From Here to Financial Happiness

Day Fifty Two Homeward Bound

Thinking of buying a home or trading up to a larger place? Here's the financial checklist:

• Yes, buying makes sense, because I can see staying put for at least five years, and preferably seven years or longer.

  If your time horizon is any shorter, you could lose money if the market turns lower and you have to sell before prices recover. Even if you benefit from rising property prices, any gain could be offset by the costs you incur buying and later selling the house.

• Yes, I've checked my credit reports and credit score, so I know I'll look like a worthy borrower to mortgage lenders.

  It's best to check your credit reports and credit score at least six months before applying for a mortgage, so you have time to fix mistakes in your reports and take steps to improve your score.

• Yes, I have enough for a house down payment or I've start socking away the necessary money.

  To avoid the cost of private mortgage insurance, try to make a 20% down payment. Even if you can't put down 20%, the larger your down payment, the better. Until you buy a house, you might keep the money for your future down payment in a money‐market mutual fund or a high‐yield savings account.

• Yes, I've gauged how much I might be able to borrow by heading to HSH.com and using the “How Much House Can I Afford?” calculator.

  As a rule, lenders will let you take on mortgage payments, including property taxes and homeowner's insurance, that equal 28% of your pretax monthly income.

• Yes, ...