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Saving Money For Your House - December 2007 Blog

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December 24, 2007
Types of Mortgage Loans, How To Find A Real Estate Agent, and Your Down Payment

For the last few months, I have been writing all about ways to save money and make more money towards your home mortgage down payment. I am very excited today to be uploading two new articles that focus on two additional tasks you should be doing while saving for your down payment: researching and understanding the fundamentals of mortgage loans and searching for the optimal real estate agent. Saving up your home loan down payment is a huge savings task. You want to get the most out of your down payment savings by making sure you find the right home loan and real estate buyer's agent. Also, I would like to wish all of my readers a very Happy Holidays and New Year!

December 12, 2007
Interest Rates and Your Mortgage Down Payment

Yesterday, the Federal Reserve lowered the fed funds rate to 4.25 percent, one of the lowest levels in years. Faced with overextended banks and borrowers, the Fed is doing whatever it takes to keep the economy afloat. What does this mean if you are saving for your first home down payment? There are two ramifications: more favorable borrowing conditions and inflationary pressure.

Let's first look at the bright side. If you have good or excellent credit and are saving for your first home mortgage, you are in great shape. Lenders are fighting for good and excellent credit borrowers these days. They are facing loan losses from bad credit borrowers are trying to balance their portfolio of mortgages with more A-paper loans. If you are in this situation, I highly recommend getting competitive mortgage quotes. Negotiate and don't take the first offer. You might be able to get a much lower interest rate and larger loan amount than you think. Just remember, you don't want to end up in the same situation as many overextended homeowners today. Buy within your means and get a great deal. Use the left over money to pay off your loan sooner so you own your house 100 percent, that is true financial freedom and my top goal (that is, after I first own my own home).

Now, let's look at the negative ramifications of low interest rates. In saving for your down payment, low interest rates are a double edged sword because they also signal higher inflation. As we know, inflation is a concern when saving for your down payment. Inflation is not so bad if you have your assets in real estate and stocks. Real estate and stocks appreciate with inflation and that is one of the reasons owning your own house or condo is such a great investment. In saving for your down payment, however, inflation is a real issue because it can erode the value of your down payment savings in addition to pushing house prices higher. What should you do? First, don't stress out too much. My main take on all of this is to stay the course and try to save my down payment within the next three years. Over the course of three years, inflation is not likely going to erode too much of my down payment savings fund. Second, you may want to consider placing a little of your savings in gold, a terrific hedge against inflation. Overall, I'm excited about the low interest rates because I think it presents a good environment for someone striving to own their first home and get a good deal on their mortgage loan. I feel this aspect outweighs the downside inflationary concerns.

December 11, 2007
Save Money For Your Down Payment By Renting a Condo

I'm looking forward to the day I no longer have to rent my apartment and have saved enough money for my first house down payment. Upon doing some research, I'm finding that my apartment may be costing me even more than I had previously thought. Why? I have some friends at work who are renting condos they found on Craigslist. I have not seen their condos from the inside but know the complex and location. Overall, I get the impression that their condos are not quite as nice as my apartment but almost as good. However, there is one staggering difference: price. The condos are renting for 30% less than my apartment.

How is it possible that my friends are saving so much money on their rent? My hypothesis is twofold. First, I believe the condo rental market is far less competitive than the apartment rental market for the simple fact that many people do not know they can rent condos. When looking for my apartment, I never considered a condo. Second, I believe condo owners are willing to take a lower rent amount in exchange for a nice, quiet, clean tenant. They want to keep their asset in great condition and are willing to deal on price more than apartment owners to keep their condo nice.

My monthly rent is my single biggest expense. Reducing it just a few percent is great savings toward my first home down payment savings fund. When my apartment lease comes up, I will certainly consider taking a look on Craigslist to see if I can find a condo for rent at a great price.

December 9, 2007
Save For Your Down Payment By Eating Fast Food

Health critics out there are not going to like me but I have a new strategy for saving money: eating one fast food meal per week. Fast food is very cheap and tasty. I'm able to get a Big Mac meal at McDonald's for less than $5 which includes a burger, fries, and Coke. Compared to my regular $10 lunch meal, I'm saving $5 per week by eating one fast food lunch. $5 in savings times 52 weeks per year is a handsome $260 in savings per year. That definitely helps in my quest to save up for my down payment.

Now I'm going to go out on a limb and present two other arguments for fast food. First, I don't think fast food is all that bad for you, in moderation. If you can hold yourself to once per week, it should not affect your diet too much. The main reason I believe this is because most meals out are not great for you. Substituting a $10 meal out for fast food not only saves money but is probably not much worse for you health wise. Second, I believe in rewarding yourself. Fast food tastes good. While you are working hard to save money for your down payment, why not reward yourself once per week with a very tasty meal? Concluding my case for fast food, just remember to work out because working out is directly related to your ability to save money. To get the best of both worlds, why not walk to your fast food lunch to save money and get a mini workout during your lunch break?

December 2, 2007
Two New Down Payment Money Saving Articles

I'm pleased to start off the new month with two new articles. The first article is all about the relationship between sleep and wealth. Sleep is one of the most critical components of my down payment savings plan and I highly encourage checking out this article. The second article is a snapshot of one of my top motivational strategies: my personal finance journal. I find writing about saving money highly motivational. The personal finance journal is a very easy way to write for financial motivation in only a few minutes each day.

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