home ownership

Paying off all your debt is always impressive, especially when it runs up to six figures. Reddit user Biking posted about his and his wife's recent success of paying off $210,500 worth of debt, which includes their $127,500 home, $34,500 in car loans, and $48,500 in student loans. Further, they were also raising a kid, currently 3 years old, while trying to reach their goals. 

The couple had initially bought their home when they were 24 and had been working toward paying of all their debt for five years. Biking says their combined income when they began was $77,000 and their income now is $127,800. Here's how they did it:

• Doing research and finding what works. They both read The Total Money Makeover by debt guru Dave Ramsey and modified his plan to suit their situation.
• Sticking to a strategy. They decided to prioritize paying off debt instead of investing, although they were still contributing a good amount to their retirement accounts. They paid off high-interest loans first and avoided carrying balances on credit cards.
• Keeping track and automating. He automated as much as he could and kept track of everything on an Excel sheet.
• Increasing their income. Both he and his wife worked full-time jobs to contribute toward debt repayment. They increased their income over the years. His wife got a master's (which accounted for their student loan debt) and had a $15,000 salary increase as a result of a higher position, while Biking's average pay raise each year totaled to $3,500. To add to their income, he started a sports photography side business that generated an extra $10,000 a year.
• Tightening belts in various ways. For example, they saved on groceries by coupon-cutting. Biker says, "[My wife] would routinely knock $50 off a $125 grocery bill with coupons from the Sunday paper. She would plan meals by the week and we would save the left overs for lunch the next day or dinner the next night."

The main advice the Reddit user has for others is to create a debt repayment plan and stick to it, which for most people is easier said than done.

Are you inspired by their example?

Thinking of buying a home? Kiplinger shares details on what it takes to become a home owner.

Tired of renting? It could be a great time to buy your first home. In many cities, home prices have bottomed and rents have risen. Mortgage rates are still superlow. In fact, homes haven't been as affordable since 1971. On the downside, in many cities buyers have fewer homes from which to choose and more competition for the best houses.

In Austin, Tex., newlyweds Mark and Ariane Corcoran bought their first home in March. They were renting in a popular downtown neighborhood, where they paid $1,200 a month for a 500-square-foot loft apartment, when they inherited enough money for a down payment. When they began shopping, they expected to buy a classic 1930s Austin bungalow. They found lots of prospects online but drove by most of them. "Agents are really good at taking photos that exclude what they don't want you to see, like the used-car lot out back," says Mark.

They put in an offer on a $225,000, 800-square-foot home. But after the home inspection, they realized that it needed $20,000 to $30,000 in renovations and repairs and that they'd quickly outgrow it. They walked away during the state-mandated rescission period (during which a buyer can back out for any reason and get back any earnest money deposited).

Ariane identified their next prospect within an hour after the listing appeared online. It was a newly built, 1,600-square-foot home with three bedrooms, 2.5 baths, and a yard for the dogs. The builder asked $270,000, the couple offered $260,000, he countered and they paid $268,000. They put down 20% to avoid private mortgage insurance and snagged a 30-year fixed rate of 3.75% from a credit union. Their monthly mortgage payment is $1,524.

Before you take the plunge, consider the answers to questions often posed by first-time buyers:

Will I qualify for a mortgage?

Lenders will scrutinize your "three C's"—credit history (your credit score as well as a deeper dive into your record of debt payment), capacity (income, savings and investments) and collateral (your down payment and the value of the property you want to purchase, as determined by an appraisal).

Lenders will verify your employment (job, school or military) for the past two years and try to predict how likely it is that you will keep your job. If you're weak in one area, strength in the other two areas or in a spouse's bona fides may compensate. Or you may need to beef up your credit score (see Improve Your Credit Score Before Applying for a Loan), establish a more stable income history or save for a bigger down payment.

Read on for more.

My friend is currently over the moon because she just managed to snag what in her words is an "optimal interest rate" for her new home. She shared with me a couple of tips, which I thought were extremely helpful. For those of you looking to haggle the best rate, read on for some helpful guidance, which may very well save you thousands of dollars:

• Check the Market Rates: Do your research on what mortgage rates are like in the market right now. This way you'll have a better idea of a realistic rate to negotiate for and it'll be good ammunition to use when you're haggling. Check out Bankrate.com to look up the rates in your area.
• Use a Financial Calculator: Compare how much you'll be paying monthly to get a sense of how much you'll save with different rates. This might incentivize you to haggle for a better rate and shop around more. Bankrate has a good mortgage calculator.
• Know What Will Get You a Good Rate: The best way to get a good rate is to have a good credit score, a big down payment, and consistent employment history. This is so the lender will know that you're a low risk borrower, and will be willing to let you have a lower rate. Take all these factors into consideration and see if you can work on some of them. Give yourself some time to boost your credit score if you can.
• Comparison Shopping: Shop around! My friend did the savvy thing by approaching her bank and finding lenders through zillow.com and bankrate.com. This information will help you negotiate a better rate. Lenders are required to give you a “good faith estimate” in three days after you submit your loan application so get your GFEs in order to use it for pitting lenders against each lender.
• Haggle, Haggle, Haggle: A lower mortgage rate means that the lender will be getting less commission, so you need to find a way to convince them using the tips I just mentioned. It's never fixed so don't feel like there is a standard rate or feel bad about haggling. Remember that lender fees are also negotiable so keep that in mind, too!
  

Do you have more tips on getting a better rate?

The housing market might be a mess, but what does that mean for the hunt for your dream home? Oftentimes, a large part of purchasing big-ticket items such as housing becomes emotional, but don't let that blind you from the necessary steps you need to take before purchasing your first house. Here are some great tips from reader brisas who shared what she learned from her own home-buying experience.

Thanks to SavvySugar, I just read this Learnvest link! And it actually got me thinking about how my husband and I after much looking and 7 different offers finally were able to buy a house (one we really love). I know buying a house is always a little different for each person but here are a couple things we learned from buying our first house!

1. First, there are always more houses! We put so many offers out there and many of them received no response for one reason or another. But we kept looking, it took us over a year and 6 offers on other homes.
2. Like I said it took us a whole year to find the place and then once we were in contract, it still took longer than we would have anticipated. With us, everything was going smoothly with our 30 day close but of course, there were unforeseen hiccups along the way. I would say it's perfectly reasonable to double how long your close will take especially in this market. We had planned for a month overlap from our rental to our home but in the end we had only four days of overlap. Plenty of time to move but a little more rushed than we had anticipated!

For more great tips, read after the jump!

They say your first house is the best purchase you'll ever make. brisas is thinking about buying her first house and asked for support in the Ask Savvy group.

So my husband and I are in the process of buying our first home and the entire process seems more complicated than it needs to be. I think we have a great realtor and loan agent, but there is so much paperwork, disclosures, etc. that it is definitely a little overwhelming. Any tips for a soon to be first time home buyer?

Have a question for fellow readers? Ask away by posting your questions in my Ask Savvy group.

The nationwide housing crisis might not be over just yet, but in some areas at least, home prices have hit bottom and are starting to climb again. If you’ve been holding out on buying a home until you can be sure your new purchase won’t continue losing value, Money magazine’s got some good news for you. The magazine has rounded up a list of the US cities where the housing market is turning around, and home prices are actually expected to rise over the next year. Here are the top five:

1. Santa Rosa, CA: Home prices expected to rise 6 percent
2. Cheyenne, WA: Home prices expected to rise 4.7 percent
3. Kennewick, WA: Home prices expected to rise 4.6 percent
4. Merced, CA: Home prices expected to rise 4.4 percent
5. Fairbanks, AK: Home prices expected to rise 4.2 percent

To round out the top 10, keep reading.

I suppose this makes sense: a UK-based price comparison website predicted that homeowners insurance rates could rise up to ten percent thanks to the popularity and use of location-based services like Twitter and Facebook. I've already suspected that Foursquare could equal overshare thanks to the "check-ins" that let everyone know where you are (or where you're not: home), and insurance companies could be bracing for an increase in break-ins because of it.

Aptly-named website PleaseRobMe is trying to make people aware of how easy it is to determine whether your place is empty by locating and compiling tweets and status updates of people who obviously aren't home, using it as a "slap across the face" to make you more aware of what you tweet. I'm pretty darn careful when it comes to broadcasting where I am, but that's not to say I don't like to brag a bit when I'm at a really great restaurant, or seeing a show I'm excited about. At least the knowledge that my renters insurance rates could spike will make me even more cautious about what I'm declaring to the world! Want some tips on how to keep your location private? Then just read more