Happy Friday everyone!
As some of you may know, my wife and I are currently in the process of buying our first home. In Minnesota there is a specific loan you can get as a first time homebuyer, but there are a few catches. One of those is that you have to attend a “Home Stretch” class. Essentially this is an 8 hour class that you have to sit through. I talked to some of our friends who had to go to the class and it sounds like it is almost entirely lecture. This class is how I will be spending my Saturday.
On the website they list the following as topics that will be covered:
- Determine your financial situation
- Understand credit, credit issues, and how credit affects the costs of homeownership
- Decide what type of mortgage is best for your needs
- Select the right home for your family
- Understand the loan closing process
- Find special programs just for first-time homebuyers, and more!
Humor me for a minute here.
Most people are going to take this class because they have to in order to qualify for a certain loan. Most are likely are already pre-approved and possibly have already found the home they are going to purchase. With that in mind, read through that list again.
If you met with a loan officer to get pre-approved, you have to bring in all your financial statements. By the end of the meeting, you will know what your financial situation is and how your credit affects the costs of home ownership. They likely have already laid out your loan options, so the “best” mortgage for you is almost certainly the one that requires you take this class (or else I can almost guarentee you wouldn’t be taking the class…). My least favorite topic they listed is “select the right home for you and your family.” If you are pre-approved, you will already know what the max you can spend is, and that will narrow down your options. You also probably have a general location, number of bedrooms, etc. in mind before you get to the class.
Essentially I don’t see the point of an 8 hour class when my loan officer and Realtor (not to mention the countless resources on the internet) can give me the same information in a much shorter time frame. Also, this class is “one-size fits all” while your loan officer and Realtor have a fuller understanding of your situation.
Thankfully this class is almost entirely lecture, so I can at least make efficient use of my time brainstorming blog posts ;)
Rant over! Moving on…
I decided to do something new this Friday. I decided to share a few articles from this week that I thought were useful and would be worth your time to check out:
- Making Sense of Cents asks the question, Do you take all your vacation days?
- Money, Life, and More gives their opinion of whether rental real estate and blogging can be defined as passive income in their post, Passive Income: Not As Passive As You Think
- Bible Money Matters helps you save money in Zombie Attack! Giving The Axe To Zombie Accounts, Subscriptions And Services
- Last but not least, Modest Money gives us a lesson in Search Engine Optimization in Optimal Blog Keyword Research for SEO
That’s all I have for you. I hope you enjoy the posts and have a great weekend!
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I’ve purchased two homes and a lake cabin. I’ve sold a home and a lake cabin. And, I’ve worked for 12 years with a real estate appraiser, valuing both residential and commercial real estate. My husband and I are pretty frugal. We’ve always adhered to the promise that we made to each other when we purchased our first home – We will always live within the means of one salary, even though we are a two salary family, with stable incomes. This has meant that we have not always had the 6 bedroom – 6 bath palatial mansions that some of our friends have. But, it has afforded us the opportunity to do pretty much whatever we want, when we want to, in addition to contribute to retirements and savings of various types. I think that these classes should have been held prior to the burst of the real estate bubble. A lot of real estate agents and loan officers convinced a lot of people that they could afford the $200,000 mortgage, when, in reality, they weren’t even close to being ready to be in a home at all. My advice – take the max that the loan officer tells you that you can afford and divide it in half. Or, as my husband and I have done, purchase a home solely on one salary (if you are a stable two salaried household, that is). That is really what a person can afford, not be “house poor”, and actually live a life. Who wants to work just to have a house? From experience, it is much better to live below one’s means than at or above one’s means. I think that is one reason that my marriage is so good – we eliminated the number one reason for marital problems right away.
@RobertaRenstromNyquist Did Victoria tell you we drive by your old cabin a couple weeks ago?? It was fun to see where she spent a lot of hee summers. I think you have good advice. Buying based on one salary is a smart idea, and is essentially what we are doing as well since Victoria hasn’t started her career yet.
She did! It was fun to see the photo! This is such a good market to purchase real estate if one is prepared. I’m pretty sure that you wouldn’t jump in unless you had all the I’s dotted and T’s crossed. It is so exciting to purchase one’s first home! Jeff and I really loved the process. It was exciting and completely frightening all at the same time. I just hate hearing about the instances where people ‘put the cart before the horse’, purchase a home that they cannot afford, and then suffer for many years, both financially and personally, due to that unwise decision. It still happens far too often!
Thanks for highlighting my post this week! That class seems like such a waste but I’m sure someone makes money off of it somehow… oh well. Hopefully the program you are getting for sitting through it is well worth it!
@Money Life and More No problem! Yeah sitting through it is just something I have to do haha. It’s not really a choice.
As boring as this class might sound, I think it is a good idea and should be required before people take on a mortgage. I know you are pretty knowledgable about money and interest rates, but is the average person? They might not understand the difference between a 4.5% interest rate on a 30 year mortgage and a 3.25% interest rate on a 15 year mortgage. They might not understand why you shouldn’t have such a high percentage of your income allocated to a mortgage or even the hidden expenses of owning a home. That said, hopefully the speaker at your class isn’t a boring monotone speaker like Ben Stine and he has some good stuff to say. And good luck on your first home purchase!
@DebtnTaxes You know what? The class wasn’t that bad! I just feel bad for the people who are closing this week and this was the last thing they needed to do. I actually agree with you now, that it’s definitely a good idea to sit through one of these and pick up whatever information you can. Sure there was a lot that I already knew, but there was so much information (we got a giant binder when we walked in the door) that it’s almost a guarantee there is at least some new information for everyone.
We hopefully will start looking this week! Way pumped.
Congrats on becoming a first time homeowner. I wish every state required that course (earlier in the process).
@Funancials Thanks! We just started the process so hopefully we find something relatively quickly.
Thanks for the link love!
@moneymatters No problem!
Another place I can recommend if you are a first time home buyer is http://www.georgiamortgageonline.com …especially if you are looking for Georgia home loans online.
Before you make planing to buy home so many things are clearly under stood like you financially strong, location is suitable, decide the which type of mortgage is best of you and much more.