12 Arrowwood Court South Portland Maine

12 Arrowwood Court South Portland Maine
Under Contract!!

Saturday, June 26, 2010

101 Things I Love About Portland Maine

87. Restaurants: Otto's Pizza on Congress Street. A small eatery with a counter and stools, this pizzeria offers some delicious and somewhat unusual selections, including mashed potato. I got a big slice of cauliflower and mushroom which was very tasty with a nice chewy crust. With a small can of soda the cost was $4.
They open every day at 11:30 and stay open til 2 am on Friday and Saturday.

Friday, June 25, 2010

Relocation Timeline

About one month away from your move, you'll want a detailed checklist to make sure nothing is forgotten.

Four weeks to go:

•Call moving companies for a free estimate. Cost will vary depending on distance, weight and optional services.
•Look through your house to determine items to be discarded or donated to charity. Have a garage sale!
•Inform schools of transfer. Make arrangements for enrollment/registration in new schools if necessary.
•Most homeowner's policies do not provide adequate coverage for moving. Check with your agent and consider purchasing additional coverage from a moving company.
•Begin collecting boxes with covers if you plan to pack your belongings. You can purchase packing materials through moving companies or contact local grocery stores for extra boxes. Be sure to stock up on packing tape!
•Begin consuming perishable and frozen food items to minimize waste.
Three weeks to go:

•Begin packing!
•Notify the post office of your new address and send change of address cards to friends, family, subscriptions and any billing companies.
•Make necessary travel arrangements including interim housing and car rental. Be sure to record confirmation numbers.
•Collect medical records and prescriptions from physicians. Ask for recommendations for doctors in your new area.
•Place legal, medical and insurance records in a safe and accessible place.
Two weeks to go:

•Arrange to disconnect utilities/services in your current residence and coordinate installation of utilities/services in your new home.
•Close/transfer bank accounts and open accounts in your new city.
•Take pets to the vet for immunizations. Ask for advice on moving animals.
•Draw a map of your new home and where the furniture will be arranged.
•Return library books and any borrowed items.
•Be sure to cancel newspaper subscriptions and/or any special services you have (i.e., landscaping/lawn service, snow plow, etc.).
One week to go:

•Prepare car for the trip. Check the oil, tires, brakes, etc.
•Drain water from hoses.
•Drain gasoline and oil from any lawn or power equipment.
•Remember to pick up items sent to the cleaners or for repairs.
Days before:

•Defrost and clean out refrigerator
•Pack your luggage and separate any items you will need in the first days in your new home (i.e., a current telephone directory - you may need to refer to it for calls to residents or businesses in your former hometown). Label these boxes "Load Last."
•Reconfirm travel arrangements.
•Reserve ample parking space for the movers and provide clear paths inside the house.
The Big Day!

•Be on hand to answer any questions.
•Go over your inventory with the driver.
•Be sure to point out all FRAGILE items to the movers.
•Check, double check and triple check to see if anything is left behind!
•Do not leave the house until the movers are gone.
A Few More Moving Thoughts:

Moving your computer - Make copies of all your files and software. If possible, pack your computer, monitor, and printer in their original boxes. If not, ask a moving company for boxes made especially for computers.

Packing supplies - have 1.5" packing tape, thick markers, packing pellets, scissors, labels, tissue paper, newspaper and blankets on hand.

Inventory - Review inventory list.

Pack photographs between sheets and blankets in boxes for added protection.

At your destination consider hooking up the TV and VCR to occupy children until the truck is unloaded.

Enjoy your new home!

Wednesday, June 23, 2010

Escrow Information

What is an Escrow?
An escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a specific condition or event. It is an independent neutral account by which the interests of all parties to the transaction are protected.

When opening an escrow, the buyer and seller of a piece of property establish terms and conditions for the transfer of ownership of that property. These terms and conditions are given to a third, impartial party known as the escrow holder. The escrow holder has the responsibility of seeing that the terms are carried out.

The escrow is a "storehouse" for all monies, instructions and documents necessary for the sale of your home. This includes the buyer providing funds for a down payment, and the seller depositing the deed and any other necessary papers.

Why Do I Need an Escrow?
An escrow will provide you with a guarantee that no funds or property will change hands until ALL of the terms and conditions have been followed. The escrow holder has the responsibility to watch over the funds and/or documents and then pay out the funds and/or transfer the title only when all requirements of the escrow have been completed.

How Does the Escrow Process Work?
The buyer, seller, lender and/or borrower cause escrow instructions to be created, signed and delivered to the escrow officer. The escrow officer will then process the escrow, in accordance with the escrow instructions. When all conditions required in the escrow are met, the escrow is "closed."

Prior to close of escrow, the buyer deposits the funds required with the escrow holder. The buyer instructs the escrow holder to release the money to the seller when:

•The deed records
•A policy of title insurance is prepared and delivered to the buyer
The escrow holder acts for both parties and protects the interests of each within the power of the escrow instructions. Escrow cannot be completed until the instructions have been fully satisfied and all parties have signed escrow documents. The escrow holder takes instructions based on the terms of the purchase agreement and the lender's requirements.

The duties of the escrow holder include:

•Managing the funds and/or documents in accordance with instructions
•Paying all bills as authorized
•Responding to requests from the principals
•Closing the escrow only when all terms and conditions have been met
•Distributing the funds accordingly
How Do I Open an Escrow?
Generally, the seller's real estate agent will open the escrow. As soon as you complete the purchase agreement, the selling agent will place the buyer's initial deposit, if any, into the escrow account at a title company or into the real estate broker's account.

What Do I Need to Do Before My Appointment to Sign Escrow Papers?
All parties signing the documents must bring proper identification. Bring either a valid driver's license, state identification card or current passport with you to the title company. This item is needed to verify your identity by a notary public. This is a routine, but necessary step for your protection.

What's the Next Step After I've Signed the Closing Escrow Papers?
After both parties have signed all the necessary instructions and documents, the escrow officer will return the buyer's loan documents to the lender for final review. After the review is completed, the lender is ready to fund the buyer's loan and informs the escrow officer.

How Long is an Escrow?
The length of an escrow is determined by the terms of the purchase agreement and can range from a few days to several months.

What is an "Escrow Closing"?
An escrow closing is the climax of the transaction. It signifies legal transfer of title from the seller to the buyer. Generally, the Grant Deed of Trust is recorded within one working day of the escrow holder's receipt of loan funds. This completes the transaction and signifies the "close of escrow." Once all the conditions of the escrow have been satisfied, the escrow officer informs you or your agent of the date escrow will close and takes care of the technical and financial details. The final closing papers are disbursed upon close of escrow, when the escrow officer verifies with the County Records Office that the documents have recorded and legal transfer has occurred.

101 Things I Love about Portland Maine

86. Craftworks Store in Bridgton: This fine boutique has been a favorite for a long time. You can find fashionable women's clothing and accesories, crafts, books, cards and other lovely gifts.

101 Things I Love about Portland Maine

85.Day trips from Portland: North Conway NH.
This trip takes about an hour and 1/2 drive from Portland but it is worth making as North Conway has a lot to offer in every season. You can see the White Mountains from here and the village has an old railway station in town with regular scenic train rides. Try Horsefeathers Restaurant for really delicious soups, salads and sandwiches. Zeb's Coutry Store has all the gifts, penny candy and maple products you want. Lots of outlet shopping, too. I like The Settler's Green complex.

Sunday, June 20, 2010

101 Things I Love about Portland Maine

84.Overnight trips from Portland--Cape Cod MA. My husband and I have been travelling to the Cape since our honeymoon. We like to stay in Provincetown especially since we have started renting a friend's condo that extends right over the beach. We always take the north shore route and stop at every antigue shop along the way. Lunch is at the Beehive Tavern in Sandwich. Always fresh food "home-cooking" style.
Provincetown is a thriving arts community with lots going on. This week was the International Film fest. We usually go to the local theater for a play but this time drove to Wellfleet Harbor Actor's Theater. There are 2 separate theaters so 2 plays to choose from.
We also like to check out the Wellfleet Drive-in Flea Market on weekends to see what treasures we can find--lots of new items, too. The streets of Provincetown are bustling with activity late into the evening. Lots of great restaurants, shops, galleries, and clubs.

Thursday, June 17, 2010

101 Things I Love about Portland Maine

83.Maine Yacht Center behind B&M Baked Beans in Portland. A snazzy facility for boaters with WiFi and club room. The area has calm sea so your boat isn't rocking at its berth, too.

Monday, June 14, 2010

How to Avoid Home Buying Mistakes

1. Not doing your homework. Enter the market well-prepared by researching location, school district, deed restrictions and taxes.

2. Trying to make a shrewd investment. Focus on finding the best place for you and your family to live rather than trying to predict the real estate market.

3. Choosing a poor location. Consider what part of town you would like to live in and avoid homes located on busy streets.

4. Overlooking an inferior floor plan for an attractive exterior. Choose a great floor plan over a great exterior because you'll spend far more time inside the house than outside.

5. Overlooking how the home will function for your family. Consider features that are most important to your family and choose a home that will meet those needs.

6. Not having the home properly inspected when buying a resale. Hire a state-licensed, professional inspector to evaluate the home's true condition, which could save you thousands of dollars in repairs and maintenance.

7. Not having the home properly inspected when buying a new home. Research the number of homes sold, homeowner satisfaction, years in business, industry recognition and warranties offered.

8. Not getting what you want because you're impatient. If it's a used home, allow time to negotiate and get the best deal possible. Refusing to rush the process could save you $5,000 on the purchase price.

9. Waiting for a better time to buy based on the market and interest rates. History shows that those who purchased homes and kept them for three to five years or more did better than those who didn't. Waiting is one of the biggest mistakes a home buyer can make.

10. The biggest home buying mistake is not buying at all. Buying a home will give you a place to call your own and allow you to take advantage of tax breaks and build equity.

Avoiding common mistakes can make the home buying process simpler and less stressful.

101 Things I Love about Portland Maine

82. Old Port Festival--A fun family event every June on a Sunday, this fest starts with a big parade and includes, rides, crafts, food, music. Always a great day. I listened to a good reggae group, ate ethnic food and hand cut fries.

Saturday, June 12, 2010

101 Things I Love about Portland Maine

81. Theaters--Portland Players, Maine's Longest Running Community Theater dating from 1931 is on Cottage Street in South Portland. Read about their history and up-coming season on their website: http://www.portlandplayers.org/

Friday, June 11, 2010

101 Things I Love about Portland Maine

80. Chocolate chip cookies from Old World Gourmet in Freeport Me. On US Route 1 just behind the "Big Indian" statue you will find a great deli for soups and sandwiches but don't miss these cookies. Loaded with melty chips and walnuts!!

101 Things I Love About Portland Maine

78.Outside Dining--The Armory Hotel in the Old Port has a lovely small terrace restaurant in front of their circular entrance driveway. It is quiet and relaxed with pleasant waitstaff. My husband and I enjoyed lunch of salmon wrap and burger with fresh brewed iced tea. A nice calm spot in the middle of a busy area.

79. Places to stay or for friends and relatives visiting Portland: The Armory or Portland Regency Hotel seems very elegant and certainly conveniently located. My Mom and sister have stayed there and found it very enjoyable. Their site;http://www.theregency.com/

5 Buyer Secrets

1. Get "Pre-Approved" - Not "Pre-Qualified!"

Do you want to get the best property you can for the least amount of money? Then make sure you are in the strongest negotiating position possible. Price is only one element in the negotiations, and not necessarily the most important one. Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller.

In years past, I always recommended that buyers get "pre-qualified" by a lender. This means that you spend a few minutes on the phone with a lender who asks you a few questions. Based on the answers, the lender pronounces you "pre-qualified" and issues a certificate that you can show to a seller. Sellers are aware that such certificates are WORTHLESS, and here's why! None of the information has been verified!

Many times unknown problems can come to the surface! Some of the problems I've seen include recorded judgments, alimony payments due, glitches on the credit report due to any number of reasons both accurately and inaccurately, down payments that have not been in the clients' bank account long enough, etc.

So the way to make the strongest offer today is to get "pre-approved".

This happens AFTER all information has been checked and verified. You are actually APPROVED for the loan and the only loose end is the appraisal on the property. This process takes anywhere from a few days to a few weeks depending on your situation. It's VERY POWERFUL and a weapon I recommend all my clients have in their negotiating arsenal.

2. Sell Your Property First, Then Buy the House

If you have a house to sell, sell it before selecting a house to buy! Contingency sales aren't nearly as strong as one that comes in with a ready, willing and able buyer. Consider this scenario You've found the perfect house - now you have to go make an offer to the seller.

You want the seller to reduce the price and wait until you sell your house. The seller figures that this is a risky deal, since he might pass up a buyer who DOESN'T have to sell a house while he's waiting for you. So he says OK, he'll do the contingency but it has to be a full price offer! You have now paid more for the house than you could have because of the contingency, and you have to sell your existing house in a hurry! Otherwise you lose the house! So to sell quickly you might take an offer that's lower than if you had more time. The bottom line is that buying before selling might cost you THOUSANDS of dollars.

If you're concerned that there is not a house on the market for you, then go on a window-shopping trip. You can identify possible houses and locations without falling in love with a specific house. If you feel confident after that then put your house on the market. Another tactic is to make the sale "subject to seller finding suitable housing". Adding this phrase to the listing means that WHEN YOU DO FIND A BUYER, you will have some time to find the new place. If you don't find anything to your liking, you don't have to sell your present home.

3. Play the Game of Nines

Before house hunting, make a list of things you want in the new place. Then make a list of the things you don't want. You can use this list as a guide to rate each property that you see. The one with the biggest score wins! This helps avoid confusion and keeps things in perspective when you're comparing dozens of homes. When house hunting, keep in mind the difference between "STYLE AND SUBSTANCE". The SUBSTANCE are things that cannot be changed such as the location, view, size of lot, noise in the area, school district, and floor plan. The STYLE represents easily changed surface finishes like carpet, wallpaper, color, and window coverings. Buy the house with good SUBSTANCE, because the STYLE can always be changed to match your tastes. I always recommend that you imagine each house as if it were vacant. Consider each house on its underlying merits, not the seller's decorating skills.

4. Don't Be Pushed Into Any House

Your agent should show you everything available that meets your requirements. Don't make a decision on a house until you feel that you've seen enough to pick the best one. A decade ago, homes were selling quickly, usually a few days after listing. In that kind of market, agents advised their clients to make an offer ON THE SPOT if they liked the house. That was good advice at the time. Today there isn't always this urgency, unless a home is drastically underpriced, and you'll know if it is.

Don't forget to check into the SCHOOL DISTRICTS of the area you're considering. Information is available on every school; such as class sizes, % of students that go on to college, SAT scores, etc. You can get this information from this web site.

5. Be prepared to act fast!

The biggest mistake I see home buyers make is they find something they really like, ask to see other homes, and by the time they decide their first choice was right, the home is gone. In a seller's market, there aren't enough homes to satisfy every homebuyer. Prices are usually sky high because of the low inventory. Homebuyers typically make a fast offer - often for more than the list price - or risk losing the home to a more agile homebuyer. There isn't much room to negotiate in a seller's market unless the property is overpriced. Your agent should show you everything available that meets your requirements. If you see something you like and can afford, buy it. Inexperienced or not, in today's market you must be willing to act fast.

Monday, June 7, 2010

101 Things I Love About Portland Maine

77. Restaurants: El Rayo at 101 York Street in Portland is a fun Mexican restaurant with an outdoor seating area. It was quite crowded on the night I went so my friend and I ate inside. We ordered the Mexico City corn on the cob right away as it takes a while to prepare. I can't even describe how delicious it is but try it and see what I mean. All our food was very good. I had the Pinata salad with steak--brown rice, veggies and pinto beans. Next time I will try to eat outside.

101 Things I Love about Portland Maine

76.Clothing Shops: Corey & Co at 19 Pleasant Street has wonderful clothing and jewelry and other accessories for the chic women of Portland who like to set fashion trends not follow them. I fell in love with a white tunic when I dropped in at art walk night. Still want to go back and get it! It is a small shop with some great items especially the linen dresses. Scarves to die for!

101 Things I Love about Portland Maine

75. Ultra Cool clothing shops: I have seen Brook There on strolls down Wharf Street but finally went in tonight. The owner/designer Brook Delorme was working on projects right in the shop. The clothes are unique and fun and creative. Check out her website for more info: http://brookthere.com/

Saturday, June 5, 2010

101 things I Love about Portland Maine

74.Restaurants you save for a special celebration: Fore Street in Portland.
My husband and I just had a delicious meal for our anniversary. He enjoyed the pork loin and I had the chicken. Both were perfectly prepared--juicy and tender. We started with mixed greens and added fingerling potatoes and roasted cauliflower.
Unfortunately no room for dessert! A great night out....

Friday, June 4, 2010

Ducks at Evergreen Cemetary Portland

Drive to the back of Evergreen and enjoy feeding the ducks at the ponds. The ducklings were very friendly on a recent trip. They came running when I got out of the car!

Down Payments

What Makes Low Down Payment Loans Possible?

Simply put, mortgage insurance protects the mortgage company against financial loss if a homeowner stops making mortgage payments. Mortgage companies usually require insurance on low down payment loans for protection in the event that the homeowner fails to make his or her payments. When a homeowner fails to make the mortgage payments, a default occurs and the home goes into foreclosure. Both the homeowner and the mortgage insurer lose in a foreclosure. The homeowner loses the house and all of the money put into it. The mortgage insurer will then have to pay the mortgage company's claim on the defaulted loan.

For this reason, it is crucial that the family buying the home can really afford it, not only at the time it is purchased, but throughout the time period of the loan.

Although the cost of the mortgage insurance is paid by the home buyer, or borrower, the mortgage insurer works directly with the mortgage company. Mortgage insurance is available to commercial banks, savings & loans and mortgage bankers, all of whom offer mortgage loans to home buyers.

Remember that mortgage insurance is not the same as credit life insurance, also called mortgage life insurance. This type of policy repays an outstanding mortgage balance upon the death of the person who took out the insurance policy.

The Secondary Market

The mortgage company's decision to use mortgage insurance is driven by the requirements of investors in the mortgage market. Because of the losses that could occur, major investors require mortgage insurance on all loans made with low down payments.

The three primary investors in home loans are Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and Government National Mortgage Association (Ginnie Mae). By purchasing and selling residential mortgages, Fannie Mae and Freddie Mac help keep money available for homes across the country.

Unlike Fannie Mae and Freddie Mac, Ginnie Mae does not actually buy mortgages. It adds the guarantee of the full faith and credit of the U.S. Government to mortgage securities issued by mortgage companies.

The Two Choices: Government Insurance and Private Insurance

Now that we have explained how mortgage insurance works and why it is necessary, let's look at the basic kinds of mortgage insurance. Low down payment mortgages can be insured in two ways -- through the government or through the private sector. Mortgages backed by the government are insured by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA) or the Farmers Home Administration (FmHA).

Although anyone can apply for FHA insurance, the other two government mortgage guarantee programs are much more targeted. The VA program is limited to qualified, eligible veterans and reservists. This program is very specialized, so contact your mortgage professional for the details. The FmHA insures loans for the construction and purchase of homes in rural communities.

Obtaining conventional financing is the alternative to obtaining a home loan backed by the government. Conventional mortgages are all home loans not guaranteed by the government, including those guaranteed by private mortgage insurers.

Although government and private insurance are based on the same concept of allowing families to get into homes with less cash down, there are many differences between the two. Often, your mortgage professional will play an important role in suggesting and deciding which insurance is selected.

Home buyers must make a down payment of at least 5% of a home's value to be considered for private mortgage insurance. However, under some special programs, the down payment requirement allows the buyer to use a gift or grant to cover 2% of the 5% down payment required by private mortgage insurers. The gift or grant may come from a friend, relative, community group or other organization.

Private mortgage insurance is available on a wide variety of home loans and there is no pre-set limit on the loan amount. Although differences such as these may affect whether the mortgage company prefers to work with government or conventional mortgages, your mortgage professional will discuss which one would be better for your situation.

With the wide variety of loans available, home buyers have the freedom to choose the type of loan that best suits their needs. Early on in the home buying process, it is a good idea to meet with several companies to compare the types of mortgages they offer and shop for the best price and terms. Best of all, working with a mortgage insurer can be very easy, whether your loan is insured by the FHA or a private mortgage insurance company, because your mortgage professional handles all of the arrangements.

By making lending money to home buyers safer, mortgage insurance helps more families get into homes of their own.

Down Payment Loans and Gifts

Loans and gifts can help with your down payment but you can not use this strategy for all loan programs. The most popular program for this tactic is the Federal Housing Administration or FHA. FHA allows 100% gift funds for your down payment. The gift can be from any relative or can be collected through new innovative programs, like the Bridal Registry where couples receive money into an account that can be used for the down payment.

Another popular tactic, which can be used in a wider range of programs, is to borrow from your 401K program. If you have a 401K program with your employer, you can withdraw without a penalty for your down payment and pay it back over a specified period. There are some drawbacks, the payment will be used in qualifying and your 401K account will not continue to grow as fast. Even with these drawbacks, it is often a smart move if this is your only option.

Down Payment - Grant That Is Never Repaid By The Homebuyer!

There are national non-profit organizations dedicated to assisting homebuyers with their down payment and closing costs.

Buyers can receive a free gift under these programs. Gift amounts vary with each program but are generally available in amounts of 3% with some programs, all the way up to $22,500 with others. Buyers never have to repay these gifts.

It's easy to receive a free gift from these programs, however qualification guidelines do vary with each program. Each program requires that buyers must qualify for any eligible loan program with their lender (there are many programs that qualify).

While this is the ONLY qualifying requirement of some programs, others have requirements such as requiring that the buyer complete a Home Ownership Counseling Course or provide 1% of their own funds into the transaction. In addition some programs have income/asset restrictions, recapture clauses, reserves required, or geographic boundaries. Each program can provide you with their specific requirements and/or limitations

These programs generally participate with FHA, Conforming, and Non-Conforming loan products. Most of these programs do not underwrite the loan or add any cost in the form of points, fees, etc., they simply provide the gift for the down payment and/or closing costs.

These downpayment assistance programs can be used for Single Family (1-4 unit) homes, Manufactured/Modular Homes, Condominiums, Townhouses, Existing or New Construction, Rehab and Non-Conforming.

Qualifying for a Low Down Payment Loan

To be considered for a low down payment loan, you generally need to have:

Sufficient income to support the monthly mortgage payment
Enough cash to cover the down payment
Sufficient cash to cover normal closing costs and related expenses (explained below)
A good credit background that indicates your payment history or "willingness to pay"
Sufficient appraisal value, which shows the house is at least equal to the purchase price
In some instances, a cash reserve equivalent to two monthly mortgage payments
Closing costs, or settlement costs, are paid when the home buyer and the seller meet to exchange the necessary papers for the house to be legally transferred. On the average, closing costs run approximately 2% to 3% of the house price. This percentage may vary, depending on where you live.

Closing costs include the loan origination fee (if not already paid), points, prepaid homeowner's insurance, appraisal fee, lawyer's fee, recording fee, title search and insurance, tax adjustments, agent commissions, mortgage insurance (if you are putting less than 20% down) and other expenses. Your mortgage professional will give you a more exact estimate of your closing costs.

Points are finance charges that are calculated at closing. Each point equals 1% of the loan amount. For example, 2 points on a $100,000 loan equals $2,000. Companies may charge 1, 2 or 3 points in up-front costs in addition to the down payment. The more points you pay, the lower your interest rate will be. In some cases, you may be able to finance the points.

So How Much of a Mortgage Can You Afford?

There are two basic formulas commonly used to determine how much of a mortgage you can reasonably afford. These formulas are called qualifying ratios because they estimate the amount of money you should spend on mortgage payments in relation to your income and other expenses.

It is important to remember that the following ratios may vary and each application is handled on an individual basis, so the guidelines are just that -- guidelines. There are many affordability programs, both government and conventional, that have more lenient requirements for low- and moderate-income families.

Many of these programs involve financial counseling for low- and moderate-income people interested in buying a home and in return, offer more lenient requirements.

Generally speaking, to qualify for conventional loans, housing expenses should not exceed 26% to 28% of your gross monthly income. For FHA loans, the ratio is 29% of gross monthly income. Monthly housing costs include the mortgage principal, interest, taxes and insurance, often abbreviated PITI. For example, if your annual income is $30,000, your gross monthly income is $2,500, times 28% = $700. So you would probably qualify for a conventional home loan that requires monthly payments of $700.

Any expenses that extend 11 months or more into the future are termed long-term debt, such as a car loan. Total monthly costs, including PITI and all other long-term debt, should equal no greater than 33% to 36% of your gross monthly income for conventional loans. Using the same example, $2,500 x 36% = $900. So the total of your monthly housing expenses plus any long-term debts each month cannot exceed $900. For FHA the ratio is 41%.

Maximum allowable monthly housing expense
26% - 28% of gross monthly income - Conventional
29% of gross monthly income - FHA

Maximum allowable monthly housing expense and long-term debt
33% - 36% of gross monthly income - Conventional
41% of gross monthly income - FHA

One way to determine how much to spend for housing is to compare your monthly income with monthly long-term obligations and expenses. Use the worksheet, "Evaluating Your Financial Resources," to determine how much money you can spend on housing. Be sure to only include income you can definitely count on.

When budgeting to buy a home, it is important to allow enough money for additional expenses such as maintenance and insurance costs. If you are purchasing an existing home, gather information such as utility cost averages and maintenance costs from previous owners or tenants to help you better prepare for homeownership.

Homeowner's insurance or property insurance is another cost you will have to consider. The lending institution holding the mortgage will require insurance in an amount sufficient to cover the loan. However, to protect the full value of your investment, you might want to consider purchasing insurance that provides the full replacement cost if the home is destroyed. Some insurance only provides a fixed dollar amount which may be insufficient to rebuild a badly damaged house.

Down Payment Assistance

The best-kept secret behind the sustained strength of the residential real estate market is the creation of a new pool of buyers who can afford their mortgage payments but lack the cash for a down payment. In the past these potential buyers had little hope of owning a home. Today, thousands of these individuals are becoming homeowners.

According to both HUD and Minneapolis Federal Reserve, the number one barrier to homeownership in the U.S. is the lack of downpayment money. With President Bush's initiative to increase minority homeownership by 5.5 million by the year 2010, there is an increased need for organizations that can provide assistance through the use of private capital.

Through the use of private capital, the non-profit down-payment industry now makes possible over 17,000 home purchases each month for low to moderate income buyers. Today these Downpayment Assistance Programs (which are not just for 1st time homebuyers) are helping many people live the dream of home ownership.

These organizations are supported through contributions made by home sellers. The donations help to replenish the pool of funds that are used for future buyers. Additionally the non-profits charge a small service fee, the proceeds of which allow them to stay operational.

Buyers are provided with gifts from the non-profits, which can be used towards their downpayment and/or closing costs. These are true gifts that do not need to be repaid. The grants range from 2%-10% of the purchase price of the home. Home sellers typically agree to participate because they believe that they are receiving a fair offer for their home while at the same time they are benefiting from making a donation to a non-profit organization.

Benefits to Home Buyers

Get into a home
Begin building equity
Start taking advantage of tax benefits
May not have to deplete their entire savings
Benefits to Home Sellers

Expose their home to a larger pool of buyers
Typically will receive full price offers
Sell their home faster
Added benefit of making a donation to a non-profit
The organizations differ slightly with some providing additional benefits for the homebuyer. For instance the Home Downpayment Gift Foundation has a program called "Home Mortgage Protection Plus". This Program covers gift recipient who are enrolled in the Platinum Program against involuntary loss of employment. Should the gift recipient(s) lose their job during their first year of home ownership, the Foundation will provide for up to six months of mortgage payments (maximum of $1800.00 per month in P.I.T.I.) on their behalf.

The non-profits strongly encourage Home Ownership Counseling prior to the home purchase and some provide post-purchase counseling to its gift recipients.

The Gift Programs generally participate with FHA, Conforming, and Non-Conforming Loan Products. The downpayment assistance program can be used for Single Family (1-4 unit) homes, Manufactured/Modular Homes, Condominiums, Townhouses, Existing or New Construction, Rehab and Non-Conforming.

While they do not provide any lending services, they can make available local mortgage professionals who are familiar with their Program. For more information about these programs you can contact the Home Downpayment Gift Foundation at 1-888-856-4600 or visit their website at www.homedownpayment.org.