Skip to main content

Buying a Home in 2017? 4 Strategies to Keep Your Purchase Affordable

By U.S. News & World Report

The housing marketing is heating up with mortgage rates recently breaking through the 4 percent threshold, and very likely staying above that level next year, all while home prices are also increasing. To make the best homeownership choice in 2017 in the midst of these higher cost factors, a consumer should take action in four areas: strengthen credit, shop smart for a mortgage, choose the house carefully and wisely negotiate price.

Strengthen your credit score before you look for a mortgage. The majority of people don’t know their credit score until they begin to look for a home or mortgage.

Since looking for a home can take anywhere from one to three months on average, sometimes even longer, it could pay off to use the home shopping time to strengthen your credit score, especially if it means getting a lower mortgage rate. How much lower? Although not every lender is the same, a strong credit score can cut as much as half a percent from your rate.

A housing counselor or credit counselor can provide guidance on what to do to boost a credit score while shopping for a home.

But just as it could pay off to improve your credit before applying and getting approved for a mortgage, buyers shouldn’t assume that an approved mortgage is a done deal. Until all of the paperwork is signed and the home’s keys are handed over, a lender may review the agreement to see the factors that led to a loan approval haven’t changed.

For example: Making purchases that change your credit picture for the worse — like adding new debt or paying a credit card late, even inadvertently — before you buy the house could lead to a lender rescinding the mortgage approval.

[See: The 20 Best Places People Are Moving to in the U.S.]

Shop around for the best mortgage. As said before, not every lender offers the same mortgage rate, so shopping around is essential, but something the average person doesn’t do. According to data from the Consumer Financial Protection Bureau, nearly half of people who apply for a mortgage don’t shop around. Failing to do so could be expensive month after month, and really add up after several years.

Consider this example of someone borrowing $200,000 for a mid-price home. At a 4 percent rate of interest, the monthly payment is approximately $955. The same amount borrowed at 4.5 percent increases the monthly mortgage to $1,013, or nearly $700 each year.

As important as it is to obtain the best mortgage rate, it’s also important to watch out for fees charged by mortgage lenders. These fees go by various names, another reason to work closely with a housing counselor throughout the mortgage process in order to navigate the complicated process.

[See: 10 Tips to Sell Your Home Fast.]

Choose your home carefully. With a strong mortgage approval letter in hand at a great rate, it’s time to find your home. However, a tight market in 2016, especially for first-time buyers, is likely to persist to some degree in 2017. A market with low housing supply requires a buyer to look for diamonds in the rough, and perhaps be willing to accept the not-so-perfect dream home.

That doesn’t mean a buyer should settle for a house that doesn’t meet his or her needs. Keep your list of must-haves front and center, but make sure you know the difference between must-haves and nice-to-haves. A real estate agent that listens to you and clearly puts your interests first is a great partner in the home search process. A crystal clear focus on your must-haves could open up different communities, perhaps with better price points for your budget, and less competition.

Many housing counseling organizations can provide a homebuyer with a starter list of real estate agents from which to choose. However, just like when shopping for a mortgage, shopping for a real estate agent takes time. Remember, this is the person who is going to help you make what is probably the largest financial purchase of your life.

[See: The Best Apps for House Hunting.]

Negotiate, negotiate and negotiate. If real estate is location, location, location, then homebuying is negotiate, negotiate, and negotiate. Unless you’re buying in the most heated and competitive markets, there is always room for negotiation. Here’s where picking the right real estate agent pays off.

Whether it’s the price — probably the most important item to negotiate — or if the seller will pay a portion of closing costs, or provide a home warranty on major appliances, approaching the seller with a list of things you want is something everyone should do. Remember, the seller wants to sell, and you want to buy. Successful home purchases that work for both sides are made in the middle.

More from U.S. News

10 Ways Millennials Are Changing Homebuying

The 20 Best Places to Live in the U.S. for Quality of Life

The 30 Most Fun Places to Live in the U.S.

Buying a Home in 2017? 4 Strategies to Keep Your Purchase Affordable originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
Read Next Story

Related News

Frustration grows in Venezuela as earthquake death toll reaches 1,430

Israel and Lebanon sign framework agreement with US in ‘first step’ toward peace, Rubio says

Trump-endorsed populist poised to become Colombia’s next president as rival challenges vote