of the loan, the payment is also fixed. Neither the interest rate, nor the payment is fixed for the life of the mortgage. However, after the initial fixed period, both the interest rate and the monthly payments are adjusted to reflect the then current market rates (based on your margins).

Advantages

Disadvantage

Some of the uncommon sources of funding include the Federal Housing Association, a federal body, which facilitates the home mortgages for those who are unable to arrange for the initial payment to be submitted as the down payment for the home mortgage

An organization named Neighborhood Assistance Corporation of America also helps in getting home mortgages to people with low and moderate income. The mortgagor has to pay a nominal amount of $50 per month as fee to NACA along with his monthly mortgage payment irrespective of the mortgage amount.

All leading banks or mortgage companies are working in close association with these federal bodies.

Gurmeet Sodhi, a leading mortgage broker & banker agent from Long Island, NY, points out that the younger generation, unsure if they would settle down at one location for a long time, prefer to take lower interest rates by taking a five-year adjustable rate mortgage. "The older homebuyers tend to lock in their interest rates for 30 years even though they may be paying higher interest in the long run," Sodhi added.

Whatever is your preference of mortgage loan, be clear about your objective of how long you plan to stay in your new home.

Rama Mehra Shares her home buying Story [ special ]

Immigrating in 1999, homeownership seemed a far-fetched thought. We rented for 3 years and every time we met friends and relatives, we were told that renting was flushing money away, that we were not getting any tax break. Few of my realtor friends said we should start looking for a home but the thought of putting 10% down seemed so hard to collect.

We finally decided to embark on our journey to find a home. We chose realtors recommended to us by friends and limited ourselves to a budget of $350,000 but we did not want to move out of San Ramon, CA. Almost after a year we found a property we liked but when we went to a loan agent, we realized we did not qualify for the loan!!

Desperate and forlorn, we came across a very enterprising loan agent (who was my son's tutor's mom). She said she could get us the loan after we had heard 5 mortgage brokers saying that they could not do anything for us. She worked out a loan figure for us, which we had to increase, as there were no properties available within our price budget. The realtors I was working with showed many properties but at many times I felt they were pushing me to close the deal. But on that I stood firm and would not settle for something I did not want. I also started looking online and finally saw a reasonably priced town home in San Ramon on yahoo. I forced my agents to take me to view the house. We walked in, loved the place and put in an offer. Our offer got accepted and we closed it in 30 days. For the down payment we used a hard moneylender to assist us and my new found mortgage friend got me a great loan.

Being home owners was a great feeling. We lived in our property for 18 months and were ready to make another move. Finally we decided on a property in San Ramon, the first step we took was to get a loan in place, then put in an offer and closed in 3 months.

10 Rental Tips

1.Keep a completed rental application; written references from landlords, employers, friends and colleagues; and a current copy of your credit report.
2.Carefully review all the important conditions of the tenancy before you sign on the dotted line.
3.To avoid disputes or misunderstandings with your landlord, get everything in writing. Keep copies of any correspondence and follow up an oral agreement with a letter.
4.Protect your privacy rights.
5.Know your rights to live in a habitable rental unit. The vast majority of landlords are required to offer their tenants livable premises, including adequate weatherproofing; heat, water and electricity; and clean, sanitary and structurally safe premises.
6.Keep communication open with your landlord.
7.Purchase renters' insurance to cover your valuables.
8.Make sure the security deposit refund procedures are spelled out in your lease or rental agreement.
9.Learn whether your building and neighborhood are safe, and what you can expect your landlord to do about it if they aren't.
10.Know when to fight an eviction notice - and when to move.
Source: http://www.nolo.com/lawcenter/ency

One-story homes are booming [ By Sandhya Pramod ]

Trends seldom move drastically in home varieties. Since homes can stand up for a hundred years or more, trends in residential building tend to stick around for a while. So, do pay careful attention to home-designs when you’re choosing your new home plan, suggest experts.

There are as many types of homes as you would care for. Housing falls into several different categories, most notably: Single Family Houses, Townhouses, or Condominiums. Each brings its own set of advantages and disadvantages. One type may be much better suited to your budget and lifestyle than another.

In a condominium, your ownership is limited to a single unit and a shared interest in of all of the common areas. In a townhouse, your ownership includes the lot on which your house sits as well as the entire structure. Finally in a single family home, your ownership includes the house and extends to the limits of the property lines.

For this article, let us restrict our discussion to single-family homes. The demand for one-story and two-story designs has almost been evenly divided among Americans building single-family homes. Two-story homes are efficient and affordable. They allow homebuilders to stack a large amount of living area onto a relatively small area. They are often preferred in expensive locations. It is ideal for homebuilders who want space but can’t afford a large land area. An extra bonus will be in terms of saving green paper on heating and cooling expenses.

According to the National Association of Home Builders, two-story structures have retained a slight edge in the total number of single-family homes built.

But change is afoot. Baby boomers are moving toward retirement age. Trend-watchers and industry experts say it means that one-story homes are in for a boom. As people in their 50s and beyond show a marked preference for the comforts of stair-free living. While a two-story home requires relatively uniform ceiling heights on the main floor in order to be cost-effective, one-story designs allow homeowners to vary their house’s ceiling heights.

"Uniform ceiling heights make any space feel homogenous," writes Sarah Susanka in her best-selling book 'The Not So Big House'. Simply by modulating ceiling heights, home designers can differentiate spaces, and imbue rooms with added personality.

Lower ceilings create a sense of intimacy, while high or vaulted ceilings can produce a more dramatic effect. Combine a vaulted ceiling with oversized, or specially shaped windows and a nice view, and the results can be spectacular!

Another important point to consider is the potential resale value of the home which is better in single storied one.

A Dilemma: To Buy or to Rent Desi Match brings a comparison between buying and renting

BUY Advantages 1. Stability, Security, belongingness 2. Equity on property - generally property appreciates 3. Free hand on Designing and decorating 4. Independence for maintenance Limitations 1. Maintenance Responsible 2. Property Tax 3. Less mobility

RENT Advantages 1. No property Tax 2. No maintenance 3. High amount of mobility Limitations 1. No Tax benefits 2. No equity built, all rent amount gone for ever 3. Risk of being asked to move 4. Rental hikes are forced

There are many calculators available online to give you an approximation on whether buying or renting is the right ball to set you rolling in your unique financial situation, like www.ginniemae.gov

This calculator calculates on :

Current Rent Purchase Price of Home Percentage of Down Payment Length of Loan Term (years)

Interest Rate Years You Plan to Stay in This Homes Yearly Property Tax Rates Yearly Home Value Increase Rate

You can evaluate your best bet online too, isn’t it easy? Happy Living
(Source : Ginniemae.gov).

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